The 17th annual Sohn conference took place last May in New York and drew a star-studded panel of fund managers to offer (a few of) their best trade ideas.
Everyone was there, from David Einhorn to John Paulson and Bill Ackman. Topics as diverse as palladium, French CDS and Argentina’s sovereign debt were discussed.
But were the trade ideas any good? Read more
Hours (well minutes) of fun courtesy of the EU.
It’s the new disclosure regime for short selling, which involves the FSA publishing a list of the most shorted stocks in the UK. Read more
A less dramatic reaction than when he told the world to wake up and smell the Green Mountain Coffee, but Chipotle is a modestly-sized company and was already down more than 6 per cent on the year before David Einhorn made the short sale recommendation at a conference today.
Andrew Osborne is justified to feel hard done by. A single four-word remark in a long phone conversation has cost him a small fortune. The words were “something like 350 sterling”, an amount which bears a curious symmetry to the £350,000 fine which the FSA has just levied on him. Given his long years and senior position, he can probably pay it without having to eat bread and water, but it’s still pretty eye-watering. It also looks like rough justice, as he himself claims.
Osborne was a managing director at Merrill Lynch, the brokers with the unenviable task in 2009 of trying to restore financial stability to the pub chain Punch Taverns, a confection of debt built on a sliver of equity. For months, it had seemed odds-on that Punch would collapse, but the “dash for trash” in the spring that year propelled the share price up from 40p to around 160p, and offered a get-out-of-gaol opportunity. Read more
It’s been a gruesome week in the mobile phone market. The almost embarrassing dominance of Apple (ideas for spending $90bn of spare cash, anyone?) provided a cruel contrast to the desperate plight of the opposition. The maker of Blackberrys ditched its founders. Nokia, the one-time rubber-boot manufacturer, tried to stay positive, boasting that it had sold a million Windows-based Lumia phones in the last three months. During that time Apple shipped 37m iPhones. It has sold 315m of them worldwide.
The eclipse of Nokia is one of the wonders of the age, providing fodder for business school studies for decades to come. At the turn of the century, its position in the burgeoning mobile phone market seemed unassailable. Its combination of market dominance and mouth-watering margins meant that it could outspend and out-develop any competitor who came up with a better product. It sold its billionth phone in 2005, and in late 2007, deemed the world’s fifth most valuable brand, the business was valued at €100bn. Read more
UK regulators are seeking to fine a former Bank of America Merrill Lynch broker about £350,000 for his role in hedge fund manager David Einhorn’s improper trading ahead of the 2009 equity raising by Punch Taverns, reports the FT. Andrew Osborne, who resigned from the bank late last year, is considering whether to appeal against the fine to a tribunal. The reports cites people familiar with his views as saying Mr Osborne, who served as corporate broker for the UK pubs company, consulted lawyers throughout his June 2009 interactions with Mr Einhorn and does not believe he gave the hedge fund executive inside information. The case highlights a gulf between US and UK regulators on insider trading, says the FT separately. The WSJ says corporate broking in the UK is coming under increased regulatory scrutiny.
David Einhorn’s personal £3.6m ($5.6m) fine from the UK’s FSA for market abuse amounts to the second largest individual penalty for in the regulator’s history, and finally gives it a high-profile scalp, the FT says. Few US hedge fund managers come more high-profile than Einhorn, who often seeks publicity for controversial shorts, reports the WSJ. In a conference call with investors in his Greenlight Capital fund, Einhorn disputed the FSA’s ruling. “This is like a traffic cop with a quota at the end of the month, with a faulty radar detector,” he said, according to Dealbreaker.
David Einhorn, one of the world’s highest profile hedge fund managers, and his firm, Greenlight Capital, have been fined £7.2m by UK regulators for trading ahead of a 2009 equity fundraising by Punch Taverns, the FT reports. Mr Einhorn, who will personally pay £3.6m, is the most prominent figure to be ensnared by the UK Financial Services Authority, which has traditionally lagged behind US enforcers in tackling market abuse. His fine is the second largest ever handed down by the FSA to an individual for market abuse and will send a chill through the City. The case is a key step in the FSA’s campaign to hold market professionals to account and to tackle the high rates of suspicious trading ahead of mergers and rights issues. The WSJ says it represents a rare instance when a hedge-fund manager is personally held responsible for allegedly improper trading.
