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Greenlight Q3 Letter


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  • 2 years later...

Yeah no wonder he's flipping out. Late in the cycle and in deep.

 

Hardly. It appears he willingly tripled his position during the current quarter. While he has owned some GM for a while, he's largely been in and out of it and in significantly smaller size. The is one of his biggest positions he's taken in recent memory.

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  • 1 year later...

Noted Stahleyp. I'll look at that email to check what you mean. May have to rethink that.

 

For good measure: if you read the article you don't get any email. It is triggered when you visit the page about my premium service.

 

The article is unrelated. 

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  • 3 weeks later...

August is off to a good start with Tesla and GM.

 

I have typically been a fan of Einhorn, but this stuff from him is inexcusable. As things shake out, and guys like Ackman and Tilson do what they do, I'm beginning to wonder if that age of hedge fund "stars" was really just a result of being in the right place at the right time. It was impossible not to outperform as a value investor in the early 2000's. If you were shorting it you looked even more genius because we all know what kind of stuff value guys would be shorting during that time frame too. But longer term this period IMO just reinforced arrogance and the textbook teachings of "value investing" which in turn probably hindered these guys ability to adapt or change on the fly. I mean between Tilson, Ackman, and Einhorn, I don't think any of them ever had a real job or relevant experience coming out of school. They basically lived spoiled rich kid lives and then played hedge fund manager with family money instead of getting real jobs. To their credit, they were bright enough to run the gauntlet and become insanely rich and popular, but I don't think they have the same hardened mentality or intimate understanding of how things really work to be sustainable. Looking at the real deal guys, Buffett, Cohen, Tepper, etc, they all did their time on the street and earned valuable life lessons before striking it out on their own. In terms of "fight" I think this goes a long way in shaping an investor vs a rich kid who's always gotten what he wants.

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Tilson should not be in the same paragraph as Einhorn and Ackman.

 

For starters, they are billionaires from managing money.  Tilson probably worth 10 million max.

 

Second, Tilson never had a good track record.  At least Einhorn and Ackman did for a number of years.

 

Tilson is all hype.  Go look at his returns.  There is a reason he never accumulated any AUM.

 

For the rest of what you said, definitely possible.  But they still billionaires. 

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August is off to a good start with Tesla and GM.

 

I have typically been a fan of Einhorn, but this stuff from him is inexcusable. As things shake out, and guys like Ackman and Tilson do what they do, I'm beginning to wonder if that age of hedge fund "stars" was really just a result of being in the right place at the right time. It was impossible not to outperform as a value investor in the early 2000's. If you were shorting it you looked even more genius because we all know what kind of stuff value guys would be shorting during that time frame too. But longer term this period IMO just reinforced arrogance and the textbook teachings of "value investing" which in turn probably hindered these guys ability to adapt or change on the fly. I mean between Tilson, Ackman, and Einhorn, I don't think any of them ever had a real job or relevant experience coming out of school. They basically lived spoiled rich kid lives and then played hedge fund manager with family money instead of getting real jobs. To their credit, they were bright enough to run the gauntlet and become insanely rich and popular, but I don't think they have the same hardened mentality or intimate understanding of how things really work to be sustainable. Looking at the real deal guys, Buffett, Cohen, Tepper, etc, they all did their time on the street and earned valuable life lessons before striking it out on their own. In terms of "fight" I think this goes a long way in shaping an investor vs a rich kid who's always gotten what he wants.

 

These guys don’t need to adapt. They were filthy rich before before their performance record went to hell.

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August is off to a good start with Tesla and GM.

 

I have typically been a fan of Einhorn, but this stuff from him is inexcusable. As things shake out, and guys like Ackman and Tilson do what they do, I'm beginning to wonder if that age of hedge fund "stars" was really just a result of being in the right place at the right time. It was impossible not to outperform as a value investor in the early 2000's. If you were shorting it you looked even more genius because we all know what kind of stuff value guys would be shorting during that time frame too. But longer term this period IMO just reinforced arrogance and the textbook teachings of "value investing" which in turn probably hindered these guys ability to adapt or change on the fly. I mean between Tilson, Ackman, and Einhorn, I don't think any of them ever had a real job or relevant experience coming out of school. They basically lived spoiled rich kid lives and then played hedge fund manager with family money instead of getting real jobs. To their credit, they were bright enough to run the gauntlet and become insanely rich and popular, but I don't think they have the same hardened mentality or intimate understanding of how things really work to be sustainable. Looking at the real deal guys, Buffett, Cohen, Tepper, etc, they all did their time on the street and earned valuable life lessons before striking it out on their own. In terms of "fight" I think this goes a long way in shaping an investor vs a rich kid who's always gotten what he wants.

