So someone ended up forwarding me a letter from Greenlight Capital, a massive hedge fund (lol) managed by no other than David Einhorn. Here’s what I remembered from it:
The Greenlight Capital funds (the “Partnerships”) returned (4.0)%, net of fees and expenses, in the second quarter of 2017
My first reaction was: is this a joke? How the fuck does a hedge fund, how the fuck does anyone manage to lose money in the last three months? We’ve had perhaps one of the best bull market of all times!
Seriously, even if you had challenged me to lose money so far in 2017, I don’t think I could have done it. Hell, at this point, David Einhorn should have placed 100% of his money in SnapChat, it would have been less worst.
Year-to-date, this moron is down 2.8%. So while he charges billions of dollars, he not only underperform the general market (something that costs 0.05% instead of the 1-4+% he charges), but actually lose money. You’re better off putting your money under your mattress than invest with this idiot.
I kept reading out of curiosity, hoping to find the reason he managed to lose so much in so little time. But first, here is a “rationalization 101”:
The second quarter was a bit of a head-scratcher.
That’s one way to say you’re incompetent, David. “Hurr we lost money, but we don’t know why! We’re scratching our heads!”
If you lose money investing, it’s your fault. Period. You were wrong, you failed and that’s it. There is no “head-scratching” involved. You sucked, you failed your investors and your trading sucked, period. Don’t scratch your head, apologize for sucking and change your strategy. I mean, the fucking market moved up 10% so far and you managed to actually be down 2.8%
Let’s look at some of his “bubble basket.” Because if you think a stock is too pricey, then it’s clearly a bubble.
Amazon (AMZN) rose 9% for the quarter to $968 after modestly beating March quarter sales and earnings estimates
Are you… Are you seriously shorting Amazon? Like, really? This is like the one stock I would never short no matter what. Are you blind or something?
I mean, is this guy legit retarded or something? “This one time guy, I promise the company is going down!!!!” How fucking stupid do you have to be to short Amazon? I can think of three companies that are never going to be beaten no matter what, and one of these companies is Amazon. You don’t short Amazon. I mean, even looking at ratios, it’s not even that overpriced anyway. See you at $2,000, David!
Netflix (NFLX) missed guidance for new customers and increased its forecast for cash burn.
… and this is the second company I’d never short. Just because a company is pricey doesn’t mean it’s going to go down. And I think you are up for a bad Q3 too, David:
So we have a company that managed to grow from pretty nothing to $83B. And you think that somehow, this one time, it’s over. Yeah, they plateaued and are definitely going down. Despite digital media growing at insane speed and despite Netflix expanding in pretty much every sector of it. Yeah, stick to shorting Amazon, David.
Tesla (TSLA) finished the quarter up 30% to $361.61.
Ah, Tesla, another fantastic stock to short! You know, that company that sold $13B of cars in one day? Cars that are going to be delivered a year from now? Yet people ponied up the cash for it a year ahead? Yeah, it’s definitely going to fall. Brilliant.
Let’s look at some of the arguments from this brilliant strategist to short Tesla:
When Apple launched the iPhone, it was immediately profitable. Apple has always cared about profits. TSLA does not make money selling cars, and Mr. Musk shows little interest in profits.
So David begins his exposé claiming that people compare Elon Musk to Steve Jobs. Despite the two working in two completely different sectors and doing completely different things. Steve Jobs wasn’t even an engineer.
Still, Davir believes that because Tesla is not profitable – a stupid idea since Tesla is investing massively into R&D, Amazon wasn’t profitable until a few years ago – then it’s overpriced.
When one person buys an Apple product, it makes the experience for other Apple customers better by supporting the developer ecosystem.
By buying an Apple, I make the experience between for other Apple customers? It’s good to learn, I guess. But how exactly does that support developers? And if somehow buys a Tesla, it’s very possible he might buy another Tesla down the road. Your idea is stupid.
Competition was very slow to develop for Apple. Its peers (most famously Microsoft) publicly dismissed the iPhone as a threat.
This is incorrect. You are not going to justify such a pathetic performance with sententious crap. Google started working Android right away. In fact, if you look at iPhone sales, it took a couple of years for the iPhone to really catch on:
Steve Jobs attracted and retained a senior team of loyal lieutenants who implemented his vision, and Apple continues to have a deep bench. Mr. Musk is a one-man show
Yeah, Elon developed the entire fucking car by himself. God, this is stupid to read.
The rest of the letter is a bunch of nonsense, but I’ll quote one thing:
During her seventeen years there she was an office services and capital commitment committee coordinator (and apparently an alliteration aficionado).
HAHAHAH this is hilarious!!! Did you notice how he used an alliteration between the brackets (a a a a a ) to poke fun at the title of his new employee which is in itself an alliteration (c c c c)! This is so hilarious! I guess if you are frustrated about losing 4% while the market rallied 10%+, you can have a good laugh at Mr. Einhorn’s sense of humor. If only stakeholders of this hedge fund were paid in laughs!
Seriously, this fund is a joke. Shorting Amazon, Netflix and Tesla, what could possibly go wrong? Next year, add Nvidia, Apple, Google, Facebook and Microsoft to that list, I’m sure it’s going to go even better!
I just don’t understand why anyone would put a penny in that garbage fund. If I had lose 2.8% so far in 2017, I would be furious. This guy is an idiot who has no idea what he’s doing.