June 18, 2008
Seeing the Ball and Hitting It Hard
“An accomplished bridge player who has played against Jimmy Cayne of Bear Stearns fame, he took up poker on a lark and finished 18th at the 2006 World Series of Poker. He donated the $660,000 in prize money to charity.
‘Texas hold ’em is all about folding and waiting for that time that comes up every hour or two where you actually have an advantage and you can press it,’ he says. ‘I had a couple of advantages over the group. Number one, I probably cared less. This was the event of the year for them. We make bigger bets every day. There’s more at risk in what happens in Microsoft than I could ever bet on a poker table. Two, I keep a reasonably decent poker face.’”
– via kedrosky.com –
June 18th, 2008 at 3:11 pm
Good reading. This guy digged out the dirt by the public domain info (earnings concall etc.) ! Maybe not 100%, but still amazing …
June 18th, 2008 at 3:53 pm
werdna: I assume he has a very good network for gathering information, but yes, he’s one of those rare investors who actually reads financial statements. :)
June 18th, 2008 at 10:27 pm
Great article.
June 20th, 2008 at 7:21 am
Einhorn is a blowhard with a supersized ego. I have yet to see a validate audited statement from his fund, but who cares? Everyone loves a fantasy.
June 20th, 2008 at 7:31 am
Howard: The author repeats the “25 percent average annual return for the twelve-year life of Greenlight” number. I assume the investors in Greenlight ($6 billion in assets) *have* seen the fund’s audited financial statements. :-)
June 20th, 2008 at 7:51 am
I love people who make such assumptions. Last one that comes to mind was about a company called “Bear” something or other.
Seriously, I have followed Einhorn for 10 years, which is about 3,600 days more than most. When someone has to write a book in attempt to validate his trade (short) against ALD, it raises too many red flags with me.
Einhorn reminds me of another book writer who went belly up twice in his hedge funds. Bright guy, big ego, but belly up. Sorry. Too much reality.
June 20th, 2008 at 7:56 am
The Einhorn “assumption” reminds of another classic.
The CIO of the PA State Retirment System got some publicity this year for performance from an pension fund. I looked over his holdings. Something like 100+ hedge funds accounting for 25% of the pension funds holdings.
Now ask yourself this simple, lttle, stupid question my friend.
Do you actually think this pension fund ever went “mark to market” on all these hedges to arrive at any idea of what they actually made? Could they if they wanted to do so?
The returns for the pension fund were, of course, unaudited.
Love it.
June 20th, 2008 at 8:16 am
Howard: Didn’t he write the book long after the trade was closed? I don’t know anything about Einhorn; I’m not carrying a torch for him or have a strong opinion like you do. I’m most interested in his card-playing ability. :)
June 20th, 2008 at 10:04 am
Einhorn never disclosed (to my knowledge)in a “timely” manner when he opened or closed his ALD short. My guess is that at his presentation to NYC analysts in May of 2002 he had his short on. ALD was trading very close to an all time high at $29.00, but quickly gapped down on his presentation (he claimed he wasn’t short at the presentation. The individual who sponsored the presentation held a large position in his fund at that time. Convenient no?). ALD dropped to a low of $17.00 intraday on July 24, 2002 and did a classic key reversal on heavy volume. At that time, short % was over 35% of the float. From that price, it never looked back hitting a new high in early 2004 of $31.00. On the run up, the percentage of float short never dipped below 25% even though ALD was paying ine xcess of a 10% dividend (of course, I doubt Einhorn or any other major hedge ever paid for their naked shorts.).
I’m not necessarily questioning whether or not he made money on that short. I firmly believe he did. His claim of compounding at 25% every year for the last 12(?) years is totally bogus however.
My other criticism of Einhorn lies in his egotistic attempt to justify his short bassed on his “metrics” of ALD. As ALD moved back above its historical high of $29.00, this justification got lost in the wind, and Einhorn did a convenient forget me.
By the way, very shortly after the presentation on ALD, he closed his website for Greenlight. At that time, Joel Rosenburg (I hope I have his name correct)was on his payroll and did columns for street.com and routinely hit ALD with negative innuendo. It’s the way it always works. Repeat something often enough and it becomes the truth.
Discloser: I held 27,000 shares of ALD from 1993 with a basis of $13.00 on 20,000. Cashed out in early 2004 on the run up past the old historical highs.
June 20th, 2008 at 5:48 pm
You’ve really got to love totally unsubstantiated albeit slanderous allegations like Howard is putting forth here.
If you don’t like the message, you attack the messenger, his credibility, his character, etc.
Typical Goerge Bush BS that’s just as disconnected to reality like everything he ever said or did.
Anybody who has even the remotest skills as a trader knows that 25% pa are absolutely and totally achievable.
Maybe not with 6 billion, but most definitely on the way there.
Besides, his investors would be all over the media if his figures weren’t true.