Greenlight Capital Wants Apple To Start Selling ‘iPref’ Stock


The sage between prominent Greenlight Capital investor David Einhorn and Apple continues.
The sage between prominent Greenlight Capital investor David Einhorn and Apple continues.

If you’ve been up on your Apple news the past few months, then you’ve probably heard about a “silly sideshow” that been going on about Apple’s stock. Basically, Greenlight Capital isn’t happy with the amount of cash their getting back on their investment in Apple, while Apple has been hoarding all their cash.

Hoping to convince Apple to give shareholders some of their cash, Greenlight Capitals found, David Einhorn, has a concocted a plan that would have Apple selling “iPref” stock to investors who want to eat Apple’s cake.

In an unusual public conference call this afternoon, Einhorn said that Apple should distribute $47 billion in preferred stock to fixed-income investors, and call it iPrefs. The iPrefs shares would issue 50 cents per quarter in dividends indefinitely so that investors can get higher yields out of Apple’s stock.

“It is not complicated. It is merely unfamiliar,” Einhorn said. “For savers across the country there is a desperate need for this. “While Apple wants to keep its cake, shareholders get to eat it too.”

That keeping the cake and eating it too analogy really doesn’t work, because once investors eat all the cake, there’s nothing left for Apple to hold onto. But it sounds nice while Apple still has over $100 billion in cash.

Einhorn says that his plan makes sense because even though Apple’s common stock is going to drop in price – thanks to his proposed $0.50 quarterly dividend – the iPrefs stock will offset that drop and add additional value.

The common stock and iPref stock would be worth $480 per share today, while Apple’s shares are only trading at $447 shares today on their current model.

Einhorn says he told Apple about this idea back in May, and that they’re going to consider it really soon, but after Tim Cook’s recent comments that Einhorn’s lawsuit is a “silly sideshow,” we have our doubts that Apple will be receptive to his proposal.

Source: Wall Street Journal


  • Angeluskarl

    if he’s not happy with his return… sell up dude! bloody investors like this get on my nerves.

  • Angeluskarl

    also why invest if you do not know the way the shares will pay out?? you cannot expect a company to change their dividend structure because you aren’t happy. if einhorn didnt do his research and he’s seen as a major investment player… ROOKY ERROR DUDE

  • dustin91

    I found out that there is a point where Apple cannot have so much in cash – over a certain ratio of cash holdings to total business, the government can consider Apple to be an investment house, subject to a whole new set of regulations in which Apple would want no part. So Cook and the board probably do see this looming over the horizon and will have to act accordingly soon. It won’t be pandering to Einhorn, but it may have the same effect.