Egged on by the famous investor Carl Icahn, Apple Inc. (AAPL) has been buying back its own shares vigorously – which, according to a statement earlier today from Egan-Jones Ratings Co., is a mistake.
The independent ratings and analysis firm, established in 1995, urged shareholders to vote against the buyback plan later this month. A shareholders’ meeting is scheduled by the Cupertino-based corporation on February 28th, and the fate of the buyback program is slated to be one of the most important matters up for decision.
Mr. Icahn’s latest proposal, which is the specific measure that will be up for voting at the Apple Inc. (AAPL) meeting, is for a massive purchase of $50 billion worth of stock by the technology firm. The billionaire investor has even opened a website called the “Shareholders’ Square Table,” a name based on the Knights of the Round Table, in an effort to persuade other holders of his preferred stocks to follow his lead. Egan-Jones crisply dismisses Mr. Icahn’s scheme, stating that the firm’s commitment to giving back capital to shareholders has already been amply demonstrated without the proposed outflow of cash.
Egan-Jones claims a high rate of accuracy in their forecasts and advice. Comparing their “hits” and “misses,” their ability to foretell outcomes has ranged from 93 percent in 2012 to 97 percent in 2001 and 2006, according to data tabulated on their website. The firm utilizes objective, scientific statistical analysis to derive its conclusions, shunning the influence of the companies it analyzes and the frequently hysterical emotionalism of ordinary stock traders at the same time.
Egan-Jones is one of three chief proxy advisory companies, the other two being MSCI/Institutional Shareholder Services, Inc., and Glass Lewis & Co., LLC. Though these noted firms have not yet weighed in on Mr. Icahn’s proposal, they have sided against his plans in the recent past on other issues in regard to different companies.
For his part, Mr. Icahn asserts that his proposal’s main purpose is to create “real corporate democracy,” and advocates his position passionately both on his website and in personal statements. However, in light of the fact that he possesses at least $1 billion worth of Apple Inc. (AAPL) shares, it could also be argued that the activist investor, despite his talk of democracy, believes that some shareholders are more equal than others.
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