David Michael Einhorn of Greenlight Capital, Inc.
Book entitled “Fooling Some People All of the Time, A Long Short Story,” written by David Einhorn
Insider Monkey report: 2012 Stock Picks
November 2013 Reuters article entitled “Einhorn’s Greenlight Sells Cigna While Buying Spirit AeroSystems”
October 2013 Reuters article entitled “Einhorn’s Greenlight up 4.3 percent in third-quarter”
August 2013 Bloomberg article entitled “Loeb Poised for IPO as Einhorn Dump-Truck Bet Shows Insurer Risk”
May 2013 Institutional Investors Alpha article entitled “Einhorn Gets Defensive about his High-Profile Presentations”
May 2013 Reuters article entitled “Einhorn’s advice to investors: don’t take my advice”
May 2013 CNN Money article entitled “Hedge funds bet against Chipotle”
April 2013 Bloomberg article entitled “Einhorn’s Swaps Boosting Marvell Bet Exposed by Buyback”
April 2013 Fox Business article entitled “Einhorn Could Have a Mining ETF Problem”
March 2013 Market Watch article entitled “Greenlight’s Einhorn drops lawsuit against Apple”
March 2013 Bloomberg Businessweek article entitled “When David Einhorn Talks, Markets Listen—Usually”
February 2013 Guru Focus Stock Picks (requires subscription)
February 2013 Reuters article entitled “Hedge fund manager Einhorn blasts Dell’s buyout plan”
February 2013 Bloomberg article entitled “Einhorn Says S&P Suit Affirms Wager Against McGraw-Hill”
February 2013 Business Insider article entitled “HERE IT IS: David Einhorn’s Massive Presentation On What Apple Should Do”
February 2013 New York Post article entitled “Einhorn holds conference call to sway Apple shareholders”
January 2013 Bloomberg article entitled “Herbalife in Investor Meeting Says Ackman Pyramid Case Wrong”
May 2012 Seeking Alpha article entitled “Tracking David Einhorn’s Greenlight Capital Portfolio – Q1 2012 Update”
According to Greenlight Capital’s December 2009 business filing, “Greenlight Capital has locked horns with some of its investment such as MI Developments and Allied Capital. Einhorn (who is known for his speeches that often uncover the rationale behind some of this investments) even wrote a book about his squabbles with Allied — a company he shorted after uncovering problems with its accounting. But his bet was wrong and Allied’s stock soared. Einhorn wound up being investigated by the SEC after Allied said he threatened the company’s credibility by spreading negative information. Einhorn also grabbed headlines in 2008 when he correctly predicted the demise of Lehman Brothers and shorted its stock months before the firm went belly up.”
In December 2009 David Einhorn was very vocal about the ratings agencies McGraw Hill and Moodys. He also spoke about the value of gold, and his concerns about U.S. and Japanese debt.
In March 2009 National Rural Utilities Cooperative Finance Corp said it would acquire Innovative Telephone Co. and other assets of bankrupt Innovative Communication Corp. (ICC). Until September 2007, Jeffrey Prosser ran ICC. He and his companies were forced into involuntary Chapter 11 bankruptcy after creditors including National Rural and Greenlight Capital LLC, said they had defaulted on more than US$650 million in loans.
An October of 2008 article reveals that David Einhorns’ Greenlight Capital held a short position against General Electric in the third quarter. The Greenlight partnership listed a short on GE as one of its positive closed positions in the quarter, yielding a 67% internal rate of return as the firm bought in, on average, at $26.43 and exited, on average, at $25.22.
An October 2008 article writes that, “it appears that Einhorn’s frequent and vocal questioning of Lehman’s risk management decisions (and how the firm accounted for and reported its financial results) was not a business decision at all. Instead, he maintained that Lehman’s portrayal of its financial performance did not pass the sniff test and that he was simply stating the truth. A point that seems to really stick in Einhorn’s craw is his contention that Lehman, like other firms, has an incentive to sugar-coat its problems because management compensation is largely tied to how its performance is reported.”
From an October 2008 interview with Erin Callan former Lehman Brothers CFO:
What about your relationships with hedge funds? Part of your Lehman legacy is your battle with David Einhorn of Greenlight Capital, who was shorting your stock.
Callan: Our job was to work one-on-one with our clients and shareholders to address questions they had, based on issues that he raised. But the firm found it difficult to ignore the public dialogue he started. Einhorn actually never said anything that was outright false. He had an opinion about lots of things. And he was entitled to his opinion.
An October 2008 article reveals that during when he went before a Congressional oversight committee, Richard Fuld, former Lehman Brothers chief executive, was accused of being preoccupied with David Einhorn, causing him to abandon his fiduciary obligation to shareholders.
Greenlight Capital, a fund run by David Einhorn, was down 12 percent in September 2008. Hedge fund manager David Einhorn suffered a big loss in September as the credit crisis deepened and regulators banned short selling of more than 900 financial-services stocks.
