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

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note