Einhorn's Dream: An Everlasting AAPL Payout

Einhorn wants his Everlasting Gobstopper Apple stockHedge fund investor David Einhorn took his case to the public on Thursday in hopes of gaining more support for his lawsuit pushing Apple to issue preferred stock without requiring shareholder approval. Part of what he's hoping to gain is a stock that pays US$0.50 a share every quarter forever.

The perpetually paying preferred stock, now being called iPref by Mr. Einhorn, is a product he thinks Apple needs, but just doesn't realize yet, according to Reuters.

"This is not complicated, it's merely unfamiliar," he said. "Here's the product that Apple doesn't yet know it needs."

Mr. Einhorn and his hedge fund company Greenlight Capital filed a lawsuit against Apple hoping to block a shareholder vote scheduled for February 27 to add a stipulation requiring shareholder approval before issuing preferred stock. The lawsuit is also a push to get Apple to give back more money to shareholders.

Apple CEO Tim Cook isn't against the idea of preferred stock, but feels shareholders should have a say instead of letting executives issue the stock without accountability.

"We decided to eliminate the ability to issue blank check shares ourselves. We could still do it, but would have to go to shareholders for approval," Mr. Cook said. "So frankly, this seems bizarre to me that we're being sued over something that's good for shareholders."

Mr. Einhorn said Apple could set aside $47 billion of its $137 billion cash reserve to issue preferred stock with a perpetual $0.50 quarterly payout, and that the special stock would be in high demand with investors.

Judge Richard Sullivan, who is overseeing the lawsuit, said he sees a high likelihood of success for Mr. Einhorn's case, although there isn't evidence to show "irreparable harm," which a key point in the case.

Mr. Einhorn and Greenlight Capital have a very vested interest in seeing Apple offer a more lucrative payout option since they hold 1.3 million shares in the company.

Apple has been fighting the case, which is no surprise since the company doesn't like being told what to do.