David M. Einhorn (born November 20, 1968) is an American investor and hedge fund manager. He is the founder and president of
Greenlight Capital
Greenlight Capital is a hedge fund founded in 1996 by David Einhorn (hedge fund manager), David Einhorn. Greenlight invests primarily in publicly traded North American corporate debt offerings and equities. Greenlight is most notable for its sho ...
, a "long-short value-oriented hedge fund".
Born in
New Jersey
New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...
, Einhorn graduated from
Cornell University
Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...
, before starting Greenlight Capital in 1996. Over the next decade, the fund experienced annualized returns of 26%, far better than the market. Greenlight Capital's assets under management decreased from approximately US$12 billion in 2014 to about $5.5 billion as reported in July 2018 as the fund was down 11.3% from 2014 through the end of 2017, and a further 34% in 2018. He has received extensive coverage in the financial press for his fund's performance, his investing strategy and his positions.Lindgren, Hugo (June 15, 2008) "The Confidence Man" ''
New York
New York most commonly refers to:
* New York City, the most populous city in the United States, located in the state of New York
* New York (state), a state in the northeastern United States
New York may also refer to:
Film and television
* '' ...
''.
Einhorn was included in ''
Time
Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, into the future. It is a component quantity of various measurements used to sequence events, to ...
'' magazine's ''Time'' 100 list of "100 most influential people in the world" in 2013. According to Investopedia, his net worth was around US$1.5 billion in June 2019.
Early life and education
Einhorn was born to a
Jewish
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""The ...
family in New Jersey, the son of Stephen and Nancy Einhorn.Daniel Bice Venture capitalist Einhorn paid for voter fraud billboards ''Milwaukee Journal Sentinel'' (October 29, 2012).New York post: "Mets agree to sell minority stake in team" By CLEMENTE LISI May 26, 2011 Raised in
Demarest, New Jersey
Demarest is a borough in Bergen County, New Jersey, United States. As of the 2010 United States Census, the borough's population was 4,881, His father is the founder and president of Einhorn & Associates, a consulting firm, and Capital Midwest Fund, a venture capital fund. He has one brother Daniel who works with his father. In 1987, Einhorn graduated from
Nicolet High School
Nicolet High School is a public secondary school located in Glendale, Wisconsin. It is the only school in the Nicolet Unified School District, which serves Glendale, Fox Point, Bayside, and River Hills. Primary schooling is administered by thr ...
summa cum laude
Latin honors are a system of Latin phrases used in some colleges and universities to indicate the level of distinction with which an academic degree has been earned. The system is primarily used in the United States. It is also used in some Sou ...
'' from
Cornell University
Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...
with a B.A. in government from the College of Arts and Sciences in 1991. He was a member of the
Sigma Alpha Epsilon
Sigma Alpha Epsilon (), commonly known as SAE, is a North American Greek-letter social college fraternity. It was founded at the University of Alabama on March 9, 1856. Of all existing national social fraternities today, Sigma Alpha Epsilon is t ...
fraternity
A fraternity (from Latin language, Latin ''wiktionary:frater, frater'': "brother (Christian), brother"; whence, "wiktionary:brotherhood, brotherhood") or fraternal organization is an organization, society, club (organization), club or fraternal ...
at Cornell.
Investment career
Einhorn started
Greenlight Capital
Greenlight Capital is a hedge fund founded in 1996 by David Einhorn (hedge fund manager), David Einhorn. Greenlight invests primarily in publicly traded North American corporate debt offerings and equities. Greenlight is most notable for its sho ...
in May 1996 with $900,000 in start up capital. In May 2002, he gave a speech at the Sohn Investment Research Conference where he recommended
shorting
In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional " long" position, where the investor will profit if the value of t ...
a mid-cap financial company called
Allied Capital
Allied Capital was a private equity investment firm and mezzanine capital lender providing debt and equity capital for leveraged buyouts, acquisitions and restructurings of established businesses. Allied operated as a Business Development Compan ...
eventually disclosing that he himself had a substantial short position. The day after the speech the company's stock went down by 20 percent. Einhorn alleged the company of defrauding the
Small Business Administration
The United States Small Business Administration (SBA) is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and stren ...
while Allied said that Einhorn was engaging in
market manipulation
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
, and illegally accessed his phone records using
pretexting
Pretexting is a type of social engineering attack that involves a situation, or pretext, created by an attacker in order to lure a victim into a vulnerable situation and to trick them into giving private information, specifically information that t ...
