Gamco’s Haverty: Apple’s cash is ‘shareholders’ cash’ (with video)

Lawrence Haverty, a portfolio manager at Gamco Investors Inc., talks about Apple Inc.’s consideration of ways to disburse some of its $137.1 billion in cash to shareholders.

Haverty speaks with Tom Keene and Scarlet Fu on Bloomberg Television’s “Surveillance.”

I think people have been worried about the accumulation of cash. The stonewalling by the company at the end of the day is unacceptable. The cash is the shareholders’ cash. – Larry Haverty, Gamco Investors Inc.

Direct link to video here.

MacDailyNews Note: Haverty predicted Einhorn’s move to sue Apple on January 28th.

Related articles:
Apple shares surge following company response to Einhorn – February 7, 2013
Greenlight’s Einhorn sues Apple, ‘dissatisfied with capital allocation strategy’ – February 7, 2013
Gamco’s Haverty: Apple board can be sued over excessive accumulation of cash (with video) – January 28, 2013


        1. Coming from a law professor, and citing legal precedents, this text explains very concisely, clearly and in relatively simple language why no shareholder suit against Apple for hoarding cash will ever have merit.

          1. Nice! I will have to bookmark it! As a shareholder of Apple who benefits from the fortunes of the stock, I do not believe that Shareholders are the sole owners of a company. I believe the employees are also stakeholders, without them there would be nothing to invest in. I am rather put off by this constant droning that Shareholders are the sole owners of any company.

            1. They are eyeing the cash just like Wall Street traders, competitors, opportunist patent trolls, nobody internet domain holders, governments and such. Difference is they eat their own flesh, makes them worse than the others as I see it. Besides, who thinks that shareholders are smart about business operations and strategy? Other than their selfish selves. I call conflict of interests.

      1. Nice article. But I would assume that most people who invest understood this to begin with. The board has a responsibility to manage the company in the best interest of the shareholders. If shareholders feel that the company is amassing too much cash they can let that be known. That has been voiced by many people for a long time. Certainly long before Einhorn. Is simply the loudest. I have no problem with him attempting to sue if in the end it puts some of that cash to work.

        1. I do. You are assuming that cash isn’t being pit to work because you have no idea what Apple has planned for the future and what level of cash assets will be required for it.

          You assume without knowledge. That makes you what we like to call an Analist.

    1. Many of us shareholders think Apple is representing our interests just fine.

      Hoard that cash if you can use it strategically, or just have peace of mind making big gambles.

      1. My main concern is the volatility of Apple shares. Even if the cash is put to better use, will it decrease the volatility? When Apple was $700, I wouldn’t have been concerned at all if it dropped to $600, but when it collapsed closer to $400 merely because of slightly lowered margins, it really shocked me. So basically I’d like to see that cash used to stop that huge volatility, if possible.

        Google is able to hold its share price at a relatively stable position so why should Apple have 38% swings. It may have nothing to do with how Apple is being run at all, but I’m still concerned because I can’t figure out Apple’s value with such wide swings. Is it a $450 stock or a $700 stock?

        1. @ LB48,
          I agree that the volatility of the stock is a worry. But its not Apple that makes it volatile, its Market manipulators that want that quick cash, (kill the golden goose and move on to the next one).

          The best was for Apple stock to get back on track is to stand strong, make even more money, and bring out the next best thing. I would like them to bring out a well conducted PR campaign which shows greedy people trying to kill the golden goose to get the cash type thing. Show Apple bring jobs back. Show Apples long term plan of a super easy to use living room, work place that just works.

          Just an idea.

        2. Apple has the volume and volatility that traders love. GOOG trades only 10% of Apple volume. Gotta beleive the MMs are going to “correct” GOOG by April. The moto millstone will eventually result in a big write down.

        3. The volatility of Apple shares is a value added feature. Embrace the volatility. Here is an analogy. When the Microsoft dinosaurs ruled with DOS, Apple was considered a toy with it’s cutie graphic interface.

          Since that time the stock has pretty well outperformed most other stocks on the planet both in growths and dives.
          Apple stock climbs and descents aren’t like little hills and fast roller coaster rides. They are mountain style ups and downs so you better pack well, and embrace the volatility.

          In a nutshell: If you are looking for a stock that has little or no volatility, Apple is not the stock for you.

          There have been lots of times when Apple stock was diving like it is now. Most businesses owe their soul to the company store whereas Apple operates well in the black. You have no idea how much this upsets the company store and to what lengths they go out of their way to trash it. This is part of what creates the volatility and I welcome it.

            1. Thank you for sharing your sentiments. I certainly enjoy the diversity of the views of the MDN community and more than once I have reflected on what has been said, challenged my beliefs and changed them. This of course fits with the climbing the mountain analogy and as you put it, a single piton failure can be catastrophic, unless you plan for it. You darn well better because it will happen.

              I’ve been following the stock a bit more than usual recently and certainly the drop sort of stunned me at first, but then I calmed myself down and remembered that it’s happened before. Having others from this website echo that certainly sentiment has helped.

