Is Einhorn's suit against Apple epic or humdrum?

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David Einhorn went on offense against Apple, filing a suit that has generated massive headlines and public discussion.

Most saw this as a dramatic move by a hedge fund investor--one that has prodded at least one massive pension fund (CalPERS) to publically pledge its support--to take on a company that has been immune from shareholder criticism since 2005.

The headline on a Reuters article, "Einhorn sues Apple, marks biggest investor challenge in years," is right on the money. That an Apple investor has broken ranks with management is certainly news. At the same time, the issue of Apple's reluctance to return some of its near $100 billion cash hoard to investors has been a running issue ever since the stock turned south. Apple has pledged to return $45 billion via buybacks and dividends.

For Einhorn that's not good enough. The specific technical debate is over "a proposal by Apple to eliminate from its charter 'blank check' preferred stock. The board now has discretion to issue preferred stock but is asking shareholders at its annual meeting on February 27 to vote on a proposal that would first require shareholder approval."

Einhorn sees that as a move that would make it harder for the company to implement a preferred share plan--which carries lots of advantages, including favorable tax treatment--that he has put forward. The company says that nothing it has put forward would prevent a preferred stock issuance, but Einhorn doesn't see it that way.

In the end, we'll likely see some sort of deal worked out, one that just might result in Einhorn getting his preferred shares.

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