Icahn, who is in the midst of a fierce battle for control of computer company Dell and has a history of taking stakes in firms to seek shakeups, announced his move on Twitter.
"We currently have a large position in Apple," he tweeted. "We believe the company to be extremely under-valued. Spoke to (Apple chief executive) Tim Cook today. More to come."
In a second tweet moments later, Icahn said he would press Apple to increase its stock buyback, in which the company purchases its own shares in a bid to boost its value.
"Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly," Icahn tweeted.
Apple shares, which had been flat most of the day, jumped on the news and closed 4.75% higher US$489.57.
Asked about the Icahn action, Apple spokesman Steve Dowling said: "We appreciate the interest and investment of all our shareholders. Tim (Cook) had a very positive conversation with Icahn today."
Shares in Apple last year rose to a record level of more than US$700 but have been in a slump over concerns the company is losing its edge in innovation.
Apple remains the most valuable publicly traded company with a market capitalisation of more than US$440bn despite its steep decline in recent months.
Earlier this year, Apple yielded to pressure from the hedge fund Greenlight Capital, agreeing to return some US$100bn to shareholders over the next two years, including US$60bn in share repurchases.
Apple shares posted gains on Monday (12 August) after a report saying the Californian company was set to announce its next iPhone at a 10 September event.
Meanwhile, Icahn has been embroiled in a battle over Dell, seeking to block a private equity deal led by founder Michael Dell, which Icahn says undervalues the company.
The 77-year-old Icahn has fought some of the roughest proxy battles in modern corporate history, ranging from the airline TWA to RJR Nabisco and Blockbuster Video. He also headed a shareholder revolt at Yahoo after the Internet company rejected a takeover from Microsoft.
Icahn is from the same generation as famed investor Warren Buffett. But unlike Buffett, a long-term, relatively passive investor, Icahn makes his money by taking positions in companies that give him the leverage to force changes in management or rewards to shareholders, or both.
Forbes magazine estimates Icahn's net worth at US$20bn, earning him 26th place in the 2013 list of the world's wealthiest individuals.
Source: AFP via I-Net Bridge
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