Fund seeks greater returns for Apple shareholders
David Einhorn, president and co-founder of Greenlight Capital, which is attempting to force Apple to unlock cash reserves. photograph: bloomberg
An activist hedge fund is pushing Apple to consider new ways to return billions of dollars to shareholders, after the iPhone maker’s share price fell more than a third in recent months.
The move by David Einhorn’s Greenlight Capital is the latest attempt to unlock the huge cash piles being hoarded by large technology groups.
The 20 largest US groups in the sector, many of which are averse to making big investor distributions, are sitting on close to $500 billion (€370 billion)of cash and investments.
Greenlight yesterday said it had taken legal action against Apple over proposed changes to its corporate charter that would prohibit it from issuing perpetual preferred stock.
Mr Einhorn wrote to other Apple shareholders asking them to vote against the changes and support his motion for Apple to issue this new class of share, which could pay out billions of dollars from its $137 billion cash pile.
Noting Apple’s low price-to-earnings ratio after its recent stock price decline, he wrote: “We understand that many of our fellow shareholders share our frustration with Apple’s capital allocation policies. Apple has $145 per share of cash on its balance sheet. As a shareholder, this is your money.”
Apple holds about two-thirds of its cash overseas and repatriating it would likely incur a steep tax bill, posing a quandary familiar to many US-based technology companies.
Greenlight, which is a top-100 shareholder with a 0.12 per cent stake in Apple, made a proposal to the Cupertino-based company last spring that it should issue perpetual preferred stock to shareholders.
However, Apple rejected this idea last September, according to Greenlight. It has now agreed to discuss the proposal again, Greenlight said, but only after the fund initiated a legal action. – Copyright: The Financial Times Limited