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David Einhorn is taking his Apple cash fight to the public

Einhorn is ready to play. AP Photo / Bill Kostroun

This item has been updated.

Hedge fund manager David Einhorn of Greenlight Capital pointed out that Apple’s $137 billion cash stockpile is larger than the market capitalization of all but 17 companies on the S&P 500.

It’s one of the points Einhorn made as he takes his campaign to shake more cash out of Apple directly to the public. He’s hosting a conference call right now to argue why Apple should issue perpetual preferred stock to return some of its cash pile back to investors.

“It’s not complicated. It’s merely unfamiliar,” Einhorn said of his plan for perpetual preferred stock. He also called it “innovative.”

Einhorn has sued Apple to bar the company from enacting a shareholder proposal that he says will get rid of Apple’s ability to issue preferred shares, a claim the company disputes. A US District judge on the case said earlier this week that Greenlight has a likelihood of success. Shareholders are scheduled to vote on the measure on Feb. 27.

Although Apple CEO Tim Cook called the dispute with Einhorn a “silly sideshow,” Apple has said it is studying Einhorn’s proposal and is considering ways to return more cash to investors. Last year, it announced a plan to return $45 billion to shareholders over three years.

Investors have been grumbling about Apple’s lack of generosity to shareholders for years, but many didn’t see an opportunity to pressure the tech giant because it’s stock had been performing so well. That has changed over the last several months, with Apple stock falling by more than 35% since September amid intense competition with Samsung for tablets and mobile phones.

Not every Apple shareholder is on board with Einhorn’s plans. The largest US pension fund, Calpers, supports Apple’s proposal because it requires a shareholder vote before eliminating the ability to issue preferred shares.

Updated at 2:30 p.m. ET: Einhorn says Apple’s handling of cash has been “exceedingly non innovative.” He also says Apple’s “war chest” is more like a “war vault.” He categorized IBM and Coca-Cola among the shareholder friendly companies while Dell is not, which is why he sold out of Dell stock.

Updated at 2:40 p.m. ET: Einhorn calls his mechanism for returning cash to Apple shareholders “iPrefs,” the product Apple doesn’t yet know it needs, slyly using the mantra of Apple providing products that consumers don’t yet know they need. He says through iPrefs, Apple would issue a dividend every quarter forever, which translates into $470 million each quarter. Apple could attract a new kind of investor, one seeking a safe source of income.

Updated at 2:50 p.m. ET: Einhorn says “while Apple wants to keep its cake (cash), shareholders get to eat it, too.” He said the iPrefs method would give Apple shares a value of $480, higher than where it is trading now. He also argues it would put Apple’s cost of capital to the lowest quartile of the market, where it deserves to be, compared to the highest quartile, where it is now.

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