This Hedge Fund Is Pressuring GM to Split Its Stock

March 28, 2017, 3:33 PM UTC
Apple Urged By Einhorn To Return More Cash To Investors
Photograph by Bloomberg Bloomberg via Getty Images

David Einhorn’s hedge fund Greenlight Capital urged General Motors to split its common stock into two classes, a proposal that was swiftly rejected by the carmaker.

The company’s shares jumped 3.9% to $35.96 on Tuesday.

Greenlight Capital said the move would help the carmaker improve its financial flexibility and boost the stock’s value.

The plan would lower the company’s cost of capital and unlock between $13 billion and $38 billion of shareholder value, Greenlight Capital said.

“Our plan … would provide the company complete strategic flexibility without adding any default, refinancing, or balance sheet risk,” Einhorn said.

Greenlight Capital owned about 0.88% of General Motors’ shares as of Dec. 31, according to Reuters data.

GM said it expects to return about $7 billion in cash to shareholders in 2017, bringing total cash returns to about $25 billion since 2012.