Apple’s huge gift to investors has at least one big fan: David Einhorn, the prominent hedge fund manager who took on the company over its payouts to shareholders.
Here’s what Mr. Einhorn had to say soon after the company disclosed it was increasing its stock buyback program fivefold and its dividend by 15 percent, as well as taking on debt:
“We applaud Apple’s decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple’s management and board in the company’s future.â€
Apple’s moves aren’t quite what the Greenlight Capital chief had called for earlier this year. In a presentation earlier this year, Mr. Einhorn unveiled what he called “iPrefs,†a cheekily named variation of perpetual preferred shares. His plan involved issuing a preferred share, which carried a quarterly dividend of 50 cents, for each outstanding common share of Apple.
During his presentation, the hedge fund manager described iPrefs as an innovative way for Apple to pay shareholders from its cash pile while still maintaining financial flexibility. But he stressed that he didn’t oppose simpler measures, as long as they reached the same end goal.
When Apple pushed back, including eliminating its board’s ability to issue preferred shares at will, Mr. Einhorn went to federal court to press his case. A federal judge in Manhattan sided with Greenlight on a technical matter, namely that the company improperly bundled its preferred-share initiative with other shareholder proposals.
But Apple has also maintained that it was considering ways to return more money to shareholders.
