(NEW YORK) — Can a company ever have too much cash? In the case of Apple Inc., at least one big investor says yes, and he wants the iPad maker to quit being a miser with its $137 billion pile of cash, the most of any U.S. company.
“Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders,” David Einhorn, president of Greenlight Capital, said Thursday. His firm owns more than 1.3 million Apple shares.
He’s urging Apple shareholders to vote down a proposal to eliminate preferred stock and has sought a federal court order to bar the firm from certifying votes cast in favor the proposal. Preferred shares often pay a higher dividend than common shares.
Einhorn told Bloomberg TV that he’s asked Apple management to issue high-yielding preferred shares to reward investors with some of that cash pile, which amounts to more than $145 per Apple share.
“Several hundred dollars per share would be unlocked if Apple were to follow through on this suggestion,” Einhorn said in an interview on Bloomberg Television. “It doesn’t put the company at risk. It’s not financial leverage in the sense that debt’s considered to be.”
Apple hasn’t commented on Einhorn’s actions, but analysts who follow the company say Einhorn has a point.
“There is a widespread belief that Apple does not need to accumulate more cash and should be more aggressive in returning cash,” Sanford C. Bernstein analyst Toni Sacconaghi said on CNBC’s Squawk on the Street on Thursday. “I believe that Apple should look to take on debt at very low rate and dramatically increase its dividend. Others believe that Apple should return more cash through buybacks. The fact is for a company to have $137 billion and to be adding $40 billion a year is destroying economic value for shareholders.”
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Madison Park, Keith Allen and Andreas Preuss, CNN