(Updated from 9:58 a.m. EST to provide CalPERS comments regarding the vote in the 10th paragraph.)
Hedge fund manager David Einhorn has been a noted Apple bull in the past, but now he's asking shareholders to fight against the company. He's put out a letter asking shareholders to vote against Apple's proposal to do away with preferred stock, which he says restricts "the Board's ability to unlock the value on Apple's balance sheet."
Einhorn first mentioned this topic in May 2012 at an investment conference. He gave a solution that could eventually cause Apple to rise 62% (from May prices), where the company would offer perpetual preferred stock at a dividend rate of 4% to 6%.Apple could not be immediately reached for comment for this story. "We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders," said the Greenlight Capital president in the letter. "Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple's existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple's financial resources to pursue its business strategy." Einhorn took to CNBC this morning to further push his case. "Apple has gone through a couple traumas," he said. "It has a mentality of depression. Apple seems to feel like it can never have enough cash. We've come up with a solution where Apple can maintain its cash, and at the same time, shareholders can reap the value of its balance sheet." "We own more Apple today than we ever have," Einhorn said when asked if he still has a large position in the tech giant. Einhorn's most recent 13F showed that he trimmed some of his Apple stake, but a recent investor letter noted that Einhorn and his fund "used the lower prices as an opportunity to repurchase the shares we sold in the third quarter."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV