David Einhorn, the activist hedge fund manager of Greenlight Capital could win the lawsuit against Apple Inc. (NASDAQ:AAPL) after the presiding judge hinted that the merits seemed favorable to the shareholder.

David Einhorn

“Candidly, I do think the likelihood of success is in favor for Greenlight,” zix Judge Richard Sullivan of the Southern District Court of New York.

However, Sullivan held back his ruling to allow or prevent shareholders from voting on Apple Inc. (NASDAQ:AAPL)’s proxy proposal to end the issuance of preferred stock without the approval of shareholders.

According to the judge, he wasn’t sure if Einhorn would suffer “irreparable harm” if the scheduled shareholders’ vote will proceed as scheduled on February 27.

Einhorn filed a preliminary injunction against the proposed Proxy No. 2 of Apple Inc. (NASDAQ:AAPL) that would remove its authority to issue a “blank check” on preferred stock and provides shareholders the right and privilege to approve the issuance of any preferred stock.

The activist hedge fund manager wants the iPhone and iPad maker to modify its proxy proposal because he believes that it is against regulatory rule. According to him, Apple Inc. (NASDAQ:AAPL) needs to do more to unlock shareholders value.

“Greenlight believes Apple is a phenomenal company filled with talented people creating iconic products that consumers around the world love.  However, like many other shareholders, Greenlight is dissatisfied with Apple’s capital allocation strategy.  Greenlight believes that the amendment to Apple’s charter in Proposal 2 unnecessarily limits the Board’s flexibility to distribute preferred stock as a means of unlocking shareholder value.  As such, Proposal 2 does not merit shareholder support,” said Einhorn in a press statement.

In response, Apple accused Einhorn of attempting to use its fellow shareholders as hostages in his effort to push the tech giant to distribute more cash to its investors. According to the company, “Shareholders should not be held hostage to plaintiffs’ attempts to coerce Apple into an agreement that serves plaintiffs’ financial interests.”

As of December, the tech giant had $137 billion cash and securities.

Apple Inc. (NASDAQ:AAPL) argues that $10 billion was already distributed to investors under its plan to return $45 billion to shareholders within a period of three years. Last year, the company approved the distribution of dividend, and repurchase stock.

Reuters also reported that another investor, Brian Gralnick filed a lawsuit against Apple Inc. (NASDAQ:AAPL) requesting the court prevent the scheduled shareholders vote on Proxy Proposal No.2 and the advisory “say-on-pay” on executive compensation.