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Greenlight's David Einhorn reasserts case against Apple ahead of hearing

post #1 of 40
Thread Starter 
David Einhorn, whose Greenlight Capital is suing Apple to block a proposal that would hinder the company's power to issue preferred stock, filed a response to the U.S. District Court in Manhattan on Friday, saying that the company's "pro-shareholder" amendment is anything but.

The restatement of Einhorn's original argument comes after Apple filed its own response on Wednesday, which claimed the lawsuit is holding shareholders "hostage" in an attempt to force the company into making a decision that would only benefit the hedge fund chief.

Greenlight
David Einhorn


Einhorn disagrees with Apple's view and, as noted by Reuters, offered some strong words in support of his lawsuit.

"First, I believe it it is up to the shareholders, not Apple, to determine whether a proposed amendment is 'pro-shareholder' and to do so by voting on the amendment separate from other items," Einhorn said in Friday's filing. "In this suit, the Greenlight Entities are seeking vindication of the rights of all Apple shareholders to vote their views on that issue, separate from other matters that I support."

Earlier in the response, Einhorn noted that one of his responsibilities as the portfolio manager of the Greenlight Entities is to conduct extensive research and analysis of Apple, which is one of his major investments.

The lawsuit takes issue with Apple's so-called "Prop 2" proxy proposal which will be voted on at the company's upcoming shareholders' meeting scheduled for the end of February. If passed, Prop 2 would remove the power to issue preferred stock from Apple's board and put it in the hands of shareholders.

Greenlight's Einhorn is seeking for the issuance of perpetual preferred shares, dubbed "Greenlight Opportunistic Use of Preferreds" or "GO-UPs," which would in theory allow Apple to mete out some of its $137 billion cash hoard with shares that pay out higher than normal dividends. Apple claimed on Wednesday that the GO-UPs only serve Greenlight's financial interests and "do not serve the public interest."

The court is set to hear the case on Feb. 19, just over one week before the scheduled Feb. 27 Apple shareholder meeting.

post #2 of 40
Dork.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #3 of 40

Looking back over the past few years, it's amazing how a company that just wants to make great products and improve mankind's ability to do things can cop so much flak...from mankind itself.

 

The world legal systems really need to remove the monetary component from the process and substitute it with righting said "wronged situations" instead.

 

This flaw is generating too much greed in the weak-willed people.

 

 

And here's what I think of Einhorn...

 

My car keeps crashing whenever I do 150mph. It's a design flaw. People tell me to slow down and drive normally but I should be able to use it as I wish.
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My car keeps crashing whenever I do 150mph. It's a design flaw. People tell me to slow down and drive normally but I should be able to use it as I wish.
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post #4 of 40
Cite: https://en.wikipedia.org/wiki/David_Einhorn_(hedge_fund_manager)
Quote:
Microsoft

On May 26, 2011, Einhorn called for Steve Ballmer, CEO of Microsoft, to step down after Microsoft had been passed by both IBM and Apple[20] in market value.[21]

Green Mountain Coffee Roasters

Speaking at the Value Investing Congress in New York City on October 17, 2011, Einhorn publicly announced his short position in Green Mountain Coffee Roasters stock.[22] Prior to that date, the company's share price had increased more than tenfold since March of 2009, the third-biggest gain in the Standard & Poor's Midcap 400 Index. In his presentation Einhorn opined that the market for Green Mountain's new Keurig single-cup coffee brewer was "limited," and that the K-Cup coffee pods for the machine presented a "looming patent issue" for the company. He also said that Green Mountain had a "litany of accounting questions." Following Einhorn's speech Green Mountain's share price fell by 10 percent, closing that day at $82.50.[23]

A few weeks later on November 9, 2011, Green Mountain's quarterly report missed analyst expectations and its stock price plunged to $43.71. The company's CEO Lawrence J. Blanford cited a "number of factors including changes in wholesale customer ordering patterns in our grocery and club channels" for the underperformance of the company.

