David Einhorn


David Einhorn (born November 20, 1968), an American hedge fund manager, is the founder and president of Greenlight Capital, a "long-short value-oriented hedge fund." He started Greenlight Capital in 1996 with $900,000. Greenlight has generated about a 16.5% annualized return for investors


Early Life

Einhorn was born to a Jewish family in New Jersey, the son of Stephen and Nancy Einhorn. The family moved to Wisconsin when he was seven. In 1987, he graduated from Nicolet High School in Glendale, Wisconsin. Einhorn graduated summa cum laude from Cornell University with a B.A. in Government from the College of Arts and Sciences in 1991. He was a member of the Sigma Alpha Epsilon fraternity at Cornell. Einhorn lives in Westchester County, New York with his wife, Cheryl Strauss Einhorn, and three children.


Career

In May 2002, at the Ira W. Sohn Investment Research Conference, Einhorn delivered a speech about a mid-cap financial company called Allied Capital. He recommended shorting the company's stock and shorted it himself. The day after his speech, Allied's stock opened down 20 percent. Einhorn claimed that Allied was involved in lending practices that defrauded the Small Business Administration. Allied said that Einhorn was engaged in market manipulation, and illegally accessed his phone records using pretexting.

The U.S. Securities and Exchange Commission (SEC) investigated Einhorn for market manipulation, and Eliot Spitzer also announced that he intended to start an investigation. In June 2007, the SEC found that Allied broke securities laws relating to the accounting and valuation of illiquid securities it held.

Einhorn has published a book, Fooling Some of the People All of the Time regarding this six-year fight.In late 2008, the SEC began investigating charges that Einhorn has made about the SEC's mishandling of this matter, including the possibility that "a former SEC attorney may have taken confidential investigative materials with him when he left the Commission and provided those materials to a company he went to work for as a lobbyist." The SEC OIG confirmed in 2010 that the SEC had failed to properly pursue the allegations against Allied Capital made by Einhorn, and that Mark Braswell, the enforcement bureau chief in charge of the investigation, left the agency and landed Allied Capital as a lobbying client.

Einhorn would come to view Allied as a microcosm of market trends: "What we've seen a year later is that Allied was the tip of an iceberg; that this kind of questionable ethic, philosophy and business practice was far more widespread than I recognized at the time...Our country, our economy, is paying a huge price for that."

In July 2007, Einhorn shorted Lehman Brothers stock, believing that Lehman had massive exposures to illiquid real estate investments that were improperly accounted for. He also claimed that they used dubious accounting practices in their financial filings. Einhorn shared his thesis on Lehman in November 2007 at the Value Investing Congress.

More Recently, at the 2015 Ira Sohn Conference, David Einhorn said Pioneer Natural Resources (PXD), the second largest pure play in oil fracking, amounted to a company that had “all hat but no cattle.” His primary short thesis is the oil frackers have been spending more money to extract oil than they receive, even during the best of times. “It’s like using $50 bills to counterfeit $20 bills,” he said to what was perhaps the most audience laughter of any presenter.

Source: Wikipedia. Note: Click on the picture(s) for cool animations.


Fun Fact

David Einhorn is also a professional poker-player.


"Both poker and investing are games of incomplete information. You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical." - David Einhorn


"Both poker and investing are games of incomplete information. You have a certain set of facts and you are looking for situations where you have an edge, whether the edge is psychological or statistical." - David Einhorn