David Einhorn (November 20, 1968, New Jersey, US) is the founder and President of Greenlight Capital Hedge fund, a “long-short value-oriented hedge fund”.
His net worth is 1.53 billion USD (2017) and he is the 44th youngest billionaire on the Forbes 400.
David Einhorn graduated from Cornell University in 1991 with a B.A. in Government from the College of Arts and Sciences.
He later moved to Westchester, New York to start his hedge fund Greenlight Capital with $900,000 which has generated 16.5% annualized return for investors from 1996 to 2016.
Greenlight Capital currently (2017) has US$9.27 billion in assets under management.
Einhorn was born to a Jewish family in New Jersey, he is the son of Stephen and Nancy Einhorn. His father is the founder and president of Einhorn & Associates, a consulting firm, and Capital Midwest Fund, a venture capital fund.
Einhorn’s remarkable stock timing (albeit controversial) has put him on the radar.
In May 2002, he gave a speech at the Sohn Investment Research Conference where he recommended shorting a mid-cap financial company called Allied Capital, which he had a substantial short position in.
The following day the company’s stock went down by 20 percent. Allied later claimed that David Einhorn had engaged in market manipulation and had been acting on insider information gained by illegally accessing phone records using pretexting.
But in In June 2007, the U.S. Securities and Exchange Commission (SEC) found that Allied broke securities laws relating to the accounting and valuation of illiquid securities it held. David Einhorn later published a book, “Fooling Some of the People All of the Time” regarding this six-year fight.
In July 2007, David Einhorn shorted Lehman Brothers stock, believing that Lehman had massive exposures to illiquid real estate investments that were improperly accounted for.
Moreover, he claimed that the firm was using dubious accounting practices in their financial accounts. David Einhorn shared his view on Lehman in November 2007 at the Value Investing Congress.
But in January 2012 Einhorn’s good fortune ran out when the U.K. Financial Services Authority (FSA) fined David Einhorn and Greenlight Capital $11.2 million for trading on insider information. It was the largest FSA fine for insider dealing to date.
The FSA claimed Einhorn obtained information on the Punch Taverns Plc (PUB) equity fundraising by a broker representing the company prior to public knowledge of the event. Over the following week, David Einhorn sold more than 11 million shares, thereby avoiding a 29.9% stock price collapse and subsequent loss of about £5.8 million.
Five years later (2017) David Einhorn separates from his wife of 24 years and prepares for a divorce.
David Einhorm started Greenlight Capital with $900,000 which has generated 16.5% annualized return for investors from 1996 to 2016.
Greenlight Capital currently (2017) has US$9.27 billion in assets under management
Greenlight Capital’s latest client letter gives investors some insight into David Einhorn’s investment style.
David Einhorn acknowledges that the post-Great Recession easy money policies have been good for Wall Street but bad for Main Street and he believes that a Trump presidency could reverse this.
In short, David Einhorn readjusts his portfolio in line with changing government policies.
So Einhorn is long a variety of low-multiple, tax-paying, U.S. value stocks. He favors GM because more jobs mean in theory higher wages which should drive demand for consumer durables, such as automobiles.
David Einhorn is short “bubble basket”, which are stocks that don’t have profits. For example, Netflix. He is also short oil frackers.
As an investor my job is to figure out what will happen rather than what should happen – David Einhorn
David Einhorn’s recent Bloomberg interview and his letters to clients provide investors with learning material.
“Valuations for some companies have got out of control”
Also, a recent Q&A for the Oxford Union (second video below) provides much insght into how the 44th youngest billionaire on the Forbes 400 and the 18th highest-earning hedge fund manager in the world makes his investment decisions.
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
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