I don't think issuing perpetual preferred stock is in the best interest of the company. Adding a preferred stock would just lower the value of the common stock anyways. I think Apple wants to see itself at a $1000 stock price, probably a reason they haven't issued a stock split. The best thing Apple should do is to buyback more shares. Issuing a buyback will lowers the total number of outstanding shares; lowering supply and increasing demand for the stock. If they believe in their company and how undervalued it is right now, then issuing a large buyback would be the best way to convince investors.
I agree that Apple should be buying back shares like crazy.
However, I think they should split the stock. Something like 69% of AAPL is owned by institutions - which makes it more subject to manipulation. Furthermore, it limits the potential upside. A 10:1 split would make it more accessible to many shareholders.
I don't think issuing perpetual preferred stock is in the best interest of the company. Adding a preferred stock would just lower the value of the common stock anyways. I think Apple wants to see itself at a $1000 stock price, probably a reason they haven't issued a stock split. The best thing Apple should do is to buyback more shares. Issuing a buyback will lowers the total number of outstanding shares; lowering supply and increasing demand for the stock. If they believe in their company and how undervalued it is right now, then issuing a large buyback would be the best way to convince investors.
You raise an interesting point. Yes, adding a new group of claimants to cash flows could, in principle, lower the claim to cash flows of the lowest-tier claimant (which is what a common shareholder is), and therefore lower its value.
However, this would not be the case here. Einhorn's proposal is to hand out the preferreds to current shareholders only, in proportion to their holdings of common stock.
However, here's a tax angle to this that makes it very self-interested from his standpoint. Assuming is hedge fund is registered as a corporation, he does not have to pay taxes on the preferred dividends (that's what the tax law says). However, you and I will owe taxes on it.
I agree that Apple should be buying back shares like crazy.
However, I think they should split the stock. Something like 69% of AAPL is owned by institutions - which makes it more subject to manipulation. Furthermore, it limits the potential upside. A 10:1 split would make it more accessible to many shareholders.
Finally, someone who gets it. A 10:1 split would indeed take this stock out of it's current slump, and swiftly.
Just so I'm clear you realize that increasing the dividend wont impact the current reserve and will only slightly slow down how fast it increases, but you still don't want them to increase the dividend because they might want to...what? buy a small country? Exxon? Increasing the dividend is the only thing that makes sense and is in no way detrimental to the company in any meaningful way.
I don't know Apple's reasons, however I personally believe a larger shock to the stock market and the economy is coming, probably this year. I can't tell you how many investors I've heard express their opinion that 2013 will be another really bad year. Start looking around for 2013 economic projections and pay attention to who is saying what. I automatically dismiss the projections of politicians and those who have a vested interest in the maintenance of the illusion that our economy is on the mend.
I don't know Apple's reasons, however I personally believe a larger shock to the stock market and the economy is coming, probably this year. I can't tell you how many investors I've heard express their opinion that 2013 will be another really bad year. Start looking around for 2013 economic projections and pay attention to who is saying what. I automatically dismiss the projections of politicians and those who have a vested interest in the maintenance of the illusion that our economy is on the mend.
Absent a Mayan like collapse of our economic system I'm pretty sure we'll get through 2013 in about the same shape we were in last year plus or minus 10%. Are you seriously suggesting Apple will need to burn through more than 137 billion dollars to survive 2013? Guess what, in that scenario we're screwed anyway so is .615 billion a quarter going to change what happens in your apocalyptic scenario? No, so how about Apple go about what a reasonable and discount the .1% chance the world's economy collapses this year.
Sorry, I haven't read this article or thread but I posted something under another thread mentioning Greenlight. Some mentioned that they like my post and should be moved here.
Sorry didn't read the thread but here it is....
"The whole lawsuit is about the issue of preferred stock being tied to other issues that are being voted on at an upcoming shareholders meeting.
I can't find the wsj article now but basically the there was issue A and issue B. Apple figured the 99% of the people who voted for issue A would also vote for issue B and vice versa. Also 99% of the people voting against issue A would vote against issue B.
So Apple decided to tie those issues together and there is one vote, Yes or No, to make the voting forms easier with one check box.
Then Apple amended that article to include a 3rd issue to be voted on. Maybe bc it was convenient or they wanted it to pass bc the the people who vote yes on issue A and B would also vote for issue C - restricting the Board of Directors from issuing preferred stock without the majority shareholders approval.
Einhorn's lawsuit is about the inclusion of issue C with the other two issues. He thinks that the vast major that support issues A and B also support issue C or don't care. Issue C is less related to A or B than they are to each other so he is suing to separate issue C, saying it should be voted on by itself. Which on principle I agree with.
WSJ
"Apple proposed the preferred stock amendment after a broader review of its corporate governance practices and independent of Mr. Einhorn’s proposal, people close to the company said.
If it were to succeed with the proposal, Apple would become an outlier. According to FactSet SharkWatch, 95% of all companies in the S&P 500 have the “blank check” provision for issuing preferred stock without a shareholder vote that Apple is attempting to toss out."
Long story short, Apple wants to become more democratic in regards to its stockholders, restricting actions of its Board of Directors. If the issue passes, unless a majority of shareholders agree, the Board can't do the things that people like Einhorn want without approval by the majority. Why should someone who owns less than 1% of get more influence than the collective 80% ( chose random number )?
This is all about super rich people like Einhorn having more influence and input to get Apples' Board to get what they want and benefit from.....
Apple is trying to support the little guys here, from people with social and political influence like Einhorn. Yet the WSG and NYT never cover that aspect of the story."
