market folly

David Einhorn's hedge fund Greenlight Capital submitted a notice of exempt solicitation today via the SEC where they urged Apple (AAPL) shareholders to vote against proposal 2 at the company's annual meeting on February 27th.

The main reason for this?  Einhorn wants to see Apple issue perpetual preferred securities, a concept we highlighted via that link.

In the statement, Einhorn says that,

"We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders.  Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple’s existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple’s financial resources to pursue its business strategy."

Greenlight sees this as a way to improve Apple's poor capital allocation policy.  After all, the company has around $137 billion in cash (or $145 per share).

While Apple has started paying a dividend and initiated a 'nominal share repurchase program,' Einhorn still feels there's more room for improvement.

As such, Einhorn calls for AAPL shareholders to vote against proposal 2.  We'll have to wait and see if his call to action is successful.  The full statement can be found via the SEC.