Greenlight Company Presentation

The Market Rewards Good Stewardship Friends... and Frenemies 2013 P/E Multiples, Net of Cash 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x TXN Greenlight Capital, Inc. IBM GOOG EMC CSCO Friends of shareholders Frenemies of shareholders MSFT AAPL DELL 12 Though one can find convenient examples for buybacks and dividends being bad for the share price, failing to return excess cash in the face of a low multiple usually depresses share price and valuations further. IBM and Texas Instruments are considered shareholder friendly and are rewarded for their behavior. You can see that they have better P/E multiples net of cash despite expected earnings growth rates comparable to peers with excessive cash balances. IBM is a mature business with little to no revenue growth, is dependent on acquisitions and has debt on its balance sheet. Even so, because it is seen as shareholder friendly through continued reductions in the share count, it trades at a premium multiple and even attracted Warren Buffett. IBM gets a higher value, in part, because it cares about its shareholders. In contrast, cash-rich balance sheets have led to poor P/E multiples. And then we have the story of Dell, which has the lowest P/E of all. 12

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