Saturday, 4 June 2016
Fooling Some of the People All of the Time (David Einhorn)
This book was written by David Einhorn. He is a famous hedge fund manager and founder of Greenlight Capital. This book records his short against Allied Capital and what happened.
Einhorn took up a short position against Allied Capital as one of its businesses, Business Loan Express, had a weak portfolio of loans. This was in the early 2000's and lasted till 2008. The book records his struggle to reveal the negative practices and fraud in the business (as deemed by him) and his interactions with the company, the media, and the authorities (or lack thereof). The market did not recognise his actions and the price remained relative strong in that period.
The book is a little dry and numbers are present to build the case, but the author does inject humour in places. Readers can almost sense the frustration in his words, although it is written without much emotional outbursts. It is quite objective to me with the case being presented and quoted from different angles and not just the author's. The case lasted 6 years and it is to Einhorn's credit that he did not give up despite repeated setbacks. I recommend this book only to readers interested in case studies and "financial history" as it is very specific to one short position and does not really shed light on short selling in general or Einhorn's strategies, although you may pick up on some investigative ideas.
For those interested, Allied Capital did capitulate in the 2008 Great Financial Crisis. It was eventually bought over by Ares Capital in 2009
Found in NLB: Yes