David Einhorn

So he's like trying to raise money.

And there was a guy who was going to do it, a guy named David Einhorn, who was the president of a hedge fund called Greenlight Capital.

But negotiations broke down over the summer of 2011, and the sale ended up not going through.

By the way, the next year in 2012, Einhorn and Greenlight Capital will be charged a service fee of $11.2 million for insider trading in the United Kingdom's Financial Services Authority.

It was fantastic.

Attending the Value Congress is one of the greatest things that I've done in the past 20 years because, like you said, you got David Einhorn and Ackman and all kinds of people, just all the legends of the industry there.

Yeah.

And Whitney's

It just gives me a chance to be rethinking something, which is useful.

And so going to this point, and I'm not calling Amerito a David Einhorn.

I would save that insult for someone else.

I actually think Amerito and I are going to be good friends.

This one is one of my favorites.

David Einhorn, legendary short seller, the guy who called Lehman Brothers collapsed before it actually collapsed, runs a publicly traded reinsurance company called Greenlight Capital Re, ticker symbol GLRE.

An insurance company collects premiums today and pays out claims later on, right? So it's sitting on this giant pile of cash in the meantime called Float.

At Greenlight, the float gets invested by Einhorn's hedge fund.

But at the end of the day, you can just kind of see where the sentiment is.

And so David Einhorn, who I particularly don't like, I've had personal interactions with his firm.

I've found them to be horribly condescending, which is a lesson for anyone on this call that runs a firm or one day does is how you treat people matters.

Because unbeknownst to you, 10 years later, that person might have a podcast through a complete serendipity and remember you treated people and then decide to use their podcast to remind the people of what an asshole you are so that how you carried yourself turns out not to be a private endeavor, but in fact, a public endeavor.

And so the people at Greenlight at least were some of the most conceited, arrogant, condescending people I've ever encountered.

And they can go F themselves because their firm has basically gone out of business.

And I think they suck and they're a David Einhorn, who did a couple things back in the early 2000s, but has since just been a totally stubborn jerk, trapped in the mindset two decades ago, which I also grew up in that era with him, but have adapted.

This guy, of course, now decides to chime in about SpaceX being a bubble.

And what he was missing was if at that point they'd borrowed 300 billion, they wouldn't have been able to borrow the rates that they were.

Later, David Einhorn came up with the suggestion that they should prefer stock with a 4% dividend yield as a way of returning cash, which I thought was a terrible idea.

Because preferred stock is like very inefficient debt because you pay out that 4% and you don't even get a tax advantage.

And Tim Cook, though, to give him credit, listened to activists.

You have these high frequency trading pot shops and stuff like that, which all seem to have an impact on prices.

And this may make life of a typical value investor a bit harder and I referenced a couple of people, but I think David Einhorn has been the most vocal about this particular, let's call it problem, where it may take longer for the market to realize the actual value of a stock than it did in the past.

So I think what David Einhorn has talked about himself a lot is, say, in the 90s or maybe in the 2000s, you could buy a solid business at maybe a ten times earnings multiple.

And you could bet that at some point over the next five years, it might trade again at 15 times.

That would be a 50% expansion, giving you whatever that is over ten years, like a 12% CAGR maybe over that time frame, just from the change in the multiple.

So that is something to think about.

I would say I'm still sticking to my broader principles.

There are a few adjustments I would make and I would say some parts of my philosophy also make me slightly more immune to maybe a philosophy that David Einhorn historically or maybe still today pursues.

Very rarely.

But this time around, hedge fund manager David Einhorn mentioned the deli company in his quarterly letter to clients in April 2021.

Mm.

Pointing out a large mismatch between the deli sales and its market valuation, and he made some catty comments about how the regulators seems, they don't seem to care.