David Einhorn
I first heard of David Einhorn in last month’s issue of Portfolio about his book ‘Fooling some of the people all of the time‘. The book charts his quest to shine lights in dark corners of a firm called Allied Capital. Many of said dark corners are now well lit and the company has admitted to falsifying accounts and so on.
What is more interesting is the witch hunt short sellers face in uncovering the information. Einhorn was investigated by the SEC, accused of everything under the sun and generally perceived as a lowlife ‘trying to make money’. As opposed to say, those other people on Wall St trying to make money.
Anyway, after the article I googled his name, which lead me to a page featuring his recent talks. Many of the recent ones have focused on Lehman Brothers’ unwillingness to take write downs on illiquid assets that everyone else has taken writedowns on.
The NY Times today has an article on the ensuing battle. Einhorn is Buffet-like in his sharp and pithy speech and explains arcane accounting in simple terms.
What’s the point out of all of this besides the intrigue of high stakes finance? I think somewhere along the line I changed my worldview from ‘If person X is passionately arguing idea Y then he clearly is biased and is probably profiting from when idea Y comes to pass’ to ‘Person X is not passionate about idea Y unless he has some skin in the game or has taken some action to profit from idea Y’.
Perhaps more simply: I am less likely to give any sort of respect to words without action. If people aren’t acting upon their beliefs, then they’re not beliefs to begin with. And David Einhorn has my respect.