Or, the UK’s FSA slaps a £7.2m fine on David Einhorn and Greenlight Capital over trading in Punch Taverns shares in 2009. First, the case from the FSA:
On 9 June 2009, Einhorn was a party to a telephone conference in which it was disclosed to him by a corporate broker acting on behalf of Punch Taverns Plc that Punch was at an advanced stage of the process towards a significant equity fundraising. This was inside information and Einhorn should have appreciated this. Read more
It’s not quite as bad as the New York Mets but after David Einhorn announced Monday he was shorting Green Mountain Coffee, the firm took a roasting:
A deal that was poised to rescue the troubled finances of the New York Mets baseball team with a $200m minority stake acquisition by hedge fund manager David Einhorn has fallen apart, the FT reports. In May, Mr Einhorn agreed to become a minority, non-operating partner in the team, as the owners of the Mets struggled with declining revenues from baseball operations, substantial debt and litigation stemming from their involvement with Bernard Madoff. Fred Wilpon and Saul Katz, the Mets owners, were heavily invested with Mr Madoff. Irving Picard, the trustee working to recovery money from victims, is now seeking between $300m and $1bn from Sterling Equities, the holding company for the Mets. “A week ago, I thought this deal was in great shape and thought it would close very soon,” Einhorn said on a conference call with reporters, Reuters reports. But in light of the team’s moves, he is walking away. “We are finished here, we are done with this transaction.” The 42-year old has been a self-professed Mets fan since childhood. His hedge fund firm, Greenlight Capital, oversees about $7.8bn.
The owners of the New York Mets will sell a $200m minority stake in the baseball franchise to David Einhorn, the outspoken hedge fund manager, as they seek to right the finances of the struggling team and insulate themselves from the fallout from Bernard Madoff’s Ponzi scheme, the FT reports. Fred Wilpon, the Mets’ principal owner, was a close friend of Mr Madoff and had invested heavily in Mr Madoff’s firm. Irving Picard, the trustee seeking to recover assets for Mr Madoff’s victims, alleges that Mr Wilpon and his business partner Saul Katz knew or should have known of the fraud, and has sued them for up to $1bn.
Steve Ballmer’s leadership is “the biggest overhang on Microsoft’s stock” and he should resign to make up for new blood, according to David Einhorn, Reuters says. Einhorn’s Greenlight Capital recently began buying Microsoft stock and now holds 0.11 per cent of the company’s outstanding shares. “Ballmer does not care what Wall Street thinks and maybe that’s a good thing”, said Einhorn at the Ira Sohn investor conference, but he then went on to describe the imposing chief executive as “stuck in the past” and attacked Microsoft’s moves to build its online services offerings, the FT reports. But Einhorn argued that Microsoft still had a chance in cloud computing and smartphone markets stemming from its recent co-operation with Nokia.
Chazzer Gasparino seems to be settling into his new role at Fox Business News quite nicely, with what appears to be a slightly speculative scoop about David Einhorn and Lehman Brothers.
As Gasparino reported on the Fox Business website (emphasis ours): Read more
On Friday, the FT published a piece detailing David Einhorn’s objections to credit default swaps, which he first raised in a recent letter to investors.
And by objections, we mean the boy-genius founder of Greenlight Capital thinks the instruments which have served him so profitably ought to be banned outright. Read more
Just about “everyone and their uncle” seems to be shorting Japanese government bonds at the moment, notes Louis-Vincent Gave in the latest note from the asset allocation and research house Gavekal.
Friends on trading desks call it the “Einhorn Effect”, he says, because of the famed Greenlight Capital founder’s recent speech on the challenges many governments will face servicing their debt, with Japan as a prime example. Read more
We might have expected David Einhorn’s Greenlight Capital to have suffered terribly during the recent equity rally.
But no! Mr Einhorn might scold the Obama administration for pursuing “short-term popularity over our solvency” and advise everyone to buy gold, but funds under his management seem to be holding up relatively well. Read more
Shares of Moody’s fell sharply on Thursday after hedge fund manager David Einhorn, who correctly questioned the health of Lehman Brothers four months before its collapse, disclosed he was shorting the ratings agency, reports Reuters. Einhorn, whose Greenlight Capital manages $5bn, said Wednesday the parent of Moody’s Investors Service undercut the value of its primary business – assigning grades to bonds – after giving AAA ratings to insurer AIG, mortgage banker Fannie Mae, bond insurer MBIA and other companies later revealed to be badly overextended.
