Einhorn's advice to investors: don't take my advice

Wed May 8, 2013 10:20pm EDT
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By Steven C. Johnson and Sam Forgione

NEW YORK (Reuters) - David Einhorn, one of the most closely followed managers in the $2 trillion hedge fund industry, had some blunt advice on Wednesday for his fellow investors: Do your own homework.

Einhorn, this year's star attraction at the Sohn Investment Conference, an annual confab where the industry's top investors share their favorite trade ideas, wrapped up his presentation by offering some words of warning about his public comments.

"It doesn't make sense to blindly follow me or anyone else into a stock," said Einhorn, president and co-founder of the $8.8 billion hedge fund Greenlight Capital. "Do your own work."

He may have been talking to the converted. Einhorn's limited impact on Apple Inc APPL.O shares after he implored the technology giant earlier this year to better use its cashpile has been noted by industry analysts. A cover piece in March by Bloomberg Businessweek, "When David Einhorn Talks, Markets Listen -- Usually," highlighted the failure of the "Einhorn effect" to work its magic on Apple.

Einhorn is perhaps best known for his prescient call on the demise of investment bank Lehman Brothers before the financial crisis, a trade idea he made public at the 2008 Sohn conference, and for his short position in Green Mountain Coffee Roasters GMCR.O.

While the conference is one of the high points of the year for investors, it has also been criticized as a forum that allows money managers to move stock prices and advance their trades. Einhorn's remarks seemed to address those concerns.

The 44-year-old manager said he did not "speak about stocks to benefit from any price appreciations that might occur" and reiterated that his fund invested on a medium- to long-term horizon.

He said Greenlight had not liquidated any of the 30 trading positions he had advocated at past Sohn events "within three months of first speaking about it publicly", and added that 90 percent of the ideas were still in the fund's portfolio.   Continued...

David Einhorn speaks at the Sohn Investment Conference in New York, May 8, 2013. REUTERS/Brendan McDermid