Comments
Quote:
Originally Posted by SpamSandwich
No... That would result in charges of "unfair competition", "dumping" or some such nonsense from government overseers.
Damn, someone should tell Bezos and Page that they are not allowed to sell at cost.
Quote:
Originally Posted by monstrosity
I will continue making money from the naive!
Internet tales of wealth and expertise... always a good read
I agree that Apple should be buying back shares like crazy.
However, I think they should split the stock. Something like 69% of AAPL is owned by institutions - which makes it more subject to manipulation. Furthermore, it limits the potential upside. A 10:1 split would make it more accessible to many shareholders.
You raise an interesting point. Yes, adding a new group of claimants to cash flows could, in principle, lower the claim to cash flows of the lowest-tier claimant (which is what a common shareholder is), and therefore lower its value.
However, this would not be the case here. Einhorn's proposal is to hand out the preferreds to current shareholders only, in proportion to their holdings of common stock.
However, here's a tax angle to this that makes it very self-interested from his standpoint. Assuming is hedge fund is registered as a corporation, he does not have to pay taxes on the preferred dividends (that's what the tax law says). However, you and I will owe taxes on it.
Quote:
Originally Posted by jragosta
I agree that Apple should be buying back shares like crazy.
However, I think they should split the stock. Something like 69% of AAPL is owned by institutions - which makes it more subject to manipulation. Furthermore, it limits the potential upside. A 10:1 split would make it more accessible to many shareholders.
Finally, someone who gets it. A 10:1 split would indeed take this stock out of it's current slump, and swiftly.
Quote:
Originally Posted by tkell31
Just so I'm clear you realize that increasing the dividend wont impact the current reserve and will only slightly slow down how fast it increases, but you still don't want them to increase the dividend because they might want to...what? buy a small country? Exxon? Increasing the dividend is the only thing that makes sense and is in no way detrimental to the company in any meaningful way.
I don't know Apple's reasons, however I personally believe a larger shock to the stock market and the economy is coming, probably this year. I can't tell you how many investors I've heard express their opinion that 2013 will be another really bad year. Start looking around for 2013 economic projections and pay attention to who is saying what. I automatically dismiss the projections of politicians and those who have a vested interest in the maintenance of the illusion that our economy is on the mend.
Quote:
Originally Posted by Potsie Webber
Finally, someone who gets it. A 10:1 split would indeed take this stock out of it's current slump, and swiftly.
LOL! Ridiculous.
Quote:
Originally Posted by SpamSandwich
I don't know Apple's reasons, however I personally believe a larger shock to the stock market and the economy is coming, probably this year. I can't tell you how many investors I've heard express their opinion that 2013 will be another really bad year. Start looking around for 2013 economic projections and pay attention to who is saying what. I automatically dismiss the projections of politicians and those who have a vested interest in the maintenance of the illusion that our economy is on the mend.
Absent a Mayan like collapse of our economic system I'm pretty sure we'll get through 2013 in about the same shape we were in last year plus or minus 10%. Are you seriously suggesting Apple will need to burn through more than 137 billion dollars to survive 2013? Guess what, in that scenario we're screwed anyway so is .615 billion a quarter going to change what happens in your apocalyptic scenario? No, so how about Apple go about what a reasonable and discount the .1% chance the world's economy collapses this year.
Sorry, I haven't read this article or thread but I posted something under another thread mentioning Greenlight. Some mentioned that they like my post and should be moved here.
Sorry didn't read the thread but here it is....
"The whole lawsuit is about the issue of preferred stock being tied to other issues that are being voted on at an upcoming shareholders meeting.
I can't find the wsj article now but basically the there was issue A and issue B. Apple figured the 99% of the people who voted for issue A would also vote for issue B and vice versa. Also 99% of the people voting against issue A would vote against issue B.
So Apple decided to tie those issues together and there is one vote, Yes or No, to make the voting forms easier with one check box.
Then Apple amended that article to include a 3rd issue to be voted on. Maybe bc it was convenient or they wanted it to pass bc the the people who vote yes on issue A and B would also vote for issue C - restricting the Board of Directors from issuing preferred stock without the majority shareholders approval.
Einhorn's lawsuit is about the inclusion of issue C with the other two issues. He thinks that the vast major that support issues A and B also support issue C or don't care. Issue C is less related to A or B than they are to each other so he is suing to separate issue C, saying it should be voted on by itself. Which on principle I agree with.
WSJ
"Apple proposed the preferred stock amendment after a broader review of its corporate governance practices and independent of Mr. Einhorn’s proposal, people close to the company said.
If it were to succeed with the proposal, Apple would become an outlier. According to FactSet SharkWatch, 95% of all companies in the S&P 500 have the “blank check” provision for issuing preferred stock without a shareholder vote that Apple is attempting to toss out."
Long story short, Apple wants to become more democratic in regards to its stockholders, restricting actions of its Board of Directors. If the issue passes, unless a majority of shareholders agree, the Board can't do the things that people like Einhorn want without approval by the majority. Why should someone who owns less than 1% of get more influence than the collective 80% ( chose random number )?
This is all about super rich people like Einhorn having more influence and input to get Apples' Board to get what they want and benefit from.....
Apple is trying to support the little guys here, from people with social and political influence like Einhorn. Yet the WSG and NYT never cover that aspect of the story."
In this case it's ok to post without having read the article or thread, which I normally always advise people to do. Good post Spacepower!
So, there's the well-formulated reason why I dislike people like this Einhorn fellow.