A September 2008 profile of Greenlight Capital Re (Greenlight Re), reveals that the company gives the go-ahead to insurance companies looking to offset their losses. Through operating subsidiary Greenlight Reinsurance, the company sells property/casualty reinsurance, specializing in writing customized contracts in underserved markets, including casualty clash, homeowners insurance in some states (particularly Florida), marine, and property catastrophe. It also provides medical malpractice and workers’ compensation reinsurance. Private equity firm Greenlight Capital formed the company in 2005, and it began underwriting business the following year. Greenlight Re went public in 2007. The company gets much of its business through relationships with reinsurance brokers, including Aon. It used proceeds from its 2007 IPO to increase its underwriting capacity. Chairman David Einhorn, also the president of Greenlight Capital, owns 17% of the company.
A September 2008 article announces David Einhorn isn’t afraid of high stakes: “The New York-based hedge fund manager has taken Magna founder Frank Stronach to court, charging oppression of shareholders. He has also written a book that is highly critical of investment firm Allied Capital. What’s more, he’s a top finisher in the World Series of Poker.”
A June 2008 article reveals that six years ago, hedge-fund manager David Einhorn made a speech at an annual investment conference about a stock he didn’t like—a mid-cap financial company called Allied Capital—and the world came crashing down on top of him. He was investigated by the Securities and Exchange Commission for conspiring with other investors to sink the stock. Allied stole his personal phone records in an attempt to prove the conspiracy. An article in The Wall Street Journal compared his treatment of Allied to “a mugging.” New York’s then–Attorney General, Eliot Spitzer, vowed to do his own investigation. And Einhorn’s wife, an editor at the financial weekly Barron’s, mysteriously lost her job.
A June 2008 article on Mr. Einhorn’s battle with Lehman asks, “How in the world did a hedge-fund manager become our top crusader for financial probity?”
Several shareholder lawsuits were filed against New Century and its board members, including David Einhorn, in the wake of the company’s bankruptcy.
In October 2007 Washington Group Inc announced a settlement to a class-action lawsuit opposing the company’s proposed sale. Schultze Asset Management LLC, a hedge fund that owns about 3 percent of Washington Group shares, filed a lawsuit in Delaware Chancery Court Oct. 1 attempting to stop the engineering and construction company’s planned acquisition by URS Corp. Greenlight Capital Inc. President David Einhorn in late July and late September filed letters opposing the merger as under-valuing the company. The Greenlight hedge fund owns about 10 percent of Washington Group shares.
Greenlight Capital Re went public on May 24, 2007. David Einhorn owns 18% of Greenlight Capital Re, Ltd, located in the Caymans.
Greenlight Capital owned 6.3% of New Century Financial, (and had the right to boost its holdings to as much as 20%), but became embroiled in the sub-prime lender’s woes in 2006. After some proxy wrangling, Einhorn won a seat on the lender’s board, but New Century Financial’s lenders pulled the plug on the mortgage company, sending it into Chapter 11 bankruptcy. Einhorn resigned from New Century Financial’s board in March 2007.
In February 2007 Allied Capital acknowledged that a private investigator it hired illegally obtained the personal phone records of David Einhorn.
In November 2006, Jeffrey Prosser, the principal owner of Innovative Communications, the holding company for Virgin Islands Telephone, announced plans to sell more than 50% of the company. Two of ICC’s creditors, the Rural Telephone Finance Cooperative of Herndon, Va., and New York hedge fund Greenlight Capital LLC, filed an involuntary bankruptcy petition against Prosser and various corporate entities in a Delaware court last February after years of litigation. The parties settled in April. Prosser was unable to arrange financing for the pact, however, and filed a voluntary bankruptcy petition in the U.S. Virgin Islands in late July. Greenlight holds a judgment from the Delaware Court of Chancery for more than $130 million. Greenlight’s judgment pertained to the 1998 transaction in which Prosser took the phone company private. When Greenlight filed an involuntary Chapter 11 petition against Prosser and various business entities in concert with the RTFC, Innovative derided the move as “predatory” and “vindictive.”
A November 2006 New York Times article reported that nearly three years ago, someone claiming to be the wife of the hedge fund manager David Einhorn contacted his phone company and, using his wife’s Social Security number, opened an online account. The caller directed the phone company to send copies of Mr. Einhorn’s home telephone bills to an AOL account, according to letters written by Mr. Einhorn that he provided to The New York Times. At least four others, including Herb Greenberg, a columnist for the MarketWatch Web site, say they also discovered, around the same time, that their phone records had been accessed without their knowledge or approval. The five had one thing in common: All were vocal critics of Allied Capital, a public company that provides loans to smaller companies. The company has denied any role in the alleged pretexting and says it has found no evidence to support claims that it was involved. The allegations, made by Mr. Einhorn in two letters to Allied’s board suggest that getting the phone records under pretext may have been an effort to root out relationships and silence critics.
Full details into this situation, and the Greenlight-Allied dispute can be found in the full article at http://www.nytimes.com/2006/11/08/business/08hedge.html?_r=1&pagewanted=print&oref=slogin
Before dismissing the application, Judge Ground noted said that Greenlight Capital, in its efforts to steer MI onto a different course, behaved in an unsportsmanlike manner. The Greenlight Group surreptitiously taped telephone calls, filed a complaint letter with the Ontario Securities Commission without giving MI any notice, threatened to take board members to court and made misleading statements to shareholders.
