David Einhorn’s suggestion of dividend increases and preferred shares will prove a positive catalyst for Apple’s (NASDAQ:AAPL) stock, but there were other appropriate alternatives for the company. That assertion was made by stock specialist Jim Cramer, who said he believed Apple instead needed to use its massive cash funds to make acquisitions in order to keep growing as a company. Apple currently has $137 billion in cash holdings.
“This is a great intellectual exercise and a novel idea, but I have a lot of novel ideas that would actually move the stock up because it would increase the growth rate,” Cramer said on CNBC about Einhorn’s statement that Apple needed to return more money to its investors. Those ideas include a major acquisition, such as Twitter or Netflix (NASDAQ:NFLX), Cramer suggested.
“I want growth, I’m sorry, I’m a traditional investor,” he said. “I have a suggestion for [Einhorn]: You can always sell the stock. If you don’t like what they’re doing, you can sell it.”
According to Cramer, Einhorn’s idea would be effective, but said that it was “convoluted” and not a long-term solution. “This is an interesting method of returning capital because it doesn’t necessarily impact the cash position,” he said. “It’s convoluted because there are simple ways to embrace Apple, including dividends.”