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David Einhorn, President of Greenlight Capital, speaks at the 6th Annual New York Value Investing Congress in New York City, October 13, 2010.Mike Segar/Reuters

Hedge fund manager David Einhorn wants Apple Inc. to follow its old advertising slogan and "think different" ... about its cash.

Mr. Einhorn's Greenlight Capital on Thursday sued Apple, saying the company should give stockholders a bigger piece of its $137.1-billion (U.S.) cash pile. It's one of the strongest criticisms by an investor of the consumer device giant's cash allocation strategy.

He also urged Apple shareholders to vote against Apple's plan to eliminate preferred stock from its charter at its annual meeting on Feb 27.

This is the first such investor activism that Apple has faced in more than a decade. In an interview with CNBC on Thursday, Mr. Einhorn, a well-known short-seller, accused Apple, which teetered on the brink of bankruptcy in the late 1990s before Steve Jobs returned to turn it around, of harbouring a "Depression-era" mentality.

"It has sort of a mentality of a depression. In other words, people who have gone through traumas ... and Apple has gone through a couple of traumas in its history, they sometimes feel like they can never have enough cash," Mr. Einhorn said during the interview.

Apple shares, which had fallen 35 per cent from mid-September through Wednesday, were up 1.2 per cent at $459.83 at midday.

Mr. Einhorn remains long on Apple shares. He told CNBC that while he admires the company, it has a "cash problem" it needs to fix by offering perpetual preferred stock with a 4 per cent yield.

"The idea is powerful, and when I have a chance to explain it to the shareholders, most will see it as an enormous win-win," Mr. Einhorn told Reuters.

Apple did not return calls for comment.

Mr. Einhorn said he suggested to Apple an initial preferred share distribution, where dividends could be funded on an ongoing basis by a relatively small percentage of the company's operating cash flow.

"Apple rejected the idea outright in September, 2012," he said, adding the company considered it but then refused to withdraw the proposal to eliminate preferred stock from its charter.

One analyst said there were merits to Mr. Einhorn's proposal.

"He's a huge holder in the stock, the shares are down and it's natural for a person like that to try and reverse that," said BGC Partners analyst Colin Gillis. "Other shareholders may join, but whether it will change the tide remains to be seen."

Analysts have said stockholder pressure would increase as Apple's share price and clout declines. Investors have persistently called on the company to be more proactive in using its massive cash and capital hoard.

As recently as last month, chief financial officer Peter Oppenheimer told analysts on a post-results conference call that the company, which has the largest cash balance in the technology industry, was considering various ways to be more active on that front.

Money managers have also said Apple has underperformed peers when it comes to putting its cash pile to work.

Calling Apple shares "utterly misvalued" at current levels in the CNBC interview, Mr. Einhorn said the company no longer needs to grow at the near-triple digit rates of the past.

For every $50-billion in preferred stock that Apple gives away to shareholders, it could unlock $32 a share in value for investors, Mr. Einhorn said. He did not elaborate on how he arrived at the number.

"We understand that many of our fellow shareholders share our frustration with Apple's capital allocation policies," Greenlight said in an open letter to investors. "Apple has $145 per share of cash on its balance sheet. As a shareholder, this is your money."

In its lawsuit, Greenlight seeks to force Apple to modify a proposal in its proxy, which the hedge fund believes does not conform to regulatory rules.

Greenlight said it is opposed to the proposal, No. 2 on Apple's proxy, which the firm said would remove the company's ability to issue preferred stock from its charter.

The California company had $137.1-billion in cash, short-term and long-term marketable securities at the end of last year but more than $94-billion in that cash is parked overseas.

"This is something that we continuously assess, the opportunities to both invest in the business and return cash," CFO Oppenheimer said on a post-results conference call last month.

"We do consider increasing these programs, and we'll do what we think is in the best interest of our shareholders."

The issue will likely be on top on investors' minds when chief executive officer Tim Cook addresses the Goldman Sachs annual technology conference in San Francisco next week.

This is the second straight year that Mr. Cook will address investors publicly since he took over in 2011. In the past, Apple executives rarely participated in such public events.

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