(Reuters) - Hedge fund billionaire Carl Icahn said he bought another half a billion dollars' worth of Apple Inc (AAPL.O) stock on Tuesday, signaling confidence in the iPhone maker even after it gave a disappointing revenue forecast for the current quarter.
The investment, Icahn's third in Apple in less than a week, boosts the value of stake in the company to more than $4 billion. It was announced via his Twitter account as Apple's shares traded down about 8 percent following its quarterly report late on Monday, which renewed Wall Street's concerns about the maturing smartphone market.
Icahn told Reuters in a telephone interview that the decline in Apple shares presented "a great opportunity" to add to his position.
"Apple shares are very cheap. They are going at six to seven times earning," Icahn said. "It's not like we are holding something that is trading at 100 times earnings."
Icahn has provided a blow-by-blow account on Twitter of every new investment he's made in Apple since Wednesday, when he disclosed a $500 million purchase that took his position to $3 billion. He did so again on Thursday.
On Tuesday, he tweeted: "Just bought $500 mln more $AAPL shares. My buying seems to be going neck-and-neck with Apple's buyback program, but hope they win that race."
Icahn is waging a public campaign to get Apple to return more cash to shareholders and has filed a resolution proposing that it give back $50 billion more through share buybacks.
Apple's management "seems to be doing the right thing in running the business but this is a financial issue," Icahn told Reuters, arguing that the company should increase its share buyback program.
Apple, for its part, argues it already has one of the industry's largest capital-return programs in place. It said on Monday it had returned $7.7 billion in cash to shareholders through dividends and share repurchases during the December quarter, bringing cumulative payments to over $43 billion, out of a total plan to dole out $100 billion.
Beyond the share buyback program, Icahn said he believes investors are underestimating Apple Chief Executive Officer Tim Cook's message that the company will come out with products in entirely new categories this year.
"I think it will be huger than people think," Icahn said. "They haven't done this in four years and the last one they did was something called the iPad. And let's not forget that Apple has a huge cult following."
After Icahn's tweet, Apple shares were still down roughly 7.65 percent at $508.55 a share.
At least 14 brokerages lowered their price targets on Apple following Monday's results report, reflecting concerns that it was becoming harder to sell high-end phones as markets get saturated.
While Apple sold a record 51 million iPhones in the quarter ended December 28, that fell short of the 55 million expected by Wall Street.
Analysts on Tuesday attributed some of this shortfall to the pricing of the iPhone 5C. Apple's low-cost alternative to its iPhone 5S was unable to grab market share from cheaper rivals using Google Inc's GOOG.O Android software, they said.
Reporting by Jennifer Ablan in New York and Edwin Chan in San Francisco; Editing by Cynthia Osterman