David and Goliath
- Joshua M Brown
- February 7th, 2013
The news today is that hedge fund manager David Einhorn is sick and tired of Apple’s cash hoarding and lack of respect toward its shareholders. He’s decided to wage war against the $500 billion behemoth.
Einhorn had unveiled Apple as one of his new investments last summer at much higher prices, he claims today that he owns more of the stock than ever before.
And he is not pleased.
Unlike the targets of traditional activist battles waged by hedge fund managers, Apple is very large and any proposal put forth by a shareholder like David would require substantial cooperation among other institutional shareholders.
His hedge fund, Greenlight Capital, said on Thursday that it was suing Apple in an effort to block a move that would eliminate preferred shares. In a letter to fellow stockholders, Mr. Einhorn said the move to amend the company’s charter would unnecessarily limit the technology giant’s ability to create value for shareholders and called on them for support.
“This is an unprecedented action to curtail the company’s options,” he wrote in the letter. “We are not aware of any other company that has ever voluntarily taken this step.”
David also went on Squawk Box (CNBC) this morning to make his case:
“Apple is a phenomenal company filled with talented people creating iconic products that consumers around the world love,” Einhorn said. “But Apple has a problem, we think. It has a cash problem.”
Likening the company’s behavior to his grandmother’s hoarding of money, Einhorn said Apple is acting like “someone who’s gone through traumas … they sometimes feel they can never have cash.”
Now it’s getting interesting…
On a related, more hilarious note – Bill Ackman just released 284 questions for the board of Herbalife on 38 pages. Dude needs XBox. (Business Insider)
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.