Updated:

Jan 14, 2019

Original:

Sep 1, 2015

David Einhorn's Got Good News And Less Good News

Depending on how investors want to look at things.

Author:

The good news is that despite being down a bunch in August, Greenlight Capital still beat the market for the month, which is something to write home about, which he did in his letter to investors. The less good news is that Team Greenlight will have to get its sh*t together by the end of the year.

David Einhorn’s Greenlight Capital lost 5.3 percent in August — putting it down 14 percent for the year. Einhorn is the first hedgie to report each month, and his returns have been widely anticipated because he was already down 9 percent going into August. The prominent investor’s losses are also notable because he’s got a large short book, which many expected to shield the blow. Well, Einhorn did outperform the S&P 500 in August — it was down 6.3 percent in the month — but for the year, the broader market is only off 4.2 percent.

Einhorn’s Greenlight Capital down 5.3% in August [NYP]

Which do you want to hear first?

In fact, consider the numbers 2, 0, 1, and 5 banned from Greenlight Capital's offices.

Back in February, in his annual letter to investors, Berkshire Hathaway chief Warren Buffett spent a good bit of time discussing why one shouldn't own gold. Beyond the fact that, according to WB, gold doesn't "change in size and [is] incapable of producing anything," and you'd be much better off buying farmland (which "a century from now will have produced staggering amounts of corn, wheat, cotton and other crops and will continue to produce that valuable bounty") or shares of Exxon Mobil (which "will probably have delivered trillions of dollars in dividends to its owners," the Oracle of Omaha had one incontrovertible, be all end all reason for eschewing the metal: its unfuckability. Oh sure, you can do things to a cube, you can fondle it, you can talk dirty to it, you can send nude pictures of yourself, you can even drill a hole in it and fuck it senseless, but, the thing is, the cube will not respond. No reciprocation, no gratitude, not even a sign it enjoyed itself. For Buffett, no further argument was necessary as to the worthlessness of the commodity. (Silver, on the other hand, will make you feel like you're 18 again.) Anyway, David Einhorn sort of feels the same way about the dollar. Greenlight Capital 1Q2012 Letter To Investors [PDF] Related: Don't Think He Hasn't Tried

He's got a fallback career as a ghostwriter of letters that will cause the recipients to piss their pants in fear but for now it looks like this whole hedge fund manager thing is panning out pretty well.

Remember how David Einhorn got in trouble in England for insider trading on Punch Taverns stock and he was all "what?" and we were all "what?"? Well, you can judge it for yourself because now the entire disputed call with Punch is available online (at the back of this). So go read it, or read the highlights here. The FSA still thinks it's insider trading, but the count of people confused by the whole thing is rising, and now includes the Merrill banker on the call. There's lots of insider traderiness on this side of the pond today too so we should talk about that in a bit. For now, though, two other things. One is quick - no one can resist one part of the call and I can't either so here it is: DAVID EINHORN: Hi, I’m sorry I didn’t get to see you when you were in New York. PUNCH CEO: No, no, we -- well, we’ve -- we’ve only had the chance to speak once, although we have seen [reference to Greenlight Analyst] a few times since then. DAVID EINHORN: Oh, you’re -- you’re -- you’re getting more than -- than I could help with anyway. So, this is good. PUNCH CEO: Okay. That’s fair enough. Well, one day we’ll get you around on a pub crawl around some English pubs. DAVID EINHORN: Oh, that sounds fun. PUNCH CEO: It is. You’re right. English readers: Is it? I just assumed that Punch Taverns are rather grim places, like TGI Friday's but with more ... punching? ... but maybe I'm totally off base here. Also, here is a hypothesis: vice investments do well because, for the same level of profitability, they get more analyst/investor coverage and enthusiasm. Wouldn't you rather go on a pub crawl instead of like a tour of an auto parts factory in Queens? Would that influence your stock recommendations / money allocations? Someone should do a study.

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