3.4 Million Reasons Why Apple Inc. (AAPL) Lagged Last Quarter — and Why It Will Bounce Back

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Greenlight also loaded up on call options representing another 275,000 shares. While the expiration and strike prices of those contracts aren’t disclosed, Greenlight will get a nice pop if Apple Inc. (NASDAQ:AAPL) shares recover due to the inherent leveraged nature of options. Of course, Greenlight is also the fund managed by David Einhorn, who very publicly called for Apple to return additional cash to shareholders a week ago through the issuance of a new share class of perpetual preferreds.

Einhorn is trying to rally other shareholders into voting against a proposal from Apple that would eliminate the company’s ability to issue preferred shares solely by the board’s discretion. Apple is trying to change its corporate charter to require shareholder approval for any such move, and responded to Einhorn’s lawsuit this week by saying the fund manager is effectively trying to take shareholders “hostage.” In a court filing, Apple CFO Peter Oppenheimer disclosed that Einhorn viewed shareholder approval for his idea as a “roadblock that was not needed” and wanted to remove the risk that shareholders would vote against his proposed plan.

The good news is that while many funds were dumping their shares, it’s highly likely that they will buy back in and establish new positions after closing out previous positions and envious gains. Bespoke Investment Group founder Justin Walters thinks this activity will pick up within the next three months.

Apple’s investor base is in transition as the stock moves from a growth story to a value one. Once Apple inevitably boosts its dividend, investors can expect an influx of value-oriented funds interested in a yield they can count on.

The article 3.4 Million Reasons Why Apple Lagged Last Quarter — and Why It Will Bounce Back originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

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