U.K. Insider Dealing

In January 2012, the U.K. Financial Services Authority (FSA) fined Einhorn and Greenlight Capital $11.2 million for allegedly trading on inside information. The FSA claimed Einhorn obtained information on the Punch Taverns Plc (PUB) equity fundraising by a broker representing the company prior to public knowledge of the event. Within minutes of receiving the information, Einhorn sold more than 11 million shares over the following four days, avoiding a 29.9% stock price collapse and subsequent loss of about £5.8 million. [24]

The FSA stated: "The FSA accepted that Einhorn’s trading was not deliberate because he did not believe that it was inside information. However, this was not a reasonable belief.[24] " "This was a serious case of market abuse by Einhorn and fell below the standards the FSA expects, particularly due to Einhorn’s prominent position as President of Greenlight and given his experience in the market.[24]" “Einhorn is an experienced professional with a high profile in the industry. We expect someone in his position to be able to identify inside information when he receives it and to act appropriately. His failure to do so is a serious breach of the expected standards of market conduct. It is highly damaging to market confidence when privileged shareholders commit market abuse, and the high penalty reflects the seriousness of his breach.”[24]

Einhorn called the £7.2m fine "unjust" and "inconsistent with the law" but said he would pay it "rather than continue an arduous fight" [25] The fine was the second largest levied on an individual in the history of Britain’s Financial Services Authority. [26]

Throw him and his crew in federal prison.
post #5 of 40
Quote:
Originally Posted by AppleInsider View Post

"First, I believe it it is up to the shareholders, not Apple, to determine whether a proposed amendment is 'pro-shareholder' and to do so by voting on the amendment separate from other items," Einhorn said in Friday's filing. "In this suit, the Greenlight Entities are seeking vindication of the rights of all Apple shareholders to vote their views on that issue, separate from other matters that I support."
 


No it's not, so go f**k yourself you greedy little pr!ck.

Guy's a full-blown short-seller, got burned for making bad calls on those "investments", now is trying cut his losses by squeezing more from Apple.

As an AAPL owner, I would tell the guy if he doesn't like the way Apple is running shop, sell your shares and go away.  

post #6 of 40
Quote:
Originally Posted by sflocal View Post


No it's not, so go f**k yourself you greedy little pr!ck.

Guy's a full-blown short-seller, got burned for making bad calls on those "investments", now is trying cut his losses by squeezing more from Apple.

As an AAPL owner, I would tell the guy if he doesn't like the way Apple is running shop, sell your shares and go away.  

 

He does appear to give bottom-feeding trash fish a bad name.

post #7 of 40
Einhorn is probably right about the bundling, but he is still a whiny bitch.
45 2a3 300b 211 845 833
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post #8 of 40

So Apple wants to take the power of these GO-UPs from the Board and give it directly to the shareholders. How is this not pro-shareholder? Please go away, Einhorn. You don't speak for me, you money grubbing con artist.

post #9 of 40
This is not a big shock. His money OEMs mainly from preferred shares and their higher dividends. He doesn't want those cut. He's trying to make out that he's helping all shareholders hoping they won't figure out that this is not the case because so those other shareholders can't benefit from said shares

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post #10 of 40
Quote:
Originally Posted by charlituna View Post

This is not a big shock. His money OEMs mainly from preferred shares and their higher dividends. He doesn't want those cut.

Actually, he doesn't even have that justification. There are no preferred shares today and Apple has no intent of issuing any. So the new proposal doesn't really change anything.

I would not be surprised to see the case thrown out because he can't show any harm. Since there are no preferred shares and no plans to issue preferred shares, he loses nothing by Apple making it harder to issue preferred shares. Unless he can show that Apple's actions have harmed him, he has no case - and it could get thrown out on those grounds.
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post #11 of 40
Slash and burn capitalism, thy face is Einhorn. He is an enemy of the people.
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #12 of 40
This guy looks like a smug, shitfaced asshat.
post #13 of 40
Quote:
Originally Posted by jungmark View Post

So Apple wants to take the power of these GO-UPs from the Board and give it directly to the shareholders. How is this not pro-shareholder? Please go away, Einhorn. You don't speak for me, you money grubbing con artist.

 

That's exactly why I read the article three times.  I figured one of three things had to be true:

 

1) I'm just stupid (possible)

 

2) I have had too much to drink (not really possible at this point in the evening)

 

3) I have had way to little to drink ( definitely possible)

 

What am I missing?

post #14 of 40
Quote:
Originally Posted by GTR View Post

Looking back over the past few years, it's amazing how a company that just wants to make great products and improve mankind's ability to do things can cop so much flak...from mankind itself.

