In an attempt to rally Apple stockholders behind his him, Greenlight Capital Inc. founder David Einhorn detailed his plan for the Cupertino company to issue a new type of stock that he says will return more cash to the shareholders.
The remarks, made in an unusual public conference call, attempted to paint the novel preferred stock—which he refers to as “iPrefs”—as reasonable and appealing to fixed-income investors.
“It is not complicated. It is merely unfamiliar,” he said.
Einhorn wants Apple to start by distributing $47 billion in iPrefs, saying it would help attract new types of investors. Each preferred share would result in a 50 cents per quarter dividend indefinitely. “For savers across the country there is a desperate need for this,” said Einhorn.
Einhorn says that by his calculations, the plan would unlock up to $250 per share in value, saying that while common stock would drop in price, the preferred stock would offset that and add additional value. The stock and iPref combined would be worth $480 per share. Apple shares were trading at $447 a share in late-day trading on Thursday.
“While Apple wants to keep its cake, shareholders get to eat it too,” he said.
Einhorn first approached Apple about the idea in May. He said he was looking forward to talking to Apple, which has said it would consider the plan, soon.
He also urged shareholders to vote against a measure Apple has place on the ballot that he says would make it harder for the company to adopt his plan. Earlier this month, Greenlight sued to stop the vote on Apple’s proposal, which would require the company to get shareholder support before issuing preferred stock.
The complaint charges that Apple has improperly “bundled” the proposal with others that it wants to put to a shareholder vote on February 27th.
Several Apple shareholders, including the nation’s largest public pension fund, have aligned themselves with Apple on the proposal.