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Einhorn's Apple Argument Supported by Hidden Stock Gain (Update1)

Tickers in this article: AAPL GOOG MSFT

On Thursday, Einhorn appealed to Apple investors to vote for a provision in the company's annual proxy that would retain its ability to pay a preferred stock dividend. In May, Einhorn said Apple's cash, which now stands at $137.1 billion, or $145 a share, could be put toward a perpetual preferred stock dividend of between 4% to 6%.

"Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple's existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple's financial resources to pursue its business strategy," Einhorn said in a letter to investors.

On Thursday, Greenlight Capital sued Apple as a result of a proposal tucked in its annual proxy to eliminate preferred shares. Meanwhile, the California Public Employees' Retirement System (CalPERS) said it supported the proposed elimination of preferred stock in Apple's proxy.

Still, Apple appears to be taking Einhorn's concerns about the company's cash hoard seriously.

In a statement Thursday , Apple said it would "evaluate" Greenlight Capital's proposal to issue preferred stock. The company also said its Board of Directors is considering returning additional cash to shareholders.

"We will thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock. We welcome Greenlight's views and the views of all of our shareholders," Apple said in the statement.

"Apple's management team and Board of Directors have been in active discussions about returning additional cash to shareholders," the company added.

-- Written by Antoine Gara in New York