Major Investor Greenlight Capital Sues Apple Over Preferred Stock

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Apple gets suedNEW YORK -- Greenlight Capital is suing Apple (AAPL) in federal court in New York over attempts to eliminate preferred stock at the world's most valuable company.

David Einhorn, who heads Greenlight, said Thursday that the proposal would restrict the ability of Apple's board to unlock shareholder value. Some investors have been pushing Apple to do more with its enormous pile of cash -- $137 billion and growing.

The company started paying a dividend last year, but at $2.65 per share, it doesn't measure up to other companies with similar cash reserves. Apple has also started to repurchase some of its shares, but Greenlight and others say it should be pushing its cash in another direction.

Greenlight, a shareholder since 2010 with 1.3 million Apple shares, said it is dissatisfied with the way the company allocates capital. Einhorn said his firm has been talking with Apple over the past several months about the creation of new preferred stock that would be distributed to Apple shareholders.Apple, he said, rejected the idea in September.

A representative for Apple could not immediately be reached for comment early Thursday.

In a letter to Apple shareholders, Greenlight called Apple a "phenomenal company filled with talented people creating iconic products that consumers around the world love." But it said the company has an "obligation to examine all options to create and unlock additional value."

Apple, Greenlight continued, "has $145 per share of cash on its balance sheet. As a shareholder, this is your money."

Shares of Apple, based in Cupertino, Calif., rose $3.59 to $458.29 in morning trading amid a broader market decline.


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PCMyrs

These greedy Hedge Fund guys are the ones that brought the house down. They are short sighted, short-termist and above all scavengers on the investment community. Hope he loses big time.

February 08 2013 at 8:35 AM Report abuse rate up rate down Reply
jlf

iguess he wants his share of the booty.. i am glad he does not have shares in berkshire hathaway.

February 07 2013 at 4:59 PM Report abuse rate up rate down Reply
mclockhart

If you are unhappy with how the company is run, sell your shares. This lawsuit crap just distracts management from what it should be doing. Apple shareholders should be suing Einhorn for his distractions.

February 07 2013 at 2:42 PM Report abuse -3 rate up rate down Reply
1 reply to mclockhart's comment
itacurubi

While I don't think that there is much merit in the case at hand, if a shareholder believes that management has taken actions which result in the market undervaluing his shares, then it hardly seems that the solution would be to sell those shares at that undervalued price.

February 07 2013 at 4:15 PM Report abuse rate up rate down Reply
jdykbpl45

Right on!

February 07 2013 at 1:16 PM Report abuse +1 rate up rate down Reply
jdykbpl45

Right on!

February 07 2013 at 1:15 PM Report abuse +1 rate up rate down Reply
jdykbpl45

Right on!

February 07 2013 at 1:15 PM Report abuse +1 rate up rate down Reply
jdykbpl45

Right on!

February 07 2013 at 1:15 PM Report abuse +1 rate up rate down Reply