. In June 2007, after a lengthy investigation by the
U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
(SEC), it found that Allied broke
securities laws
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
relating to the accounting and valuation of illiquid securities it held. After the incident, Einhorn published a book, ''Fooling Some of the People All of the Time'' regarding this six-year fight. Reviews of the book were generally positive; ''
Seeking Alpha
Seeking Alpha is a crowd-sourced content service for financial markets. Articles and research covers a broad range of stocks, asset classes, exchange-traded funds (ETFs), and investment strategies. Unlike other equity research platforms, insight ...
'', said of the book: "the case against Allied Capital is laid out to the last detail. Because of the immense amount of data in the book, I would imagine that some readers may want to skip a page here and there. However, the book is by no means dull. This book proves that truth is really stranger than fiction." Einhorn would come to view Allied as a microcosm of
market trend
A market trend is a perceived tendency of financial markets to move in a particular direction over time. Analysts classify these trends as ''secular'' for long time-frames, ''primary'' for medium time-frames, and ''secondary'' for short time-fram ...
s: "What we've seen a year later is that Allied was the tip of an iceberg; that this kind of questionable ethic, philosophy and business practice was far more widespread than I recognized at the time ... Our country, our economy, is paying a huge price for that."
Lehman Brothers
In July 2007, Einhorn shorted
Lehman Brothers
Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before Bankruptcy of Lehman Brothers, filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Gol ...
stock, believing that Lehman had massive exposures to illiquid real estate investments that were improperly accounted for. He also claimed that they used dubious accounting practices in their financial filings. Einhorn shared his thesis on Lehman in November 2007 at the Value Investing Congress.
When
Bear Stearns
The Bear Stearns Companies, Inc. was a New York-based global investment bank, securities trading and brokerage firm that failed in 2008 as part of the global financial crisis and recession, and was subsequently sold to JPMorgan Chase. The compa ...
had to be bailed out by the Federal Reserve in March 2008, Lehman was widely considered to be in a weak financial situation. In a speech at a conference in April, Einhorn announced his Lehman short position.Cyrus Sanati "Erin Callan: the Greta Garbo of Wall Street" DealBook, March 9, 2010. In May, Lehman's CFO Erin Callan held a private teleconference with Einhorn and his staff, who hoped Callan could explain discrepancies they had uncovered since the firm's latest financial filing. Einhorn publicly characterized Callan's responses on the call in a negative light and Lehman stock fell sharply. Callan was fired a few weeks later when Lehman reported a $2.8 billion quarterly loss. Lehman would declare bankruptcy in September 2008.
Microsoft
On May 26, 2011, Einhorn called for
Steve Ballmer
Steven Anthony Ballmer (; March 24, 1956) is an American business magnate and investor who served as the chief executive officer of Microsoft from 2000 to 2014. He is the current owner of the Los Angeles Clippers of the National Basketball Associ ...
, CEO of
Microsoft
Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washing ...
, to step down after Microsoft had been passed by both
Google
Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. ...
and
Apple
An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple fruit tree, trees are agriculture, cultivated worldwide and are the most widely grown species in the genus ''Malus''. The tree originated in Central Asia, wh ...
in
market value
Market value or OMV (Open Market Valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with ''open market value'', ''fair value'' or ''fair market value'', although the ...
.
U.K. insider dealing
In January 2012, the U.K. Financial Services Authority (FSA) fined Einhorn and Greenlight Capital $11.2 million for trading on inside information. 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 four days, Einhorn sold more than 11 million shares, avoiding a 29.9% stock price collapse and subsequent loss of about £5.8 million."FSA fines hedge fund manager David Einhorn ￡7.2m for insider trading" ''fsa.gov.uk''.
The Financial Services Authority stated'':''
The FSA accepted that Einhorn's trading was not deliberate because he did not believe that it was inside information. However, this was not a reasonable belief. This was a serious case of market abuse by Einhorn and fell below the standards the FSA expects, particularly due to Einhorn's prominent position as President of Greenlight and given his experience in the market. Einhorn is an experienced professional with a high profile in the industry. We expect someone in his position to be able to identify inside information when he receives it and to act appropriately. His failure to do so is a serious breach of the expected standards of market conduct. It is highly damaging to market confidence when privileged shareholders commit market abuse, and the high penalty reflects the seriousness of his breach.
Einhorn called the £7.2m fine "unjust" and "inconsistent with the law" but said he would pay it "rather than continue an arduous fight" The fine was the second largest levied on an individual in the history of Britain's Financial Services Authority.