In October 2006 MI Developments Inc (parent company of Magna Entertainment Corp) announced that Justice J.D. Ground of the Ontario Superior Court of Justice had dismissed the oppression application filed by Greenlight Capital, Inc. and certain hedge funds managed by Greenlight against MID. The lawsuit in the Ontario Superior Court was the culmination of an 18-month effort by Greenlight to force radical changes in the way the companies are operated and Mr. Stronach’s role in them. Greenlight asked the court to force MI Developments to sell the MEC stake, turn the real estate company into an investment trust, convert Mr. Stronach’s multiple-vote shares into single shares and order him to compensate MI Developments for expenses incurred during a failed bid to take MEC private. The hedge funds argued founder Frank Stronach was using his undue influence to turn MI into a financing vehicle for his Magna Entertainment Corp. An appellate court confirmed this ruling in July 2008.
In August 2006 Cheryl Einhorn presented, as a gift from the Einhorn Family Charitable Trust to her husband, a $1 million donation to launch the Milwaukee Urban Debate League.
In August 2006 Einhorn placed 18th in the World Series of Poker, and won $659,730, which he later donated to the Michael J. Fox Foundation.
In May 2006 New Century Financial Corp.’s shareholders approved a plan to make an exception to the 9.8% ownership limit in the company’s charter and let Greenlight Capital Inc. increase its stake to as much as 19.6%.
In May 2006 Einhorn said that Microsoft Corp. chief executive officer Steve Ballmer should step up the company’s stock buyback to $75 billion.
He has been on the board of directors of New Century Financial Corporation since March 2006, after New Century agreed to add an 11th seat to the board in return for calling off a proxy fight.
A January 2006 article reported that Elliot Spitzer, New York State’s attorney general who was running for governor, received a number of contributions from hedge funds. David Einhorn of Greenlight Capital, along with his wife, gave $100,000.
In May of 2005, Greenlight Capital took a shot at New Century, a sub prime mortgage lender, saying the company’s executives haven’t done enough to boost the stock. David Einhorn went so far as to call the company’s strategy a failure. Greenlight was the largest shareholder at the time, with 9% of the company stock.
In May of 2005, Magna International Development defeated a motion to sell off its Magna Entertainment company and convert the firm to a real estate investment trust. The motion was brought forward by David Einhorn of Greenlight Capital, which owns about 10% of MID. Einhorn’s motion was supported overwhelmingly by MID’s class-A shareholders but the company chairman used class-B share votes to defeat the motion. Einhorn was hoping the company would drop its less profitable Magna Entertainment branch, which is involved in horse racing. At one shareholder meeting in 2005, David Einhorn compared MID president Frank Stronach to Cuban dictator Fidel Castro.
In 2003, Greenlight Capital started a proxy fight with Mercer International, a pulp-and-paper mill company in Germany. Greenlight executives state that the company’s board is in disarray and that the company is performing poorly. They also state that the company president and CEO have too many conflicts of interest. Mercer, on the other hand, believes that Greenlight has other motives and that the proxy fight is disrupting the company at a critical time.
In 2002, David Einhorn and Greenlight Capital were involved in a battle with Allied Capital, a company they had invested in. Einhorn started the fight by presenting Allied Capital as his short idea at the Ira W. Sohn investment conference, a charity event to raise money for cancer. He stated that Allied’s accounting was dubious and misleading. The day after the presentation Allied stock fell 11%. Allied has denied all of Einhorn’s charges and also states that David Einhorn is spreading misinformation in an effort to bury the stock price. Yet, in 2004, it was announced that the SEC had begun an informal investigation, looking specifically at the company’s accounting practice.
In 2003, David Einhorn placed the winning bid for the privilege to have lunch with investing guru, Warren Buffett. Einhorn bid $250,100, which will be donated to the Glide Foundation, a San Francisco organization that aids the homeless and poor. Einhorn and his wife dined at a steak house in NYC with Mr. Buffett and claimed the dinner was a “once-in-lifetime opportunity.”
In 2001, David Einhorn and Greenlight Capital released a report on CompuCredit, a sub prime lender in Atlanta, GA. Einhorn estimates that CompuCredit has overstated by $67 million the cumulative $153 million in net income. Greenlight was short the company’s stock at the time. A representative for the company stated, “shorts are trying to do anything to push our stock price down.”
In 2000, Greenlight Capital made a bid to buy BNC Mortgage Inc. for $56.1 million. After reviewing BNC’s financial records, Greenlight ”decided not to proceed with the proposed transaction.”
David Einhorn, graduated from Nicolet High in 1987, and his parents and other family members continue to live in the Milwaukee area. He started Greenlight in 1996 with $1 million.
Cheryl Beth Strauss and David Michael Einhorn announced their engagement on July 25, 1993.
Einhorn is on the Board of Directors at the Michael J. Fox Foundation.