David Einhorn

  • 28 Mar 2014 at 12:57 PM

Ben Bernanke No Cheap Date

Sure, he’ll accept your dinner invitation. But it’s gonna cost ya. The former Fed Chair doesn’t get out of bed/attend speaking engagements, pan roasted truffled squab or not, for less than a quarter mill. Read more »

David Einhorn doesn’t know who Seeking Alpha contributor “Valuable Insights” is. He’s pretty sure VI is a fellow Micron Technology investor. And he’s damned sure (a) that one of VI’s more recent insights was anything but valuable to him, and (b) that he’d like to find out exactly who VI is. And he would appreciate it if a court would help him do so. Read more »

  • 07 Jan 2014 at 2:25 PM

Area Hedge Fund Manager Lets His Scalps Talk For Him

How does an activist hedge fund manager express to executives at the subject of of his activism that they’re in his world now? That proposed changes to the company will happen with or without management? That we can do this the easy way or the hard way? Some threaten to take things public, via CNBC, Twitter, and the like. Others use well-timed coughs to mutter “Box up your crap, because you’re all going to be out of here by the end of the day” (followed by “I’m sorry, nagging tickle in my throat”). The best of the bunch, though, the most seasoned activists in the game, prefer a more subtle approach. Read more »

If you’re an activist investor your job is to (1) think of an idea for how to make a company’s stock go up, (2) buy stock in the company, (3) convince them to do your idea, and (4) sell high. Step 3 tends to involve lots of attention-seeking – it’s easier to wear a company down into doing your idea if they’re constantly hearing about it from other shareholders and reporters and stuff – but steps 1 and 2, importantly, don’t.1 If you tell everyone about your great idea for Apple to issue GO-UPS,2 then they’ll all realize that Apple will certainly do it and unlock tens of billions of dollars of value, so they’ll bid up the stock before you can buy it and you’ll lose the opportunity to benefit from all those gains. That may be a bad example but just work with me here.

There’s another way of putting that, which is: if you secretly conceive of an idea to make Apple a better company, and then secretly buy up a bunch of Apple stock, and then announce to the world “surprise! I have 12% of Apple’s stock, and a brilliant idea that starts with a thematically appropriate lowercase i!,” and the stock goes up, and you make a lot of money – isn’t that unfair? You got to buy stock at the low, pre-publication-of-your-idea price; the people who sold to you were bamboozled into selling out too low because they didn’t know about your great idea. It almost “smacks of insider trading.”

Or something. I may not be doing this theory justice because I think it’s silly: that great idea is your idea; why shouldn’t you be able to make money off of it? (And why should anyone else?) The money is your incentive to come up with the idea in the first place, and do the hard ego-stroking work of pitching it to CNBC and the target company; if you had to share it with free-riders why would you take on the responsibility? We talked about this a little last year when there were vague rumors that the SEC was buying into it, and that they might require investors to disclose 5% stakes within 1 day of acquiring them (instead of the current 10 days), and include synthetic share ownership in computing the 5%, in order to make it harder for activists to secretly accumulate shares. I have not heard much about that proposal since, though I hesitate to assign any causality.

But last week in another, colder part of town, someone proposed the same thing. Canada, I mean. Canadian securities regulators proposed: Read more »

Former General Electric CEO Jack Welch says Apple deserves better than the treatment it’s getting from David Einhorn, the hedge-fund manager pressuring the iPhone maker to cough up dividends. “Look, these guys are after a quick hit. I’d blow him off,” he told CNBC’s “Closing Bell.” “I’d give Einhorn the back of my hand.” Welch said he had the same kind of problem with activist investors while heading GE. “They’d come after us, ‘What are you going to do with all that cash?’ Well, we’re going to do a smart thing! Trust us!” Welch said. [CNBC, related, related]

Henry Winkler once said, “Assumptions are the termites of relationships.”1 In 2011, Bill Ackman assumed it was okay to talk to The New York Times about David Einhorn’s business and, like a homeowner forced to move out for three days while a pest control company sprays the place, he’s been forced to pay. Big time. Read more »

To get a sense of how old and long-drawn-out the SEC’s insider trading lawsuit against Mark Cuban is, consider this: the company in which he allegedly insider traded was Mamma.com. The .com was right there in the name. Future generations – hell, present generations – will indiscriminately add “.com” to the end of words to create an old-timey feel, the way we doeth with “-eth.”1

Actually it happened in 2004, and I don’t even need the “allegedly”: there’s no dispute that Cuban insider traded. Everyone agrees that:

  • Mamma.com was planning to sell some stock in a PIPE offering which would, inevitably, drive down its stock price;
  • Mamma.com’s CEO called Cuban and told him about the planned PIPE offering in advance, hoping to get Cuban to buy more stock;
  • Cuban instead sold the stock he already had, prior to the public announcement of the PIPE deal; and
  • Then the PIPE was announced and the stock dropped.

So he had material nonpublic information, and he traded on it, and he avoided losses by doing so. INSIDER TRADING. The only debate is whether he insider traded illegally, which, as I often find myself reminding people, is a separate question. The SEC’s lawsuit2 turns not on the facts above, but on whether Cuban agreed not to trade before learning the inside information. Here the evidence is less clear, but there’s enough evidence that he did for the SEC to survive summary judgment today and take the case to trial. Here is that evidence:3 Read more »