Unstructured Finance

Greenlight’s David Einhorn slams Fed, again

David Einhorn

David Einhorn is pointing at you Fed

Greenlight Capital’s David Einhorn, one of the most closely followed managers in the $2.2 trillion hedge fund industry, is out with his latest investment letter and provides another lambasting of the U.S. Federal Reserve for what he describes as short-sighted policy decisions with regards to its continued quantitative easing.

“We maintain that excessively easy monetary policy is actually thwarting the recovery,” Einhorn said of the Fed and its decision to continue buying $85 billion a month in Treasuries and mortgage-backed securities. “But even if there is some trivial short-term benefit to QE, policy makers should be focusing on the longer-term perils of QE that are likely far more important.”

Einhorn says the Fed’s bond buying prompts some questions about income inequality and the ability of central bankers to deal with the next recession. Specifically, he asks in his letter:

* How much does QE contribute to the growing inequality of wealth in this country and what are the risks this creates?

* How much systemic risk does the Fed create by becoming what Warren Buffett termed “the greatest hedge fund in history”?

The volubility index

By Matthew Goldstein

With money managers increasingly falling in love with their own voices and so many willing to give them a platform to air their thoughts, I’ve long thought it would be good if someone could come up with a Volubility Index that measured performance against the number of times someone was quoted or made some stock, bond, or market prediction.

It won’t be me because I’m not enough of a math geek or algo genius to even think about how to put something like that together–but it would be interesting to see the results. And given this year’s big surge in money managers spouting off–what with the Ackman-Ichan blood feud over Herbalife and and Einhorn trying to be ever so clever in trying to stop the slide in Apple shares with his iPrefers share class dividend proposal–may be it just will happen.

Anyway, the latest issue of Businessweek with its cover story on David Einhorn and the failure of the “Einhorn effect” to work its magic on Apple’s stock got me thinking again about the Volubility Index. The BW story is a long one and chronicles Einhorn’s long history of driving down the price of stocks he is shorting, but notes his plan to get Apple to unlock its big pile of cash is having limited impact on the stock–even after the Greenlight Capital manager held an unusual press conference to discuss his idea.

The guy who is killing it at SAC Capital

By Matthew Goldstein

Move over Steve Cohen. The trader who is killing it at Cohen’s $14 billion SAC Capital Advisors this year is Gabriel Plotkin.

The portfolio manager, who specializes in consumer products and the gaming and lodging industry, is one of the top producers this year at Cohen’s hedge fund, say several people familiar with the Stamford, Conn. hedge fund. Plotkin, who joined SAC Capital in late 2006 from North Sound Capital, is emerging as on Cohen’s most reliable money men.

At SAC Capital, where most portfolio managers run books that range from as little as $250 million to $500 million, Plotkin manages one of the largest. His team of half-dozen traders and analysts manages about $1.2 billion of the firm’s money, say sources.

The search for Einhorn’s gold

 

By Matthew Goldstein

These days, all anyone wants to talk about with David Einhorn is his tentative $200 million investment in the New York Mets. But baseball may not be the hedge fund manager’s only interest in Queens–the New York City borough where the Mets play their home games.

A person familiar with the hedge fund industry says a secured facility in Queens is where Einhorn’s Greenlight Capital stores some of the gold bullion it has invested in. An Einhorn spokesman declined to comment on the speculation about the location of the hedge fund’s so-called physical gold.

Greenlight began investing in gold bars in its main flagship fund in 2009. Last year, Einhorn launched a dedicated gold-only fund for investors wanting a more concentrated exposure to the precious metal. As of March 30, this dedicated gold fund had raised about $556 million from 130 investors. In all, Greenlight now manages about $7.8 billion.

Einhorn’s Field of Dreams

By Matthew Goldstein

David Einhorn’s decision to plunk $200 million on the cash-strapped NY Mets could be a bullish development for investors holding the bonds to finance the baseball team’s new stadium.

At last look, most of the bonds that were sold in 2006 to finance the construction of Citi Fields were selling for between 79 cents and 85 cents on the dollar. The distressed price for the $547 million bond issuance is a reflection of the dire financial situation the Mets are in and the reason principal owner Fred Wilpon is selling a big minority stake to Einhorn.

But if Major League Baseball approves the deal with the Greenlight Capital hedge fund manager, it could boost the value of those stadium bonds.

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