Market Currents
More on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its...
-
Thursday, February 7, 8:47 AM ETMore on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its balance sheet as it does to produce products, writes Einhorn. Every $50B of perpetual preferred stock distributed would unlock about $32/share of value, he says, and Apple has the capacity to distribute several hundred billion. "Greenlight is alarmed that Apple is attempting to eliminate preferred stock from its corporate charter." Shares +0.7% premarket.
Other date
TECH ETFs IN FOCUS
Latest Tech Articles
This news story has 49 comments:
Someone who can't function in the Mother Tongue shouldn't try to call someone else a retard.
Are you talking about book value or the stock price? I doubt you know.
the hedge fund bots are going to notice "Einhorn" and "Apple"
in the same article. I guess we're going to see how
stable their trigger fingers are at these funds.
Make our day.
I invest, but I acknowledge its essentially a non-creative activity. You bet on horses. You don't train them; you don't ride them; you don't breed them. It takes skill to exercise proper judgment, to pick the winners, but the idea that the people involved with the company owe us something because we decided to invest in them is just egoistic. Especially for a company like Apple which is debt-free and flush with cash. If a company were in debt or merger talks, if they were in short using their share price to move their business forward somehow, you'd have a point. Apple just uses revenue from their business.
I love the capital it gives them the leverage to enter any industry, pursue any venture. And yes it is a safety net. Help our portfolios, a company that gives in to Wall Street sentiment MIGHT be truly in a creative funk. We could just as easily blame Wall Street for not giving Apple a higher multiple since the trade so far below the average multiple. Mr Einhorn could use his power to address that disparity by convincing fellow hedge fund managers of Apple's stability and steady revenue stream. He CHOSE to go after the cash. Why? Pure greed.
This is a power play for more money and nothing more.
Einhorn needs to be treated very roughly here.
One could make the argument that when a person buys a share of stock from the person that was in the IPO that it does nothing to help but it does. The type of people that like to invest in IPOs make their profit, free up their cash thanks to investors like us, and then move on to the next IPO to help the next company start.
As for AAPL's cash they have...you may call me greedy but I didnt invest in Apple to be part of some hipster movement. I did it to make money. I agree with Einhorn in that the cash needs to be given to shareholders somehow.
IF AAPL needs it for operations they should keep it,.
IF they have a plan for the money for M&A they should keep it.
Tim Cook has admitted they have no idea what to do with the money. He called Warren Buffett for advice on what to do.
The money is just sitting there doing absolutely nothing. Give it to the three groups that made AAPL what it is. Higher employee wages, cheaper products for customers, or dividends/share buybacks for investors. Someone should be benefiting from it and nobody is.
Apple made all this money for their shareholders by making daring business moves. Entering into new industries. Cannibalizing their own products when it seemed called for, becoming a serial disruptor. When a company is concerned with protecting shareholder value like a hen guards her eggs, do you really the last few years would have unfolded in the same way?
And let's be frank. We DON'T OWN THE COMPANY. Yes, I understand the legal convention. Please no flaming on that point, but when I think of something I own, truly own, I imagine exerting day to day control over that thing. If I called Apple and suggested that they delve into quantum computing, would they? Would they even entertain the suggestion if they felt it was a poor one?
I bought a stake. I am riding the wave. If the wave rises I rise with it, if it falls I fall. I do not control or create the wave.
when did that happen? Tim Cook did this? I believe that was actually Jobs, a couple years before he passed away.
Why exactly did you invest in AAPL if not to make money?
That way we shareholders could share in the Apple growth similar to the payments achieved to the Directors such a Al Gore when he recently picked up multiple Millions with his share conversion...
So to eliminate preferred shares, Apple management must think that it is unnecessary because an unsolicited take-over attempt on the world's largest company is unlikely. Yes, the preferred share will oblige a company to pay perpetual dividend, but a more flexible way is to simply declare dividend on the commons.
Mr. Einhorn is a short term trader.. Once he made his money, he may even short Apple stocks. He is not acting for shareholders' best interest, don't be fooled.
If you want to look at a sector that operates very efficiently from a capital standpoint, it would be the REIT space. Some people look at REIT's high dividend distributions (no retained earnings) as a negative. This is nonsense. It is a wonderful mechanism where value creation is forced out to shareholders on a current basis. And, when management wants to invest in something new and exciting, they have to come back to the capital markets with a reasonable story on how/where they will invest the money. In short, high dividends keep management on a short leash and reduce agency risk. Why would any shareholder give AAPL even $1 of new capital, knowing they might never see it again? Give that same $1 to SPG, however, and you will benefit from a relentlessly efficient capital allocation team and a rapidly increasing dividend.
Now back to AAPL and Einhorn's suggestion to distribute preferred stock to shareholders. This is simply a way for AAPL to get its effective dividend rate up. If the company won't raise dividends much on the common, then distribute a class of higher-yielding preferred to shareholders and funnel out cash that way. It's a good suggestion that deserves to be considered. But pending some sign that the Board appreciates these issues, AAPL just looks like a beautiful, attractive, glittering and unmovable value trap.
In other words, a Miracle.
Tim Cook, in eliminating a parasite class of senior securities: preferred shares, is doing exactly what Steve Jobs would have done. Tim Cook has shown that he has the best interest of the long term Apple investors in mind, and he should be supported in his efforts to permanently bar Apple from issuing preferred shares, by long term Apple investors, and by long term Apple users, whose brilliantly successful Apple Ecosystem's growth and efficiency can be compromised or stunted, by Einhorn's nonsense proposals.
http://yhoo.it/YX5HAR
Naturally investors go diving for the buy button, although nothing that Einhorn proposed will change whatever Apple had planned to do anyway. He did coax an admission by Apple that discussions are taking place.