 

 

In the USA particularly, we tend to build up heroes to god-like levels then tear them down at the first sign of just being human. Eventually, we find a new hero and the cycle begins again.

 

Regarding David Einhorn and Greenlight Capital, this is what results from the shift in economic philosophy that used to reward profitable companies to one that punishes companies for not making enough profit (aka "Greed is good"). 

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post #15 of 40
Quote:
Originally Posted by sflocal View Post

Quote:
Originally Posted by AppleInsider View Post

"First, I believe it it is up to the shareholders, not Apple, to determine whether a proposed amendment is 'pro-shareholder' and to do so by voting on the amendment separate from other items," Einhorn said in Friday's filing. "In this suit, the Greenlight Entities are seeking vindication of the rights of all Apple shareholders to vote their views on that issue, separate from other matters that I support."
 


No it's not, so go f**k yourself you greedy little pr!ck.

Guy's a full-blown short-seller, got burned for making bad calls on those "investments", now is trying cut his losses by squeezing more from Apple.

As an AAPL owner, I would tell the guy if he doesn't like the way Apple is running shop, sell your shares and go away.  

Uh, if he's a short seller, how'd he get burned? He should have huge gains, not "losses" off of AAPL.

post #16 of 40

This guy is the reason the global economic climate is what it is , greedy . They want money for investors , if they still can operate in a non regulated environment then they will once agin cause major issues globally. How much does he gain all of the bail outs from the Fed reserve and quantitive easing went on bonuses and golden handshakes in house with the finance powerhouses. does he donate to charity help countries globally ? Bring back manufacturing to the US?

I doubt it very much in fact he may put a stop to all that . 

post #17 of 40
Quote:
Originally Posted by Slurpy View Post

This guy looks like a smug, shitfaced asshat.

No kidding. I can also envision him stomping his feet and screaming, "I want to be chairman! I want to be CEO!"
post #18 of 40

Occupy Wall Street.... David Einhorn should be living in a Tent!... Is there any chance he wasn't involved in the subprime loan fiasco... that fiasco that cost the US 4 miliion million (or Trillion ) dollars?...

 

i think David Einhorn wants apple to split the stock in the sense that you get a perferred share and common share for each share that you have in Apple...

 

i think they(apple)  should find out how many shares a apple stock he bought in 2007.(170 dollars per).. or  in 2010 (300 per) i ask this because the answer will Determine if he is Serious about helping apple's financials instead of just "ringing the out sponge" of stock value...

 

 

i think David Einhorn is a shark, and does not care about Apple... i.e. he is a fair weather hedge fund "hog"...  hedgehog... lol get it?...
 
but... he is rich,rich,rich...  what has he accomplished?...  bringing  to life the main character in the movie " Wall Street". Gordon Gecko?...
post #19 of 40
So, isn't the proposition being voted on by the "shareholders" and isn't the result going to be decided by the "shareholders"? How is this in any way no "pro-shareholder"? If the "shareholders" don't want it, they'll just vote it down. I don't get the argument outside of the fact that the proposition seems like it would hurt this guys ability to potentially make more money for a select few.
post #20 of 40
Quote:
Originally Posted by jragosta View Post


Actually, he doesn't even have that justification. There are no preferred shares today and Apple has no intent of issuing any. So the new proposal doesn't really change anything.

True. But they are still a possibility at his point. If the vote goes he way Apple wants, there is zero chance it will ever happen. And Einhorn doesn't want that because then he can't try to force a vote to get them issued. Or some other stunt.

 

 

As for the bundling part, given the press on this, if it was such a blatant violation of rules the SEC would have dealt with it already.

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post #21 of 40
Quote:
Originally Posted by AaronJ View Post

That's exactly why I read the article three times.  I figured one of three things had to be true:

1) I'm just stupid (possible)

2) I have had too much to drink (not really possible at this point in the evening)

3) I have had way to little to drink ( definitely possible)

What am I missing?

Alcohol. You need more.

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"Apple should pull the plug on the iPhone."

