Greenlight’s Einhorn sues Apple, ‘dissatisfied with capital allocation strategy’

Here come the lawsuits.

“Fund manager David Einhorn’s Greenlight Capital on Thursday said it has sued Apple Inc and said the company needs to do more to unlock value for shareholders,” Reuters reports. “Einhorn said Greenlight filed suit in federal court in New York to force Apple to modify a proposal on its proxy [No. 2], which Greenlight believes does not conform to regulatory rules.”

Apple Inc. 2013 Annual Meeting of Shareholders (February 27, 2013, 9:00 a.m. Pacific Standard Time)

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.

Reuters reports, “In a filing with the U.S. Securities and Exchange Commission, Greenlight said it was ‘dissatisfied with Apple’s capital allocation strategy.'”

Full article here.

“Cash-rich technology giant Apple needs to find a way to distribute its cash to shareholders, instead of sticking to the Depression-like mentality that prompts the company to hoard equity, fund manager David Einhorn told CNBC on Thursday,” Javier E. David reports for CNBC.

“‘In an interview on “Squawk Box,”Greenlight Capital’s founder defended his decision to file suit against Apple over a proposal to eliminate preferred stock. Einhorn urged shareholders to vote against the proxy, branding Apple’s tactics as symptomatic of someone who has suffered through a trauma,'” David reports. “‘Apple is a phenomenal company filled with talented people creating iconic products that consumers around the world love,’ Einhorn said. ‘But Apple has a problem, we think. It has a cash problem.'”

David reports, “Likening the company’s behavior to his grandmother’s hoarding of money, Einhorn said Apple is acting like ‘someone who’s gone through traumas … they sometimes feel they can never have cash.’ …Einhorn said that he understood Apple’s impulse to keep cash in the event of a rainy day, and its need for ‘strategic flexibility and comfort money.’ However, he added, ‘at the same time shareholders can receive the value that is embedded in the balance sheet.'”

Read more in the full article here.

The Associated Press reports, “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.”

Read more in the full article here.

Related articles:
Greenlight Capital urges Apple shareholders to vote ‘No’ on proposal 2 that would impede Apple’s ability to unlock shareholder value – February 7, 2013
Greenlight’s Einhorn: Apple ‘the best big growth company’; Fed stimulus ‘counterproductive’ – July 10, 2012
David Einhorn says Apple isn’t a below-average company, it’s just priced like one – May 30, 2012


    1. The shareholders think they have the rights to sue Apple when things are getting tough but when the cards change in their favor they quickly shut their trap! This is so typical of them just grow up already stock holders, what part of gambling do you not understand? LoL

      PS: Apple is not in this market to just make you money! LoL

      1. Just a thought. Why do people invest in Apple? Is it to make money? Or is there some other reason that I can’t think of? And shareholders are not supposed to have an opinion about their investment in a company? And they should shut up and never express an opinion about their investment?

  1. Kinda have to agree with Einhorn..lawsuits are stupid tho.

    Apple rewards executives with millions, shareholders are entitled to some juice too, what on earth does Apple need over 100 billion in cash anyhow?? Just does not make any sense whatsoever, get that money moving ASAP.

    1. All my life I was taught to save. The political arguments in this country revolve around “spending” and yet the robber barons are aghast that Apple isn’t giving away or spending their money. Amazing insight into the Wall street entitlement mentality. Is it any wonder these frat boys wipe out people’s retirement accounts with their gambling ways..

      This is nothing more than a greedy attempt to raid Apple’s bank accounts. Cook already announced a dividend, something Apple used to NEVER do. Not sure how you justify buying a stock and then expect to get into the cash horde that was building long before you owned stock.

      Maybe Apple is saving to buy AT&T? Maybe they are going to build a few dozen new factories? Maybe new data centers. Who knows, we know Apple does not announce their plans.
      I own 200 shares, I have no right to Apples saved cash IMO.

  2. It is always entertaining to watch someone who has never run a major electronics company give advice to someone who runs the most successful electronics company in the world. Apple has a lot of cash, and the greed of the short term owners (including Einhorn) is now showing. Apple might get to be a six hundred billion dollar annual revenue company in the next few years. They are developing a major manufacturing facility in Brazil. They are continuing to move into the China market, with a major expansion of retail stores, icloud facilities, and additional manufacturing facilities. They are replacing Samsung as a major supplier. Which means more money to run the company.

    Learn to think BIG. And when Apple gives bonuses to executives, I believe those are paid with restricted shares, and not cash. The current cash position did not require us, the current shareholders, to do anything. I have profits in the millions and I have not done anything like work to get that.

    If you don’t like the way they run the company, then sell your stock. I’m keeping mine and I expect to have spectacular buying power in a few years, also accumulated without doing anything like work. I’m going to go now. I need to preview a few BIG HOUSES, and maybe a Rolls Royce for my trips to the mail box. Getting really rich requires real patience.

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      Johnny-come-lately Einhorn is a public company’s worse nightmare. This guy doesn’t care a whit about Apple or the products it makes. He cares only about share price and dividends. This is the kind of investor that cripples companies.

  3. If cash is a problem, it’s the kind of problem I’m glad Apple has.

    And this notion of a trauma? Yes. Apple experienced a trauma. In the 90s they were almost sunk by internal stupidity and external panic. So keep that big pile of cash under your mattress Mr. Cook, if it helps you plan and stay flexible. And hoard some more if you’re planning something bold.

    The team at Apple has done so much for us (customers, shareholders) with so little. They’re the only people I trust to pilot this ship.

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