 

What given2invest said about Tilson is all valid so I won't dive into that again. Also, please don't lump Cohen - the insider trading king - in the same category as Buffett.

 

Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality.

 

On the flip side despite all that's happened I think Einhorn is a great investor but he is being harmed by the hedge fund model. Basically the whole long short thing. The aura around hedge funds being that they have to be long and short at the same time and make money on both. That's what sold and you have to go with it if you wanna make money. It doesn't help Einhorn given that he got notoriety for his shorts. I think he's a great long stock picker, but he's forced to be short by the model.

 

Let me elaborate a bit and get a little academic. If you assume the markets are efficient and you're a long/short fund with equal exposure then you'll make risk free. Now I don't think that the markets are efficient and these guys are not perfectly long/short. But still, given the market inefficiency and you being good, you'll generate some alpha. Maybe you do it on both sides. But alpha is hard, and in a raging bull market there's no way you generate enough alpha to beat the market. So the system is setup to make you fail as a hedgie. But hey, that's what sold AUM!

 

The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors.

 

Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager.

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August is off to a good start with Tesla and GM.

 

I have typically been a fan of Einhorn, but this stuff from him is inexcusable. As things shake out, and guys like Ackman and Tilson do what they do, I'm beginning to wonder if that age of hedge fund "stars" was really just a result of being in the right place at the right time. It was impossible not to outperform as a value investor in the early 2000's. If you were shorting it you looked even more genius because we all know what kind of stuff value guys would be shorting during that time frame too. But longer term this period IMO just reinforced arrogance and the textbook teachings of "value investing" which in turn probably hindered these guys ability to adapt or change on the fly. I mean between Tilson, Ackman, and Einhorn, I don't think any of them ever had a real job or relevant experience coming out of school. They basically lived spoiled rich kid lives and then played hedge fund manager with family money instead of getting real jobs. To their credit, they were bright enough to run the gauntlet and become insanely rich and popular, but I don't think they have the same hardened mentality or intimate understanding of how things really work to be sustainable. Looking at the real deal guys, Buffett, Cohen, Tepper, etc, they all did their time on the street and earned valuable life lessons before striking it out on their own. In terms of "fight" I think this goes a long way in shaping an investor vs a rich kid who's always gotten what he wants.

 

What given2invest said about Tilson is all valid so I won't dive into that again. Also, please don't lump Cohen - the insider trading king - in the same category as Buffett.

 

Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality.

 

On the flip side despite all that's happened I think Einhorn is a great investor but he is being harmed by the hedge fund model. Basically the whole long short thing. The aura around hedge funds being that they have to be long and short at the same time and make money on both. That's what sold and you have to go with it if you wanna make money. It doesn't help Einhorn given that he got notoriety for his shorts. I think he's a great long stock picker, but he's forced to be short by the model.

 

Let me elaborate a bit and get a little academic. If you assume the markets are efficient and you're a long/short fund with equal exposure then you'll make risk free. Now I don't think that the markets are efficient and these guys are not perfectly long/short. But still, given the market inefficiency and you being good, you'll generate some alpha. Maybe you do it on both sides. But alpha is hard, and in a raging bull market there's no way you generate enough alpha to beat the market. So the system is setup to make you fail as a hedgie. But hey, that's what sold AUM!

 

The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors.

 

Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager.

 

Einhorn is a brilliant guy, even though I'm not a fan of his antics.  Ackman is smart, charming but reckless.  Tilson was great at running with their ideas, and if their ideas weren't plentiful...his buy Berkshire below intrinsic value analysis would usually come out...his philanthropic work was more notable.  Cheers!

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Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality.

Lucked into some good trades? He has beaten the pants off the s&p.

 

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