Hedge fund manager David Einhorn still thinks Apple should do more with its cash
Though he is no longer suing Apple over its massive amount of cash and reserves, hedge fund manager David Einhorn still spoke out on the issue on Thursday, stating he still does not believe the company is doing enough for investors.
Einhorn's comments were made in an appearance on CNBC, where he said he would give Apple a grade of "C+" on the matter of capital management. He added that earlier this year, when he sued Apple and accused the company of having a "problem" with hoarding cash, he would have given them a "D-" grade.
"More could be done that would unlock probably even more value, but it's not so bad at this point that I want to complain about it," Einhorn said.
His hedge fund, Greenlight Capital, bought in to Apple about three years ago. His original intent was to be a passive shareholder, but as the company's cash built up and its market valuation dropped, he felt the situation got "out of hand."
The hedge fund manager said he believes Apple began hoarding cash because of a culture that was fostered under company co-founder Steve Jobs, who brought the company back from the brink of death. However, in Einhorn's view, the level of cash simply got to a point where it didn't make sense.
Einhorn refused to say whether he agrees with a recent push by fellow investor Carl Icahn for Apple to spend all of its $150 billion a share buyback. But he did say that his fund is still long on Apple.
"I look at it as a company that has dominant positions in growing markets," he said.
Einhorn was also complimentary of Apple's latest flagship smartphone, the iPhone 5s. In his interview, he revealed he owns an iPhone 5s, and called the device "terrific."
Einhorn's comments were made in an appearance on CNBC, where he said he would give Apple a grade of "C+" on the matter of capital management. He added that earlier this year, when he sued Apple and accused the company of having a "problem" with hoarding cash, he would have given them a "D-" grade.
"More could be done that would unlock probably even more value, but it's not so bad at this point that I want to complain about it," Einhorn said.
His hedge fund, Greenlight Capital, bought in to Apple about three years ago. His original intent was to be a passive shareholder, but as the company's cash built up and its market valuation dropped, he felt the situation got "out of hand."
The hedge fund manager said he believes Apple began hoarding cash because of a culture that was fostered under company co-founder Steve Jobs, who brought the company back from the brink of death. However, in Einhorn's view, the level of cash simply got to a point where it didn't make sense.
Einhorn refused to say whether he agrees with a recent push by fellow investor Carl Icahn for Apple to spend all of its $150 billion a share buyback. But he did say that his fund is still long on Apple.
"I look at it as a company that has dominant positions in growing markets," he said.
Einhorn was also complimentary of Apple's latest flagship smartphone, the iPhone 5s. In his interview, he revealed he owns an iPhone 5s, and called the device "terrific."
Comments
Einhorn & Ichan. Two peas in a pod.
It's BECAUSE of their cash reserves (along with their great products) that has given Apple such a dominate position.
What is that on his head?
Hmmm... I guess I'm just naive enough to play along. It's hair.
Well, if the world sinks into yet another extended global recession (and I'm seeing fewer and fewer reasons to believe this will not be the case), all that "excess" cash will come in handy for Apple.
If you got run over by a bus it would mean nothing to Apple other than maybe a slight delay in getting employees to their place of work... or a slight rocking motion of the bus as your now lifeless or at least life decaying body rolls under the bus.
Apple doesn't care about your opinion because your opinion means about as much to it as a glass of water to a drowning man.
You're all so inconsequential to Apple that it's so funny you keep going on TV and having opinions as though people genuinely care about you.
Remember that bus comment before??? Make it so.
It's BECAUSE of their cash reserves (along with their great products) that has given Apple such a dominate position.
Really? How does Apple's wealth in cash, and short and long term securities held them create products, sell products, or serve their customers?
They don't, of course. Their reserves are the consequence of their dominant position, not the cause of it. And if (stress the if) they don't have a plan for it then there's no good reason not to use it for a buy back, either to retire stock or provide staff incentives - both of which provide a return to actual people, rather than just growing the (already large) numbers on the balance sheet of a company.
these a-holes are fund managers and financiers. they make money by exploitation of the stocks they invest in. they are not interested in the welfare of any company. they are known as Vulture Capitalists. they try to pick the carcass clean, then move on. einhorn stands to make millions if not billions if he can get Apple to do as he wants. F them all!
The reason Apple is not doing enough for share holder is due to guys like him who are driving the stock value down. If they stop doing that then everyone with shares would be happy.
There's a multi-page article here about Einhorn that makes me think he's not quite as bad as some of the others in his industry:
http://nymag.com/news/businessfinance/47844/
He started his company with $900k and grew it into a company managing over $6b in 12 years (apparently he's made over 20% yearly returns). A lot of his gains have come from shorting stock in companies he sees that aren't doing their accounts properly like Lehman Brothers. He criticises the investment banks for handing out such massive bonuses from their revenue and reporting their losses in a way to make it look like they are doing better than ever just before bankruptcy. This happened with Lehman being rated AAA mere weeks before filing for bankruptcy - he shorted them months before they collapsed so that's pretty good research when a lot of people didn't see it coming. Investment banks like Lehman Brothers are the ones that cause more damage. The CEO of Lehman hated the short sellers like Einhorn.
Einhorn is in a bad position because he's hated by the companies he shorts (gaining from their failure) and the investors investing for gain whose share price falls when he brings out negative reviews and also supporters of the companies.
It's probably no surprise that he's a very accomplished poker player, making millions from tournaments.
He acknowledged that people hate when shareholders keep making demands and he tries not to be too vocal. However, he uses euphemisms like "unlock the value in the company". That basically means getting a payout and looting at the company's expense.
If it was the staff being paid as shareholders, it wouldn't be so bad because they are the ones driving the company success. To see 3rd parties gaining from the work of other people while literally contributing nothing but noise is something that never sits well with people.
yes, great bio on einhorn. i get you like him, but what do you think he's doing right now with apple? qui bono? who does it benefit first here? he used the stock as leverage to force a pay out to him!
Einhorn's proposal was some iPref thing:
http://uk.reuters.com/article/2013/02/21/us-apple-einhorn-call-idUSBRE91K1GR20130221
It seems to be designed to encourage savers to invest in Apple and boost the stock price. For some reason, shareholders always seem to think Apple needs to attract more shareholders - some misguided sense of self-importance perhaps. Investors help when a company needs capital, Apple doesn't need this and they don't need more investors.
Apple tried to prevent iPrefs happening using a bundled shareholder proposal, Einhorn sued them for doing this and won, Apple removed the attempt to block, he dropped the lawsuit.
He was trying to find ways to get his returns out of his investment - an investment that Apple gains nothing from - and in that regard is greedy like every other wealthy investor coming to loot a successful company but I suspect he's got his returns by now as he bought in the low $400s and so should be up 20-30%. He doesn't seem to be pushing for more just now like iCahn is. iCahn seems to want Apple to drain their cash reserves and to hell with what happens. Most of their assets are in long-term securities though and they can change in value. If they do a huge buyback by taking on debt and their securities drop in value, that can leave the company in a vulnerable situation. iCahn obviously doesn't care about that, Einhorn's proposal is at least less damaging.
Ideally, Apple wouldn't be a publicly traded company as it is really bad for a company as secretive as they are but this is how it is and as long as Apple shares are available to buy, the people who buy them will look for returns like with any investment.