Greenlight Company Presentation
Large On-Going Share Repurchases
Lower Share Count Drives Accelerated Earnings Growth
Net income before repurchases
Shares outstanding before repurchase
EPS before repurchase
Repurchases
Average repurchase price per share
Shares repurchased (millions)
% Outstanding shares
Pro forma net income
Pro forma shares outstanding (millions)
Pro forma EPS
% Accretion
Greenlight Capital, Inc.
2013
$42.5 B
945
$45
$16.7 B
$525
32
3%
$42.5 B
913
$47
3%
2014
$48.5 B
945
$51
$39.5 B
$604
65
7%
$46.8 B
848
$55
8%
2015
$ 52.8 B
945
$56
$38.0 B
$694
55
6%
$45.8 B
793
$58
3%
25
We think that announcing a program of repurchasing stock with all future free cash flow would unlock
value. It would signal a more shareholder-friendly capital allocation, faster earnings growth, and
confidence in the business.
Calculating the value is harder, because it is sensitive to the share price assumption. Unless Apple's
valuation expands dramatically - which would be a good problem - Apple should be able to buy back
about 6% of its shares each year in this case.
We think Apple shares would immediately re-rate by 10-20%, as the market would price in a lower
share count and higher earnings in 2015. While the EPS accretion would lag the share reduction due
to the higher tax rate, we would expect some multiple expansion on the fully taxed earnings in
reaction to the more shareholder-friendly policy.
We assume an immediate 17% stock price bump followed by 15% annual appreciation. For the
purpose of calculating comparisons to other ideas, we estimate that this plan will immediately unlock
about $75 per share with more to come.
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