This time last year, David Einhorn – the hedge fund manager behind Greenlight Capital – took to the stage at the Ira W Sohn Investment Research Conference in New York and in a rather forceful speech – even by activist standards – announced that he was shorting Lehman Brothers and that the firm was indeed, as its CFO had many times said, “incredible” — just for all the wrong reasons.
Einhorn’s detailed takedown had Lehman executives on the ropes for weeks thereafter. And, of course, it was all correct. Read more
Hedge fund investors who made money last year by betting against investment banks are now buying gold as a way of betting against central banks. The gold bulls include David Einhorn, founder of hedge fund Greenlight Capital, who last year came under the spotlight for his short selling of shares in Lehman Brothers, after arguing that the bank did not have enough capital to offset its exposure to falling property prices. Other funds looking at gold include Eton Park and TPG-Axon, the FT reported.
The short sellers did it, Richard Fuld, former Lehman Brothers chief executive, said in testimony to a Congressional committee on Monday. In an extraordinary public autopsy into the biggest bankruptcy in US history, Fuld declared he felt “horrible” about Lehman’s collapse but insisted the investment bank was brought down by a crisis of confidence in the marketplace, combined with a wave of naked short selling. By blaming the short sellers, Fuld echoed a fellow victim of the credit crisis earlier this year – Alan Schwartz, former CEO of Bear Stearns, who told a Senate committee in April short sellers had helped create a run on the bank, which sapped its liquidity and eventually saw it bought by JPMorgan Chase. Fuld said what had happened at Lehman could have happened to “any other firm on Wall Street, and almost did”. But Henry Waxman, Democratic chair of the oversight committee holding the hearing, suggested Fuld’s preoccupation with David Einhorn, a hedge fund manager who stated he had a large short position on Lehman stock, caused him to abandon his fiduciary obligation to shareholders.
David Einhorn’s Greenlight Capital has opted off the SEC’s no-short list.
Here’s the Nasdaq statement. HT Naked Shorts. Read more
Also known as: “Would a short-selling ban have saved Lehman?”
The outspoken hedgie David Einhorn would have made a killing from his bets against Lehman Bros this summer. He first announced his position in April, when Lehman’s share price was at about $40, saying he had questions about the company’s balance sheet. Lehman stock is now under $4 — giving Einhorn’s Greenlight Capital a 90 per cent return according to some estimates. Read more
Is it a case of “anything you can do, I can do
worse better” at Natixis?
The French bank, which needs to replenish capital after about €3bn worth of subprime-related writedowns, said today it will go ahead with its planned rights issue. The catch? It’s selling new shares at a 61 per cent discount to yesterday’s closing price of €5.84 euros – deeper than many analysts had expected. Read more
Hedge fund manager David Einhorn of Greenlight Capital is best known (now) as the prolific shorter of Lehman Brothers.
His very public evisceration of the bank in May sparked huge falls in its share price. He brought down CFO Erin Callan. His most damning conclusion was that Lehman needed more capital. He pulled no punches: Read more
Amid an implosion in the subprime mortgage market, David Einhorn, the hedge fund manager who runs Greenlight Capital, is resigning from the board of New Century Financial, reports Dealbook. The company, which faces an inquiry into its accounting and mounting credit problems, made Mr. Einhorn a director last March after Greenlight Capital, a $4.7bn fund and New Century’s second-largest shareholder, threatened to wage a proxy fight. New Century Financial also on Thursday said it had stopped accepting loan applications from prospective borrowers and was negotiating with creditors to whom it owes billions. New Century shares, which traded as high as $50 last May, fell a further 25 per cent to $3.87. Should New Century file for bankruptcy protection, it would impact a number of large Wall Street and commercial banks that have extended billions in credit to the company.
Allied Capital, a business lending group locked in a bitter battle with a hedge fund, said that federal prosecutors have asked for information on how it obtained private phone records from the hedge fund’s president. The statement from Allied is the latest salvo in a complex five-year fight between the lender and hedge fund Greenlight Capital, headed by David Einhorn. Greenlight has been betting against Allied’s stock for five years, claiming the company overvalues some assets. An Allied subsidiary, Business Loan Express, has been under investigation by the US Attorney for the District of Columbia and the Securities and Exchange Commission over accounting issues. Mr Einhorn and Greenlight have also filed a federal lawsuit, in the name of the US government, alleging that BLX submitted fraudulent loan documents to the federal Small Business Administration. Mr Einhorn has also claimed that Allied used “pretexting” – using a false identity to obtain private records from the phone company – to get hold of his and other Allied critics’ phone records.