All Eyes on Apple (AAPL) on Potential Shareholder Friendly Action Ahead of Annual Meeting

February 27, 2013 10:55 AM EST
Apple's (NASDAQ: AAPL) annual shareholder meeting starts at 12PM ET (9AM PT) today and all eyes are on what the company will do with its massive $137 billion cash hoard, especially in light of the 37 percent slide in its stock price from the September 2012 highs.

Hedge fund manager David Einhon would like to see Apple adopt his 'iPrefs' idea, which he said could unlock $150 per share or more in shareholder value.

If Apple doesn't go with the 'iPrefs' idea - which is widely expected - the company can still unlock value in more conventional ways: A one-time special distribution of excess cash; A one-time stock repurchase using excess cash; A plan to use future cash to repurchase stock in the future; and An increase in the common dividend.

Mr. Einhorn conveniently calculated the value of each of those prospects for Apple shareholders:

One-time dividend - This could unlock up to $89 per share in value, Einhorn calculated.

Large one-time share repurchase - could also unlock up to $89 per share in value, Einhorn said.

Large on-going share repurchases - Could unlock about $75 per share, according to Einhorn.

Double dividend - If Apple were to double the dividend he sees $21-$80 in value added per share, but warns "often when a stock with a low P/E introduces or raises its dividend, it just becomes a stock with a low P/E and an attractive dividend."

In addition to the above potential actions, Apple could announce a stock split. While not impossible, given the current authorized share count, it does not seem likely near-term. Shareholder approval would likely be required to increase the authorized shares before a split could be declared. The company has 1,800,000 shares authorized and approx. ~939,208 and 929,277 shares issued and outstanding, respectively.

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