Greenlight Capital Sues Apple Citing Tight Grip on Money

David Einhorn says Apple needs to unlock value for shareholders

Greenlight Capital has sued Apple Inc. in a federal court in New York to force the company to modify a proposal on its proxy statement, saying that the Mac maker needs to do more to unlock value for shareholders, according to Reuters.

Fund manager David Einhorn told reporters, “We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders.”

“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 says his firm is “dissatisfied with Apple’s capital allocation strategy,” adding that the Cupertino tech giant needs to find a way to distribute its cash back to shareholders.

The fund manager went as far as to compare Apple to his grandma, “acting like ‘someone who’s gone through traumas … they sometimes feel they can never have cash.”

Forbes reports that investors will be able to repel or agree with the proposal at Apple’s shareholder meeting at the end of this month.

Apple’s 2013 Annual Meeting of Shareholders will be held February 27, 2013, 9:00 a.m. Pacific Standard Time.

The proxy in question is reproduced below.

“2. To amend the Company’s Restated Articles of Incorporation to (i) eliminate certain language relating to the term of office of directors in order to facilitate the adoption of majority voting for the election of directors, (ii) eliminate “blank check” preferred stock, (iii) establish a par value for the Company’s common stock of $0.00001 per share and (iv) make other conforming changes as described in more detail in the Proxy Statement.”

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