Summary of David Einhorn's Fooling Some of the People All of the Time

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 My father, a chemist, decided to start an MA business in the basement of our house in Demarest, New Jersey. It was a difficult business, and he was paid mostly on contingency. He eventually moved the business out of the house and it became successful.

#2 I majored in government at Cornell University, but became more interested in economics after I interned at the Office of Economic Analysis at the SEC in Washington. I wrote my thesis on the cyclical regulation of the U. S. airline industry.

#3 I began working at DLJ in 1991. I did not understand the culture of the company, and I spent weeks researching a company before meeting with the executives to discuss the opportunity. I would not know the answers to any of Peter’s questions after a couple of years.

#4 I made the initial business plan on a napkin with Jeff Keswin. I would be the portfolio manager, while he would be the marketer and business partner. I did not know where I would raise the initial capital, but I thought we could start with $10 million. My parents invested $500,000.

• Language: English
• Publisher: IRB Media
• Release date: May 17, 2022
• ISBN: 9798822518612

IRB Media

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Insights on David Einhorn's Fooling Some of the People All of the Time

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 1

#1

My father, a chemist, decided to start an MA business in the basement of our house in Demarest, New Jersey. It was a difficult business, and he was paid mostly on contingency. He eventually moved the business out of the house and it became successful.

#2

I majored in government at Cornell University, but became more interested in economics after I interned at the Office of Economic Analysis at the SEC in Washington. I wrote my thesis on the cyclical regulation of the U. S. airline industry.

#3

I began working at DLJ in 1991. I did not understand the culture of the company, and I spent weeks researching a company before meeting with the executives to discuss the opportunity. I would not know the answers to any of Peter’s questions after a couple of years.

#4

I made the initial business plan on a napkin with Jeff Keswin. I would be the portfolio manager, while he would be the marketer and business partner. I did not know where I would raise the initial capital, but I thought we could start with $10 million. My parents invested $500,000.

#5

Greenlight takes the opposite approach. We start by asking why a security is likely to be misvalued in the market. We then analyze the security to determine if it is, in fact, cheap or overvalued. In order to invest, we must understand why the opportunity exists and believe we have a sizable analytical edge over the person on the other side of the trade.

#6

Greenlight does not engage in pair trading, as we believe that each investment has individual merit. We aim to make money on every investment, which means that securities should be sufficiently mispriced so that if we are right, we will do well, but if we are mostly wrong, we will roughly break even.

#7

The popular misperception is that investors are attracted to hedge funds for the status, the secrecy, the leverage, and, according to one preposterous magazine account, the high fees. However, it is actually simpler: Asking the better question of risk-versus-reward gives hedge funds an enormous opportunity to create superior risk-adjusted returns compared to relative-return strategies.

#8

The media often misunderstand the risks in hedge funds. Academic research demonstrates that hedge funds have less volatility or risk than long-only indices. However, it is difficult to find long ideas that are ones and twos, so when you do, it is important to invest enough to be rewarded.

#9

I made 3. 1 percent in May 1996. The market suffered a correction in July, but our portfolio enjoyed several good events and generated a 4. 8 percent profit. We had bought bonds in the campsite operator U. S. Trails at 77 percent in June, and the bonds got called at 100 percent in July.

#10

We began to see a large increase in the assets under management, and decided to have a partners’ dinner