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Apple's $100B capital reinvestment prompts Greenlight hedge fund to increase stake

post #1 of 9
Thread Starter 
Greenlight Capital Chairman David Einhorn, who made waves earlier this year when he attempted to force Apple to offer preferred stock shares, has increased his stake in the company in response to its $100 billion capital reinvestment program.

Einhorn held a quarterly earnings conference call with Greenlight Capital investors on Tuesday, in which he declared Apple's $100 billion share repurchase and dividend program is "a major step forward" for the company. A transcript of his remarks was published by Seeking Alpha.

Greenlight


"We've added to our Apple position," Einhorn said Tuesday. "Now, we just wait for the release of Apple's next blockbuster product."

Greenlight's increase in Apple comes in spite of the fact that declining shares of the iPhone maker led to the hedge fund's biggest losses during the March quarter. During the period, shares of Apple were off about 17 percent.

But Apple has rebounded nearly 20 percent since the company reported its own quarterly earnings last month. And sentiment regarding the company has begun to change on some fronts, with one firm this week increasing its price target for AAPL stock."We've added to our Apple position. Now, we just wait for the release of Apple's next blockbuster product." ??Greenlight Capital Chairman David Einhorn

After sinking below $400 in mid-April, the company's shares were up over $460 this week. The rebound comes after months of losses falling from its highs north of $700 last September, ahead of the launch of the iPhone 5.

Earlier this year, Einhorn publicly pushed for Apple to offer so-called "iPref" preferred shares, but the suggestion was not accepted by Apple. Greenlight Capital even went as far as to file a lawsuit against Apple over how to best utilize its massive cash reserves, but the complaint was eventually dropped in March.

Wall Street's sentiment regarding Apple has weakened as the company's growth has slowed, with lower margins resulting in lower year over year profits for the first time in a decade in the March quarter. Apple has also offered investors soft guidance through its current June quarter, but the company has also signaled that new products, including surprises, are in the works for this fall and all of 2014.

Einhorn, like other investors, eagerly awaits the company's "next blockbuster product" with particular interest this year because of a lack of major new releases seen so far in 2013. That's expected to begin to change at the annual Worldwide Developers Conference in June, where it's been said that the company will unveil new MacBook models running Intel's latest Haswell processors.
post #2 of 9
Still a jerk, until he 'fesses up that he was wrong comparing Apple to his Depression-scarred grandmother.

And I'd like to see igriv eat some crow about his professed admiration for Einhorn's "proposal."

On second thought, I'd rather not watch.
post #3 of 9
@flaneur or he was not wrong, just a tiny itsy bit manipulative?

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

Reply
post #4 of 9

Darn, was hoping to hold onto my shares a little longer, but......  I always do the opposite of what Einhorn does so guess its time to sell. 

post #5 of 9
So, a few weeks ago, he drives down the stock price with his lawsuit, buys the stock cheap and is now pumping it up.

How is this not illegal?

The unchecked corruption in the financial industry is going to doom the rest of the country to endless crashed and crises, and only the David Einhorns of the world will profit each and every time.
post #6 of 9
Quote:
Originally Posted by lightknight View Post

@flaneur or he was not wrong, just a tiny itsy bit manipulative?

No, wrong in trying to say Apple suffers from a Depression-era mentality.

Yes, manipulative. If he had any sense he'd be on his knees asking to be forgiven for his "silly" proposal and lawsuit.
post #7 of 9
Quote:
Originally Posted by AppleInsider View Post

"We've added to our Apple position," Einhorn said Tuesday. "Now, we just wait for the release of Apple's next blockbuster product."

I'm sure everyone appreciates his contribution to the process. "Now we just wait" for someone else to do all the hard work and then reap the rewards. If no rewards come after doing nothing for a long enough period of time, it's time to make more noise until they do. That's called creating wealth.
post #8 of 9
Quote:
Originally Posted by macFanDave View Post

So, a few weeks ago, he drives down the stock price with his lawsuit, buys the stock cheap and is now pumping it up.

How is this not illegal?

The unchecked corruption in the financial industry is going to doom the rest of the country to endless crashed and crises, and only the David Einhorns of the world will profit each and every time.

 

And the really bad part is that you almost have to be in the stock market to have any chance of beating inflation and generating income. I retired back in December and handed over my lump sum pension payout and my 401K to  Morgan Stanley to manage and send me a check every month. So far so good but you wake up every morning wondering if this kind of crap is going take a big bite out of your portfolio in some contrived, manipulated crash. The little guy is at the mercy of these assholes.

post #9 of 9
I think most of the commenters here are attributing way too much to this Einhorn guy. People like him should be ignored.

In all likelihood, he knows nothing much more than most of us here do. In fact, we probably collectively know far about Apple than this guy could possibly know.

Basically, it sounds like he had bought too high before, and made some noises to see of he could get the stock back up to mitigate his losses. It did not work. Apple simply ignored him. Tim Cook went with a garden variety share buyback plus dividend increase, financed, in part, with low cost, tax-advantaged debt -- pretty much the basic things that many of us here advocated -- and Einhorn's idiotic proposal was simply (and correctly) ignored despite all the media hype. Cook hasn't changed the company's product focus or timeline one iota, from the looks of it.

Now Einhorn is (sheepishly) trying to get back in recognizing that Apple's momentum is back. He wants to get in before its too late (looks like he's already missed a nice chunk of the runup).

We would all be better off as market participants if we didn't confuse luck with skill with these hedge fund types. They bring nothing much more to the table than the collective wisdom of the market does, and often have difficulty beating the market.
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