              Sure it’s dropped from ~ $700 to close to a tad under $450, but now it’s climbing back. It might take a while for it to get back to $700 but I play the long game, and it’s been very profitable for me so far.


    2. @WOW,
      Sorry, have to disagree. Wall Street stock holders are not investors, they are speculators. They would be totally happy to KILL THE GOLDEN GOOSE to get a couple of quick golden eggs.
      Then they are on to the next goose. Scr*w you. /s

      As an investor, I want to see a strong Apple, not one that is run like Amazon (ready to blow up and run out of cash) or Microsoft (messing over its investors to do power plays) or other normal scr*wed up companies that are run poorly. Just because Wall Street cannot understand Apple, they would like to kill it for the cash…. Move on.

      I like to think different. Its the way you move forward, not sit in the mud with the rest of the kids.

      Just a thought.

  1. “I think people have been worried about the accumulation of cash.”

    For that read – Short term speculators are desperate to get their hands on that cash. Long term investors are quite happy about Apple having a significant strategic cash reserve.

  2. “Apple’s cash is ‘shareholders’ cash”

    If that’s the case, why isn’t LEGALLY MANDATED for every publicly-traded company to issue a dividend? They need to stop their bitching and just deal with the fact that their gamble isn’t currently paying off. Or maybe they should be investors rather than gamblers and go long on AAPL.

  3. Apple’s responsibility to the shareholders are twofold:

    1. Honesty in reporting their financial results
    2. Running the business the best way they know how, and making a profit.

    Otherwise, they owe nothing to the shareholders

  4. A company’s cash and debt are it’s own. Only in the case of liquidation are shareholders in line to get some money. This trader is just another short term speculator drooling at the idea he could intimidate the company to give him some cash.

    The duty of the company is to use or keep this cash for the good of the shareholders and the company.

  5. Haverty is wrong, unless he’s talking about a dissolution or a wind up of the company. Anyone pushing for that? Know also that if that were to happen, shareholders are the lowest on the list if creditors having a right to the cash.

  6. Greed greed ,investors are bloodsuckers they put in a few thousand and expect millions in return ,apple doesn’t need investors money period ,take the company private

    1. Yes greed. But you are describing speculators, not investors.

      And that difference makes all the difference. speculators are in it for the quick buck. Investors want a strong and vibrant company for the long term.

      Just a thought,

  7. The Lawsuit strikes me as spurious. Apple’s shares dropped after it reported its best quarterly results of any company in history. Give me a break. Wall Street manipulates Apple stock and then sues when the stock price drops?

  8. It’s quite simple, the brokers and fund managers want the money. If Apple spend it on buy backs or dividends then it become liquidity for the market. They are greedy and will do anything to get their hands on some of the action.
    It’s quite amazing how shameless they are given all the shit that the finance and stock sector has created in the last 15 years. First the dot com bubble burst and then the credit crunch.

  9. It seems that everyone on TV knows how to run Apple better than Apple. Every move that they see Apple make is the wrong one. Apple is a failed company in their eyes.

    Could all these pundits be right? Should all companies be the huge ‘failure’ that Apple is?

  10. Both yea and no.
    Own a share and you own the cash. And. You can’t claim you own all the cash if you don’t own all the shares. It’s funny to see how a few people are talking for all of Apple’s shareholders. I think that these cry babies should sell their stock and buy some of Google or Samsung. Why would Apple want to distribute cash to someone that does not seem to want to own the shares. It’s not like the cash will evaporate if not used. Apple will find some use for some of it and keep the rest for a rainy day. I think these big shots are too greedy, I really don’t think this is the kind of share holder Apple wants.

    Also. I know that the company’s cash is the shareholders cash but its still amusing to see people buy some shares and then claim some magical right to Apple’s cash. It’s not like you give the company money when you buy a share. It doesn’t help the company. So why some people claim their “right” to the cash is amusing and stupid frankly. It’s not like their purchase of Apple stock helped Apple make the money you now are claiming.

    Apple should get harder against these “know it alls”. Send out a press release telling them if they don’t like Apple they can sell their stock and go else where and stop be so greedy. In those words, yes.

    1. First, “The cash is the shareholders’ cash.” in a word BULLSHIT.

      The company’s cash (any company’s cash) is the company’s cash. It is NOT the shareholder’s cash. Never has been. Never will be. Under U.S. Law the company is a “person”, and the company’s cash belongs to that person — not the shareholders.

      The ONLY way a fraction (yes, a fraction) of the company’s cash goes to the shareholders is if a) the company does dividends (and even then it is not directly tied to cash as there are companies that have nearly zero cash holdings that give dividends) or b) if the company is dissolved and the residual (yes, residual) cash is distributed among the shareholders.

      There is no other way that a shareholder has direct rights to *any* of a company’s cash.

      So, KarlV, there is no “Both yea and no”. The answer is a very, very succinct, “NO!” There can be no other answer.

      This idiot is just trying to rattle some cages hoping Apple will panic and set up a system whereby he makes more short term money — and if he has his way, people with a specific kind of preferred stock like he wants get a perpetual, advantageous to him, dividend above and beyond that dividend provided to the common stock holders.

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