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post #22 of 40
Quote:
Originally Posted by haar View Post

i think David Einhorn is a shark, and does not care about Apple... i.e. he is a fair weather hedge fund "hog"...  hedgehog... lol get it?...
 
but... he is rich,rich,rich...  what has he accomplished?...  bringing  to life the main character in the movie " Wall Street". Gordon Gecko?...

Patrick Bateman.

"Apple should pull the plug on the iPhone."

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post #23 of 40
Quote:
Originally Posted by sflocal View Post


No it's not, so go f**k yourself you greedy little pr!ck.

Guy's a full-blown short-seller, got burned for making bad calls on those "investments", now is trying cut his losses by squeezing more from Apple.

As an AAPL owner, I would tell the guy if he doesn't like the way Apple is running shop, sell your shares and go away.  

But not until he's been slapped by each one of us!

Who's first?

 

An I say this as an AAPL owner.


Edited by Rabbit_Coach - 2/16/13 at 11:58am
post #24 of 40
If nothing else, following Apple Insider is a great way to also get an insight into the legal world 1smile.gif
post #25 of 40
Einhorn is a brilliant guy, it's hilarious reading these posts. Not sure that I agree with his proposal or his lawsuit, but he is making Apple do something with the cash and it is going to result in a net benefit to shareholders, both in terms of getting money back and getting a better valuation on the stock.
post #26 of 40
Quote:
Originally Posted by bonky View Post

Einhorn is a brilliant guy, it's hilarious reading these posts. Not sure that I agree with his proposal or his lawsuit, but he is making Apple do something with the cash and it is going to result in a net benefit to shareholders, both in terms of getting money back and getting a better valuation on the stock.

Quite a few flaws with your claims:

1. Einhorn's proposal doesn't help 'shareholders'. It would only help a limited number of the shareholders. Most shareholders would not benefit from his proposal.

2. If the shareholders want preferred stock, they can do it even under Apple's proposal. Einhorn's proposal is to take the decision out of the hands of shareholders and give it to management. How is that 'pro-shareholder'?

3. In the long run, dividends do not have any significant impact on shareholder value. When a company gives away $10 B in dividends, it reduces the value of the company by roughly that amount. The "value" of giving dividends is largely psychological and doesn't really add value.
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post #27 of 40
Here come the bean counters.

Folks like this will be the death of Apple. smh
post #28 of 40
Dividends are the only way to get a return on your investment without selling part of your stake. Of course shareholders covet them, for good reason.
post #29 of 40
Quote:
Originally Posted by bonky View Post

Dividends are the only way to get a return on your investment without selling part of your stake. Of course shareholders covet them, for good reason.

The bolded section makes this a tautology.

In reality, receiving a dividend of $100 or selling $100 worth of stock with no dividends amounts to essentially the same thing. When a company distributes a dividend, it's book value drops - which is ultimately reflected in the share value. It's largely a wash.
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post #30 of 40

Interesting possibilities:

http://en.wikipedia.org/wiki/Ira_Einhorn

 

Cheers

post #31 of 40
Quote:
Originally Posted by Suddenly Newton View Post


Alcohol. You need more.

 

That's usually the case.

post #32 of 40
Quote:
Originally Posted by jragosta View Post

The bolded section makes this a tautology.

In reality, receiving a dividend of $100 or selling $100 worth of stock with no dividends amounts to essentially the same thing. When a company distributes a dividend, it's book value drops - which is ultimately reflected in the share value. It's largely a wash.

It's good financial practice to receive cash flow from an investment. Do you have a job? Would you be happy if your salary just went back into the business to make it more valuable? What you're essentially saying is that there is no benefit to receiving an annual salary, biweekly paycheque, whatever.

It may technically be a "wash" but it has a huge impact on investor sentiment.
post #33 of 40
Quote:
Originally Posted by bonky View Post

It's good financial practice to receive cash flow from an investment. Do you have a job? Would you be happy if your salary just went back into the business to make it more valuable? What you're essentially saying is that there is no benefit to receiving an annual salary, biweekly paycheque, whatever.

If you own the business (as shareholders do) and don't need the money, a lot of owners take little or no salary - because the salary is taxed at high rates and if you put the money back into the business, it is not (until you sell, when it is taxed at lower capital gains rates or if you die and leave it to your heirs in which case millions of dollars of equity is tax free).

