Daniel Loeb: Fanuc Corp. Should Use Cash Hoard for Buybacks

Feb 20 2015 | 1:25am ET

Activist investor Daniel Loeb says that Fanuc Corp.’s plans to boost capital spending are not a suitable alternative to addressing the company’s "blatant capital inefficiency."

This week, the company said it planned to boost investment in a new factory to 100 billion yen ($844 million). However, Loeb would like to see that money allocated elsewhere. 

Loeb is pushing for the Japanese industrial robot maker to allocate up to $8.5 billion of its cash for buybacks. "We like that Fanuc is investing and expanding capacity," Loeb told Reuters this week. "But we take great issue with the inefficient balance sheet."

In an interview with Reuters, the founder of hedge fund Third Point, discussed his firm’s stake in the company and called its shares “significantly undervalued today.” 

Last week, Loeb disclosed his stake and wrote a letter to the company, calling on it to embrace economic changes under Shinzo Abe and Western-style corporate governance that centers on responsibility to shareholders.

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