Even More on Einhorn
Does the media move in bunches on topics? Following up on recent posts on Einhorn, here is another profile of the hedge fund manager from yesterday's WSJ.
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Does the media move in bunches on topics? Following up on recent posts on Einhorn, here is another profile of the hedge fund manager from yesterday's WSJ.
Ben Stein had a column over the weekend in the NYTimes that asked the question: what is to blame for the meltdown of our financial system and our weakening economy? Stein answers that we may not have to look much further than David Einhorn's speech at a conference for Grant's Interest Rate Observer earlier this month. Einhorn lays out a pretty compelling argument for why many of the failing (or failed) firms were able to take on excessive amounts of leverage while hiding the riskiness of some of their investments from regulators.
The need for consolidation in the airline industry have been outweighed by the increasing problems at United, as Continental announced today that it was backing out of its intended merger with UAL.
The WSJ has reviewed David Einhorn's new book: Fooling Some of the People All of the Time
What gives the book a special value, beyond its backstage look at the life of an elite trader, is its insight into two important but usually neglected aspects of the investment business. First, Mr. Einhorn's carefully documented battles with Allied Capital say a lot about the temperament needed to be a great investor. Tenacity is vital. So is patience. And so, too, is an ability to keep a sane perspective.
As Mr. Einhorn's own firm prospered, he could have jammed far more money into his Allied Capital short position, determined to prevail by brute force. He didn't. He kept 3% of assets in that position but invested most of his money in other ideas that worked out better. Such discipline, we come to realize, is what distinguishes the wisest long-term investors from obstinate short-timers who veer between triumph and ruin.
The book also shows why good accounting really matters. It is easy to mock finicky people with green eyeshades who worry about financial footnotes. But reliable numbers are essential if capital is to be allocated properly in our economy. Otherwise good projects starve and foolish ones burn up money.
Mr. Einhorn is a hard-liner, wanting strict accounting standards that punish missteps quickly. Allied Capital, to judge by his version of events, liked living in a more lenient world, where there was plenty of time to patch up problems quietly. Regulators were comfortable with an easy-credit philosophy, too, to a degree that startled Mr. Einhorn.
In the current financial shakeout, people like Mr. Einhorn are entitled to say: "I told you so." It's to his credit that, telling the Allied story, he is often angry but never smug.
Many of us probably remember the buzz regarding CMU professor Randy Pausch and his "last lecture" that was given to the CMU community several months ago. Pausch, who is terminally ill with cancer, spoke about following your childhood dreams and the video became viral almost instantly. The WSJ seems to have started the buzz with its September 2007 article which highlighted the "Last Lecture" that Pausch gave.
Bruce Flatt, the CEO of Brookfield Asset Management, spoke recently about investing in the current environment. Brookfield invests in infrastructure assets (real estate, power plants, timber, etc).
Last week's issue of Barron's had a great interview with fund manager David Winters. See the reprint here (no login required).
Barron's had a good interview with GoldenTree Asset Management fund manager Steve Tananbaum in this weekend's issue.
Famed investors Martin Whitman of Third Avenue and Richard Haydon of Neuberger Berman spoke at Syracuse's annual Breakfast Panel and the video of the interview is available on the web here.
The Prince of Wall Blog's had an interesting post on the state of the private equity industry. As the post points out, the typical private equity fund has diversified its lines of business, which may not necessarily be great for PE investors.
For those that are free (or have a DVR), Charlie Rose is interviewing George Soros on PBS tonight. In Chicagoland, it's on PBS WCCY (channel 20 on RCN). If you miss the interview, go here tomorrow to watch the full thing.
More from Kedrosky's Blog - Good interview from Charlie Rose's show with Blackstone CEO Pete Peterson.
Paul Kedrosky had a post recently that questioned if n+1's interview series with an anonymous hedge fund manager is an interview with an actual hedge fund manager.
Alan Abelson's column yesterday brought to light an extremely bullish column written by uber-bear Doug Kass. Of course the whole thing was an April Fool's joke, and yet, as Barry Ritholtz mentioned in his blog, several "elite" (Bloomberg, WSJ) members of the financial media took the article for its actual contents. The market rallied on the day, and while correlation might not imply causality (there was also other "bullish" news, including the fact that Lehman and UBS are raising capital), it would be hard to say that Kass' column wasn't instrumental in part of the bump.
The FT had a nice interview with Black Swan and Fooled by Randomness author Naseem Nicholas Taleb.
It's been a while since I've updated the blog, but expect more updates going forward (7-10 links a week). I had been busy with wedding planning and am now catching up on reading, so hopefully this weekend you'll start seeing a deluge of posts.