Green Mountain Coffee Roasters
Speaking at the Value Investing Congress in New York City on October 17, 2011, Einhorn publicly announced his short position in
Green Mountain Coffee Roasters
Keurig Dr Pepper Inc., formerly Green Mountain Coffee Roasters (1981–2014) and Keurig Green Mountain (2014–2018), is a publicly traded American beverage and coffeemaker conglomerate with headquarters in Burlington, Massachusetts. Formed in ...
stock. Prior to that date, the company's share price had increased more than tenfold since March 2009, the third-biggest gain in the
Standard & Poor's
S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is con ...
Midcap 400 Index. In his presentation Einhorn opined that the market for Green Mountain's new
Keurig
Keurig is a beverage brewing system for home and commercial use. The machines are manufactured by the American company Keurig Dr Pepper. The main Keurig products are: K-Cup pods, which are single-serve coffee containers; other beverage pods; and ...
single-cup coffee brewer was "limited", and that the
K-Cup
Keurig is a beverage brewing system for home and commercial use. The machines are manufactured by the American company Keurig Dr Pepper. The main Keurig products are: K-Cup pods, which are single-serve coffee containers; other beverage pods; an ...
coffee pods for the machine presented a "looming patent issue" for the company. He also said that Green Mountain had a "litany of accounting questions". Following Einhorn's speech Green Mountain's share price fell by 10 percent, closing that day at $82.50.
A few weeks later on November 9, 2011, Green Mountain's quarterly report missed analyst expectations and its stock price plunged to $43.71. The company's CEO Lawrence J. Blanford cited a "number of factors including changes in wholesale customer ordering patterns in our grocery and club channels" for the underperformance of the company. The stock had a run up to 157 in Nov 2014, before its final pricing in the 90's, prior to the company being sold.
Apple Inc.
In early February 2013 Einhorn filed a lawsuit against
Apple Inc.
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company ...
in a Manhattan court in order to pressure the company to issue dividend-paying perpetual preferred stock as a means of distributing some of its in cash to shareholders. Later that month Einhorn set what one ''
Wall Street Journal
''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' headline called a "Legal Precedent in Corporate Governance" when the court ruled in favor of Einhorn and determined that Apple's attempt to bundle a measure requiring a shareholder vote prior to issuing preferred shares with a larger shareholder proposal "impermissibly bundles 'separate matters' for shareholder consideration".
Fracking industry
Speaking at the Sohn Investment Conference on May 4, 2015, Einhorn sharply criticized the practice of
hydraulic fracturing
Fracking (also known as hydraulic fracturing, hydrofracturing, or hydrofracking) is a well stimulation technique involving the fracturing of bedrock formations by a pressurized liquid. The process involves the high-pressure injection of "frack ...
or "fracking". He said, "A business that burns cash and doesn't grow isn't worth anything." Specifically, Einhorn announced short positions on
Pioneer Natural Resources
Pioneer Natural Resources Company is an American company engaged in hydrocarbon exploration headquartered in Irving, Texas. It operates in the Cline Shale, which is part of the Spraberry Trend of the Permian Basin, where the company is the larges ...
and
Concho Resources
Concho Resources Inc. was a company engaged in hydrocarbon exploration, incorporated and organized in Delaware and headquartered in Midland, Texas, with operations exclusively in the Permian Basin. In 2021, the company was acquired by ConocoPhi ...
. David Einhorn also joked that Pioneer Natural Resources is a "Motherfracker".
Personal life
In 1993, Einhorn married Cheryl Strauss, a financial reporter and media consultant; they divorced in 2017. He has three children with Cheryl. Einhorn lives in
Westchester County, New York
Westchester County is located in the U.S. state of New York. It is the seventh most populous county in the State of New York and the most populous north of New York City. According to the 2020 United States Census, the county had a population o ...
.
David Einhorn is a
Democrat
Democrat, Democrats, or Democratic may refer to:
Politics
*A proponent of democracy, or democratic government; a form of government involving rule by the people.
*A member of a Democratic Party:
**Democratic Party (United States) (D)
**Democratic ...
,Christopher Keating Greenwich: Ground Zero For Campaign Cash ''Hartford Courant'' (May 26, 2012). and has contributed to Democratic political campaigns, in contrast to his parents, who are
Republican
Republican can refer to:
Political ideology
* An advocate of a republic, a type of government that is not a monarchy or dictatorship, and is usually associated with the rule of law.