Your example is not even close to the same thing.
Quote:
Originally Posted by bonky View Post

It may technically be a "wash" but it has a huge impact on investor sentiment.

I already acknowledged that it has a large psychological value-particularly for a stock with a high price like AAPL (since most people don't own enough shares to easily sell 2% a year).

But that doesn't change the fact that it is just psychology and has no real effect on the true value.
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post #34 of 40
Quote:
Originally Posted by jragosta View Post

If you own the business (as shareholders do) and don't need the money, a lot of owners take little or no salary - because the salary is taxed at high rates and if you put the money back into the business, it is not (until you sell, when it is taxed at lower capital gains rates or if you die and leave it to your heirs in which case millions of dollars of equity is tax free).

Your example is not even close to the same thing.
I already acknowledged that it has a large psychological value-particularly for a stock with a high price like AAPL (since most people don't own enough shares to easily sell 2% a year).

But that doesn't change the fact that it is just psychology and has no real effect on the true value.

Granted, but what if you do need the money (as most probably do)? I expect to hold AAPL for a long time, and I will eventually want a steady increasing cash flow. Undoubtedly there are many today who are in my future position.
post #35 of 40
Quote:
Originally Posted by bonky View Post

Granted, but what if you do need the money (as most probably do)? I expect to hold AAPL for a long time, and I will eventually want a steady increasing cash flow. Undoubtedly there are many today who are in my future position.

Sorry, but 2% per year is not a significant amount. If you have 20 shares ($10,000), that's $200 per year. Hardly enough to justify buying the stock.
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post #36 of 40
This AppleInsider article puts it all in perspective:
http://appleinsider.com/articles/13/02/14/huge-selloff-by-hedge-funds-bruised-apple-stock-in-the-winter-quarter

Hedge Funds are responsible for the stock tanking since October, and now the chief of one of these funds has the audacity to sue Apple because they want the milk the company even more.

As an AAPL shareholder since 1999 (never selling a single share from that time to now), I cast my vote against Einhorn. Stop holding me hostage, Greenlight Capital.
post #37 of 40
Quote:
Originally Posted by bonky View Post


It's good financial practice to receive cash flow from an investment. Do you have a job? Would you be happy if your salary just went back into the business to make it more valuable? What you're essentially saying is that there is no benefit to receiving an annual salary, biweekly paycheque, whatever.

It may technically be a "wash" but it has a huge impact on investor sentiment.

Apple shares rise to put the company in no.1 spot without the need to pay for dividend. Your argument is flawed.

post #38 of 40
Quote:
Originally Posted by matrix07 View Post

Apple shares rise to put the company in no.1 spot without the need to pay for dividend. Your argument is flawed.

In fact, the shares have fallen since the dividend was implemented. While I doubt that the dividend caused the drop, it clearly shows that the "stocks rise when there is a dividend" argument is flawed.
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post #39 of 40
Quote:
Originally Posted by jragosta View Post


Actually, he doesn't even have that justification. There are no preferred shares today and Apple has no intent of issuing any. So the new proposal doesn't really change anything.

I would not be surprised to see the case thrown out because he can't show any harm. Since there are no preferred shares and no plans to issue preferred shares, he loses nothing by Apple making it harder to issue preferred shares. Unless he can show that Apple's actions have harmed him, he has no case - and it could get thrown out on those grounds.

This will be quite a surprise IMO: The judge indicates that he's leaning towards accepting Greenlight's argument, saying "Candidly I do think the likelihood of success is in favor for Greenlight..."

http://newsandinsight.thomsonreuters.com/Legal/News/2013/02_-_February/Greenlight_shows__likelihood_of_success__against_Apple_-judge/

melior diabolus quem scies
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post #40 of 40

That's a bizarre comment for a judge to make at a hearing.

Normally, they'd just say,"ok you've got a point. Lets test it." Or words to that effect.

 

To say that you're leaning one way or the other ahead of the trial. Bizarre.

 

What about the SEC ? They approved the so called "bundle".

Irreparable harm to Greenlight ? You gotta be kidding me - shouldn't even be a consideration.


Edited by RobM - 2/19/13 at 5:13pm
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