David Einhorn said great things about Apple Inc. (NASDAQ:AAPL) today, he said that Apple is a phenomenal, terrific, fantastic company. The only problem is they have got to act like they have a lot of cash rather than being depressed about their over-sized wealth.

David Einhorn

To be clear, David Einhorn is very happy about the $139 billion in reserve cash, which is a third of Apple’s market cap; however, he does not want the company to squander it away. Einhorn suggested a clever plan whereby Apple Inc. (NASDAQ:AAPL) could hold onto its cash base but still unlock more value to the existing shareholders.

He suggests that Apple distributes some amount of high yielding preferred stock to the investors as a reward for owning Apple’s terrific credit. He also said this is a much better option than share buybacks as it does not reduce the cash balance.

David Einhorn had put forward this proposal to Apple Inc. (NASDAQ:AAPL)’s board and advisors and they did not agree to it. Now with Apple’s own proposal, the company is effectively eliminating the possibility that Einhorn’s proposal ever gets practical application. David Einhorn has sued Apple in NY court alleging that the company violates the regulations by implementing such plan.

Even if Apple Inc. (NASDAQ:AAPL) distributes preferred stock with a 4 percent yield, the investors who are looking for a stable source of income will find great value in the deal. According to Einhorn’s stats, for every $50 billion in preferred issue, the stock would boost $32 per share. Einhorn wants all shareholders to vote against the approval of this new regulation, if they like Einhorn’s alternative plan.

However, not everybody agrees with Einhorn; The California Public Employees Retirement System (Calpers) is advising the shareholders to vote for Apple’s proxy proposal. Calpers owns more than 2.7 million shares of Apple, which beats Greenlight Capital’s stake of 1.3 million shares. Critics of David Einhorn’s preferred issue plan say that the distribution of preferred stock essentially reduces value of the common stock, so in reality this accomplishes nothing.

The critics say the plan hopes to befuddle investors into thinking that they have more and therefore the stock is worth more. Einhorn’s advice relies heavily on a complex financial engineering that hopes to make something out of nothing. Critics think that paying more dividend unlocks more value and does not affect the balance sheet in any big way.

David Einhorn also said that Steve Jobs’ absence is a void but the company has the potential to invest in several new opportunities and still carries a lot of value. Einhorn repeated that $1000 can still materialize for Apple if it chooses to adopt a plan similar to his suggestions. While responding to a question, ” Price targets like $1000, Do you think that is still feasible (for Apple)? , Einhorn replied,

 I think if the company continues to execute and the company unlocks the value within its balance sheet, either in the way  I am describing or in a similar fashion, it still seems very much on the table to me.

 He added another 200,000 shares to his Apple Inc. (NASDAQ:AAPL) holding in Q4 which now amounts to 1.3 million shares of common stock.

Einhorn compared Apple Inc. (NASDAQ:AAPL) to Amazon.com, Inc. (NASDAQ:AMZN), he said while both companies trade at the same same price to sales multiple, Apple makes far more in earnings but is still undervalued in comparison because of all the noise in the market  (Shut up Google!).

CNBC’s anchors could not help themselves, they repeatedly asked Einhorn to comment on Herbalife Ltd. (NYSE:HLF); however, he did not take the bait and stood firm while maintaining that he just wanted to help Apple Inc. (NASDAQ:AAPL)’s shareholders today. While speaking to Bloomberg, Einhorn did comment on Herbalife and said, “We think the risk-reward is poor for both the long and the short”.

So he is neutral on the company for now perhaps more because of the way two influential value investors Bill Ackman and Dan Loeb have decided to butt heads on the stock. Not to mention Icahn’s personal vendetta against Ackman.

He said that he has never been on either the long or short side of Amazon.com, Inc. (NASDAQ:AMZN) and still holds a short in Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) which fell 9 percent in market after Einhorn’s reiteration of his bearish thesis.