** Republicanism, the ideology in support of republics or agains ...
Honda Odyssey Honda Odyssey can refer to three motor vehicles manufactured by Honda:
* Honda Odyssey (ATV), an all-terrain vehicle (1977—1989)
* Honda Odyssey (minivan), a brand of two different Honda minivan models for different markets
** Honda Odyssey (inte ...
.
He is also a founding Master Player of the
Portfolios with Purpose
Portfolios with Purpose ("PwP") is a registered 501(c)(3) non-profit organization founded in 2011. It is an annual virtual stock selection competition in which players of novice and professional experience pay a nominal entry-fee to choose a fiv ...
virtual stock trading contest.
Wealth and philanthropy
As of March 2019, ''
Forbes
''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also re ...
'' magazine reported Einhorn to have an overall net worth of US$700 million.David Einhorn Exits Billionaire Club After Horrible Investment Run /ref>
Einhorn is a major contributor and board member of
the Michael J. Fox Foundation
The Michael J. Fox Foundation for Parkinson's Research is dedicated to finding a cure for Parkinson's disease (PD) established in 2000 by Michael J. Fox. It concentrates on funding research and ensuring the development of improved therapies for ...
. In 2006, Einhorn finished 18th in the
World Series of Poker
The World Series of Poker (WSOP) is a series of poker tournaments held annually in Paradise, Nevada and, since 2004, sponsored by Caesars Entertainment. It dates its origins to 1970, when Benny Binion invited seven of the best-known poker pla ...
main event and donated his winnings (over $650,000) to the foundation. He is also on the board of the
Robin Hood Foundation
The Robin Hood Foundation is a charitable organization which attempts to alleviate problems caused by poverty in New York City. The organization also administers a relief fund for disasters in the New York City area. In 2010, a key supporter gave ...
and a contributor to numerous charities in the New York area. In the spring of 2009, as promised in his book ''Fooling Some of the People All of the Time'', Greenlight Capital donated all of the general partner's profits from the shorting of Allied Capital stock (an additional $6 million - Greenlight already donated $1 million in 2005 to Tomorrows Children's Fund - to make a total of $7 million) to three organizations
(Tomorrows Children's Fund, The Project On Government Oversight (POGO) and the
Center for Public Integrity
The Center for Public Integrity (CPI) is an American nonprofit investigative journalism organization whose stated mission is "to reveal abuses of power, corruption and dereliction of duty by powerful public and private institutions in order to c ...
(CPI)). In 2012, Einhorn donated his winnings from the
2012 World Series of Poker
The 2012 World Series of Poker was the 43rd annual World Series of Poker (WSOP). It was held at the Rio All Suite Hotel and Casino in Paradise, Nevada between May 27 – July 16, 2012, with the final table of the Main Event delayed until late Oct ...
Big One for One Drop
The Big One for One Drop is a $1,000,000 buy-in No Limit Texas hold 'em tournament hosted at the World Series of Poker (WSOP). Added in 2012, it became the highest buy-in poker tournament in history as well as the largest single payout offered. T ...
Tournament (which had a one million dollar buy in, and in which he won $4,352,000 for his 3rd-place finish) to
City Year
City Year is an American education nonprofit organization founded in 1988. The organization partners with public schools in 29 high-need communities across the US and through international affiliates in the UK and Johannesburg, South Africa. Ci ...
.
New York Mets
On May 26, 2011, the
New York Mets
The New York Mets are an American professional baseball team based in the New York City borough of Queens. The Mets compete in Major League Baseball (MLB) as a member of the National League (NL) East division. They are one of two major league ...
announced that Einhorn had agreed to buy a minority share of the
baseball
Baseball is a bat-and-ball sport played between two teams of nine players each, taking turns batting and fielding. The game occurs over the course of several plays, with each play generally beginning when a player on the fielding tea ...
team for $200 million. Einhorn had the option to purchase a majority stake in the Mets after three years if current majority owner
Fred Wilpon
Fred Wilpon (born November 22, 1936) is an American real estate developer and former baseball executive. He was principal owner of the New York Mets from 1987 to 2020.
Early life and education
Wilpon was raised in a Jewish family
and his family could not meet their financial obligations by then. On September 1, 2011, the Mets announced that they had ended negotiations to sell minority ownership to Einhorn.
Bibliography
* Einhorn, David (2010). ''Fooling Some of the People All of the Time''.
Wiley Publishing
John Wiley & Sons, Inc., commonly known as Wiley (), is an American multinational publishing company founded in 1807 that focuses on academic publishing and instructional materials. The company produces books, journals, and encyclopedias, in p ...