Apple loss to Einhorn ups pressure for AAPL shareholder payout

“Apple Inc. is under pressure to return more of its cash hoard to investors after David Einhorn’s Greenlight Capital Inc. persuaded a judge to block a vote on whether to limit creation of preferred shares,” Christie Smythe, Patricia Hurtado and Adam Satariano report for Bloomberg.

“U.S. District Judge Richard Sullivan in Manhattan [on Friday] granted Greenlight’s request to stop a Feb. 27 vote that would require shareholder approval before the company could issue a new class of preferred shares,” Smythe, Hurtado and Satariano report. “Following the ruling, Apple said it would pull the proposal from its shareholder meeting.”

Smythe, Hurtado and Satariano report, “Einhorn has used the lawsuit to drum up support among fellow investors to get Apple to return some of its $137.1 billion in cash and investments back to shareholders. ‘It’s a shame that you have to go through the legal system, but we’re happy that there is a real message being sent to management that they should consider an alternative strategy’ for the cash, said Keith Goddard, president of Capital Advisors Inc., an Apple investor who supported Einhorn’s lawsuit.”

Read more in the full article here.

21 Comments

    1. Same here.

      I very strongly oppose Einhorn’s proposal. I’m a long term investor in Apple and believe that Apple would be foolish to do what Einhorn is suggesting.

      We have already seen that once Apple returns some cash to shareholders in the form of a dividend, certain investors then demand even more and they won’t be satisfied until they have squeezed every drop out of Apple.

      If he doesn’t like the way Apple deals with it’s cash, he has the option of selling up, getting out and finding a better home for his clients’ money. I don’t want Apple’s resources wasted on pointless diversions like this, there are more important things to get on with.

      Apple is a creative and innovative company, it generates immense wealth. Hedge fund managers are merely parasites living off the back of other’s achievements.

    2. Agreed, silverhawk1. If Apple management decides that an increased dividend, special dividend, or preferred shares are the right answer, then we can talk. But I do not want them to take action in response to being Einhorned, nor do I expect them to do so. Steve would not have done that, and neither will Cook.

      Einhorn had two objectives with his lawsuit. The first was publicity. He succeeded in getting this issue in front of media, and he won an overhyped lawsuit on a technicality. The second was to block the requirement for shareholder approval to issue preferred shares. Why? Because it is generally difficult to obtain shareholder approval for proposals that are opposed by the corporate Board of Directors. Einhorn wants to retain the ability of the BoD to issue preferred shares without shareholder approval. Einhorn may believe that Cook and company will cave in to his demands (the last time that I checked, over 70% of AAPL shares are owned by institutions). If the pressure is unsuccessful, then Einhorn may try to change the membership of the Apple BoD to elect directors that are more favorable to his financial ideas.

      I plan to watch Einhorn very carefully. In his blind pursuit of money, he could cause a lot of damage to the company.

  1. Apple is like Jobs. A stingy, anal retentive conceited company. Jobs probably buried his billions in the graveyard with him … never gave anything to anybody except maybe asshat Hussein. Now Apple can’t even give their shareholders a fair dividend. Hope Einhorn reams Apples ass out.

  2. Solution: Apple buys back all stocks so Wall Street can stop strong-arming the corporation in its attempt to liquidate the company.

    As if Wall Street had “earned” any of the money WE invested Apple over the years by buying awesome products!

    No wonder Steve Jobs refused to offer dividends. Tim Cook opened a can of worms.

  3. just because Einhorn won, the board doesn’t necessarily have to
    listen to him or propose anything regarding more payout. Einhorn
    is not with any Apple management or consultants. Any shareholder
    can be noisy, doesn’t mean he has his way. Either own enough for a
    board seat or own 51% of Apple. Einhorn should just go suck a
    lemon.

  4. Einhorn’s win is merely to stop the bundling that happened with their Proposal No. 2. It is still a side show. Now the real Einhorn circus will begin. Stay tuned to see how he sways investors to (as others and I have put it) kill the golden goose. This investor will not be swayed.

  5. Cook deciding to give dividends was not the problem. The problem is greedy, short term thinking dimwits like Einhorn and his ilk. This country would be far better off without money manipulators like him. As I said before, I find no redeeming value in his type. If he succeeds in his stupidity, history will show that it was the single event that crippled Apple’s ability to be as successful as they might have been. iCal that!

  6. The SEC shopd investigate Einhorn’s selling patterns. I would bet money that he trickle/ burst sells AAPL shares to create selling momentum and keep it falling while creating PR pressure, so that he can buy low for a killing.

  7. I guess I should have read the whole article before posting (I usually do).

    This is definitely not surprising, first he wants Apple’s Proposal No.2 split into separate components and then of course he wants that one component removed “Einhorn said that requiring investor approval for issuing preferred stock could create a “roadblock that was not needed” to his plan for sharing the value of the company’s cash with shareholders, according to a declaration filed by Apple Chief Financial Officer Peter Oppenheimer.”

    That’s not a roadblock it’s the ability of the investors to voice their concern instead of being manipulated by some hedge fund ANALyst.

    What is the risk he was talking about when he said that “he wanted to “take the risk away,” according to the filing.”

    The risk of putting it to a shareholder’s vote?
    The risk that there might be enough smart investors out there who can smell his manipulative ways a mile off?

    This is the kind of guy that belongs on Wall Street.

  8. Evil occurs when those who don’t agree with it stay silent. I’m not an Apple shareholder, but those who are, it’s time for you to get together and do something concrete to counter Einhorn rather than just cursing and swearing on MDN or other media.

    1. Remember the sign at the garage:

      1. Repairs x$ per hour.
      2. If you watch x$ + 5$ per hour.
      3. If you help x$ + 10$ per hour.

      1. I’ve put down my money because I have confidence in what Apple, Tim Cook and the Board can do. Doing nothing is sometimes the best approach (they also serve those who watch and wait).

      2. Being provided with a vote allows a say and if that should come to past discussion, including cursing and swearing on MDN and other media is something concrete that can assist investors who want to make an intelligent choice.

      3. There is likely more than one investor with deep pockets who might be willing to campaign on an alternative platform than Einhorn.

      My point is, evil occurs regardless of silence or not. Those that put Galileo away were certainly vocal. In fact there are those that believe that good and evil are separate kinds of entities. Then again there are those that believe that good and evil are opposite poles of the same entity and that trying to separate them is like removing the front of the door from the back of the door.

      Regardless the list that says where evil does not occur is probably just as long as the list where evil does not occur.

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