Why hedge fund billionaire David Einhorn is suing Apple

Feb 8, 2013

Shareholder accuses company of 'acting like his grandmother' for stockpiling $137bn in cash

David Einhorn

A HEDGE fund billionaire is suing Apple in an effort to force the tech giant to return more of its $137bn stockpile to shareholders. David Einhorn’s Greenlight Capital hedge fund owns $1.3m Apple shares – more than the company’s CEO Tim Cook, AP notes.

But Apple, which has a cash pile that is only £3.7m shy of New Zealand’s GDP, has described Einhorn's move as misguided, Reuters reports.

As well as the lawsuit, Einhorn has written an open letter to his fellow shareholders saying: "Apple has $145 per share of cash on its balance sheet. As a shareholder, this is your money."

The influential investor told CNBC the company was acting like his grandmother, Roz, a woman scarred by the Great Depression. "She wanted to hoard money," he said. "She would not leave me a message on my answering machine because she did not want to be charged for a phone call." He added that Apple was "traumatised" like his grandmother.

Einhorn wants the company to return money to shareholders by giving away perpetual preferred stock – a type of share which pays a dividend over time but does not offer the shareholder any voting rights - with a four per cent annual cash dividend.

Einhorn claims Apple are trying to eliminate the ability for shareholders to own perpetual preferred stock, a move that Apple has denied. Einhorn had previously held private discussions with the company’s chief financial officer Peter Oppenheimer and CEO Tim Cook about returning cash to shareholders.

Analyst Toni Sacconaghi said there was a "widespread belief" in the financial world that Apple should be "more aggressive" in retuning cash to shareholders.

As the BBC reports, Einhorn has a track record of activism. In 2011, he urged Microsoft Corp chief executive Steve Ballmer to step down, accusing him of being "stuck in the past" as Microsoft fell behind both Apple and IBM in market value.

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