Einhorn Warns Of ‘Second Tech Bubble’ As Greenlight Slides

Apr 23 2014 | 11:25am ET

Greenlight Capital’s first-quarter loss has founder David Einhorn in a dark mood.

The New York-based hedge fund lost 1.5% in the first quarter, it told clients yesterday. But much of the missive was dedicated to technology stocks and Einhorn’s warning that the market is facing “our second tech bubble in 15 years.”

“In our view, the current bubble is an echo of the previous tech bubble, but with fewer larger capitalization stocks and much less public enthusiasm,” Einhorn wrote. “What is uncertain is how much further the bubble can expand, and what might pop it.”

In the meantime, he’s steering clear of tech shorts, arguing that such positions are “dangerous” when stock prices have nothing to do with corporate fundamentals.

Einhorn said that Greenlight had closed its short against Chipotle Mexican Grill, a position that lost 33%—“this short gave us gas,” he joked. But Einhorn is sticking with his bet against coffee company Keuring Green Mountain even though it “was our only significant loser” in the first quarter.

Greenlight did exit three other shorts, in Michael Kors Holdings, Fortescue Metals Group and Loblaw Cos., as well as long positions in General motors and Delphi Automotive. The hedge fund bought stakes in retailer Conn’s Inc. and SunEdison Inc.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR