Barry Ritholtz: WTF is Wrong With Apple Investors?
Market strategist Barry Ritholtz came down hard on Greenlight Capital’s David Einhorn and other investors clamoring for more returns from their Apple (NASDAQ:AAPL) investments and sparking the company into admitting it was contemplating increasing dividend. According to Ritholtz, having large cash holdings and pumping profits into research and development was Apple’s way of guarding against becoming technologically irrelevant.
“As a longstanding Apple guy and someone who was pushing the stock post iPod at $15 (pre-split), I cannot help but be astounded at the current crop of Apple shareholders,” Ritholtz wrote in a post titled The Collossal Gall of Bad Apple Investors. “Wall Street has always misunderstood Apple but its now getting ridiculous.”
While Apple should listen to “these activist shareholders” for legal reasons, the company could cite several reasons for holding on to its $137 billion cash reserves, he wrote. Among the possible reasons Apple could give, according to Ritholtz, were funding a separate R&D division to keep fostering “outside the box” innovations, creating a subscription-based unlimited streaming music business, making a series of strategic acquisitions, and funding a venture capital division to foster more innovations for the Apple ecosystem.
In fact, Apple didn’t even need to explain what it needed the money for, and instead just say it was working on a secret plan that could not be revealed to rivals because it would risk billions of dollars.