| BOSTON, March 31
BOSTON, March 31 Investors have given
billionaire hedge fund manager David Einhorn's plan to boost
General Motors Co's value a frosty reception with most
surveyed saying his call for two types of shares would not raise
the automaker's worth, according to an Evercore ISI poll.
Einhorn, who runs hedge fund Greenlight Capital, this week
proposed that GM create two classes of stock, one that pays a
dividend and one that does not, to boost the No. 1 U.S.
carmaker's languishing share price. More investors would buy the
shares, helping boost the company's market capitalization,
But 53 out of 61 investors surveyed by investment banking
advisory firm Evercore ISI said they did not believe
Greenlight's proposal would lead to value accretion at GM. In
fact, a significant majority of investors polled - 48 people, or
80 percent - said Einhorn's plan could jeopardize the company's
credit rating. Of the investors surveyed, 34 percent were GM
Greenlight on Friday called the survey "fundamentally
flawed" and through a spokesman said it failed to understand the
firm's plan to unlock value at GM.
GM rejected Einhorn's plan, saying it had reviewed it for
seven months but considered it too risky.
Evercore ISI is working for GM and surveyed investors after
Einhorn, whose Greenlight Capital has owned GM shares on and off
for five years and currently owns a 0.9 percent stake, made his
plan public on Tuesday.
Now Einhorn is taking his plan to GM shareholders more
broadly through a proxy contest where he hopes to win seats on
the board. Investors will vote on board members at the upcoming
annual meeting and Einhorn would need to quickly mobilize many
large owners to agree with his proposal in order to win enough
votes for his slate.
While a number of investors in Einhorn's own fund have
applauded him for coming up with this novel approach, no major
GM shareholder has yet publicly thrown their weight behind the
Warren Buffett's Berkshire Hathaway Inc, which is
GM's sixth largest investor with a 3.34 percent stake, has
remained silent about Einhorn's proposal. Greenlight Capital is
the 17th largest investor.
Nearly all those polled, or 93 percent of investors, said
they were satisfied with GM management's plan to return some $7
billion to shareholders this year, through share buy backs worth
$5 billion and $2.2 billion in dividend payouts.
GM's stock is currently trading at $35.46 and it pays an
annual dividend of $1.52 per share.
(Additional reporting by Nick Carey; Editing by Andrew Hay)