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Fooling Some of the People


BSB
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Why does David Einhorn call Fairfax a "questionable company" at page 355 of his updated book?

 

Probably for the same reason some people call David Einhorn a "questionable investor".  In his updated book, did he discuss New Century?  Cheers! 

 

 

 

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BSB, What exactly did he write about FFH in his book.  If he gives you some detail then why dont you elaborate.  Otherwise, why would anyone here bother to comment.

 

Wasn't it Einhorn who tried taking on Frank Stronach at MI Developments and lost?

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Beerbaron,  You can google the details but Einhorn was trying to get changes to the captive board of MID since 2003 because he bought shares and thought the company was not being operated in the interest of shareholders, which is wasn't.  He sued and lost but kept the shares.  Stronach has proven far too tough for any and all activist investors he has ever encountered - you dont go from $0.00 with no education to being a billionaire without some hard-headedness.  Einhorn should have known better, but experience is a great teacher I guess.

 

I am still not getting an answer as to what Einhorn wrote about FFh.

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Wasn't it Einhorn who tried taking on Frank Stronach at MI Developments and lost?

 

Uccmal, what's the story between MID and Einhorn?

 

BeerBaron

 

Basically what the last poster said.  Stronach is a terrible person and fleeced the company, used it as his personal piggy bank for horse racing regardless of what the shareholders wanted.  He tried numerous times to get green mail and didn't succeed but it appears he finally succeeded, getting paid hundreds of millions in assets to give up voting control of the company (not actually selling any stock, simply agreeing to collapse the share structure).  But yah, Einhorn misplayed this one big time.

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I really, really want to like Einhorn. But he was wrong about Fairfax and the whole thing with JOE (when he calls out Berkowitz) reeks of hubris.

 

I like Einhorn and Ackman, I just dont think of them as gods who walk on water or the next Buffetts. They are just decent investors who one can learn something from.

 

 

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Rabbitisrich is right, Einhorn's comments were published in 2007 (original book date). Einhorn describes 3 companies (Fairfax,Overstock, & Biovail) as "questionable", because they took aggressive actions against their critics e.g. short-sellers. Einhorn may have been right about Biovail, I think it settled w/SEC by paying a fine, & may have been acquired "on the cheap" by another drug company.Overstock is currently an investment of Fairfax & Francis Chou. I think Fairfax's "aggressive action" is the filing of a $6 billion lawsuit against the short-sellers in NJ state court (see Fairfax press release dated 7/26/06). It is my understanding this stock manipulation litigation is ongoing. So Einhorn's intuition concerning Fairfax may have been misguided.  I recommend reading the Fairfax pleading. If true, the prominent hedge fund defendants are the "questionable" companies.On 12/1610 Overstock sought to amend its lawsuit (commenced 2/07) against naked short-sellers to assert RICO claims, much like Fairfield. Chou & Watsa must have confidence in the merits of this litigation.

 

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  • 5 weeks later...

This book is a very good read.

 

I'm reading the updated version - "A Long Short (and now completed) Story."

 

 

On page 355 he states "Allied's success has emboldened other questionable companies like Overstock.com, Biovail and Fairfax Holdings to take even more aggressive actions against the critics. At a minimum, silencing critics through personal attacks will distract some investors from understanding and regulators from dealing with the real problems facing these companies."

 

Chapter 24 was also really interesting. It's essentially about overstock.com and Byrne. If what Einhorn says is true, then Byrne is certainly not the most trust worthy guy. Byrne stated that he was "in" Greenlight. Einhorn refutes that Byrne has ever been to their offices, etc. It's a worthwhile read.

 

Reading the book also gives me much better insight into the level of research Greenlight does when looking at short positions. It's really quite amazing.

 

I don't recall him mentioning New Century. But he did confess to some other loses, like Worldcom.

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