Tuesday, December 21, 2010

Q&A With Greenlight Capital's David Einhorn

DealBreaker's Bess Levin delivers the goods:

Heads Up Play With David Einhorn 
If you’re going to commit financial fraud, you probably don’t want to find yourself sitting at a table across from David Einhorn, who will know what you’re up to and share it with the world. Similarly, if you’ve never played poker and have only ever had a 15 minute tutorial on the game, you probably should avoid playing with the Greenlight Capital founder, whose vastly superior skills will demonstrate just how much you suck. As I like to live on the edge, yesterday in an undisclosed location, I choose not to heed the wisdom of the latter. Over several hands, Einhorn and I discussed the new edition of his 2008 book, “Fooling Some Of The People, All Of The Time.” 
The latest version includes an epilogue, and concludes the story of Allied and Einhorn’s years of trying to get other people to listen when he said something was up. As we now know, Allied’s shares collapsed, Greenlight collected $35 million, and the hedge fund made another big (and correct) call on a bank called Lehman Brothers, whose failure was, according to Einhorn, “the Allied story all over again,” just on a bigger scale, with more resounding consequences. Even after the last crisis, which should have been a wake-up call, Einhorn doesn’t think we’ve changed much and if anything, the reforms passed only “encourage poor behavior and will likely foster an even bigger crisis.” He and I chatted about that exciting event, Quantitative Easing, Steve Eisman’s illicit pleasure of choice and more, plus poker tips for people who really, really need them.**
BL: You mentioned an unexpected and tremendous response from readers of the book the first time around. What’s the craziest piece of fan mail you’ve gotten- has anyone sent you their undergarments in the mail?
DE: [laughs] No, do you think they should?
BL: Sure.
DE: You’re hysterical.
BL: I mean, people do that. Musicians, rock stars get sent that sort of stuff. You’re like a rock star…of investing.
DE: Well, the thing is, my following [for the most part] is with 20 to 35 year old men. So, you know. I definitely don’t want their undergarments.
BL: You said that we didn’t actually get to the root of the last crisis- we just swept the problems under the rug, and that we’re setting the stage for the next crisis, which will be even worse. How much worse? What are we talking here, what does that mean- rioting in the streets? A depression?
DE: I hope not.
BL: Well, does it?
DE: I don’t know, how would I know?
BL: You can’t predict the future?
DE: [laughs] I don’t how exactly it will play out- but I’ve got really good news for you.
BL: What’s that?
DE: You’re going to win this first hand
[I do, with a Queen, but don’t really know how this happened.]
BL: Don’t let me win.
DE: If he keeps dealing me 6-2, you’re going to win.