Apple Inc. (NASDAQ:AAPL)’s annual shareholder meeting is scheduled for February 28. That’s when shareholders will be voting on billionaire investor Carl Icahn’s much-talked about $50 billion share buyback proposal. But Apple’s two large investors are waging a heated fight over what the tech giant should do with its $158 billion cash pile.
CalPERS urges investors to back Apple
Carl Icahn has a $3.6 billion position in Apple Inc. (NASDAQ:AAPL), and he has been quite vocal about his investments in the world’s most valuable company. On the other hand, pension fund California Public Employees’ Retirement System or CalPERS owns $1.6 billion worth of Apple stock. Anne Simpson, the senior portfolio manager at CalPERS, has gone against Carl Icahn’s proposal to spend $50 billion on stock buyback.
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In an interview with CNBC, Simpson said that an investor with a short-term agenda like Carl Icahn should not press the board of Apple Inc. (NASDAQ:AAPL), which is a very big company with a long-term future. She said long-term investors should back Apple in a sensible and rational way. Long-term investors like CalPERS don’t want the tech giant to be distracted by short-term noise. Apple board has urged shareholders to vote against Carl Icahn’s proposal. The Cupertino-based iPhone maker has already announced to return $100 billion to shareholders through 2015 in the form of share buyback and dividends. As of December 2013, Apple has already returned more than $43 billion.
In response, Carl Icahn said Simpson is simply misguided. He said he is surprised to see Anne Simpson’s stance against improving corporate governance in the United States. Icahn doesn’t appreciate Simpson’s view that he is a small and short-term investor. He has made several long-term investments. For example, Carl Icahn has owned Federal-Mogul Corp (NASDAQ:FDML) shares since 2001 and Biogen Idec Inc (NASDAQ:BIIB) since 2007. However, his style of buying a big chunk of a company’s stock and then putting pressure on its board to boost shareholder value has come under criticism. Long-term investors argue that Icahn’s style is detrimental to the long-term value of a company.
At the end of the day, the name of the game in the investment industry is returns. Carl Icahn’s firm has given an annual return of 26.6% over the past ten years, compared to just 7.1% of CalPERS.
Apple Inc. (NASDAQ:AAPL) shares were up 0.29% to $511 at 10:13 AM EST.