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”?

Hedge funds vs. darts

By Matthew Goldstein

The Wall Street Journal used to run a feature in which some of its staffers would periodically pick stocks by throwing darts against a target. The idea was to see how many times stock picking by pure chance could outperform the picks of a bunch of experts.

The WSJ ended the popular feature several years ago but maybe it’s time from someone to bring it back and this time use darts to try to outperform some of top hedge funds managers. That’s because with the average hedge fund up about 1.2% during the first-half of the year, it would seem an investor on his or her own could do just as well picking stocks blindfolded.

Indeed, with the S&P500 up about 8 percent for the first half, the 3.7% gain for David Einhorn’s Greenlight Capital and the 3.9% gain for Dan Loeb’s Third Point don’t look so robust on second glance.

SAC Capital: a look back in time

By Matthew Goldstein

The full year numbers aren’t in, but it appears Steve Cohen’s SAC Capital had a pretty good year–especially compared to most other long/short equity hedge funds which lost money. But how does this year’s 8% gain stack-up against other strong years posted by the Stamford, Conn. hedge fund?

As we reported previously on UF, a good chunk of SAC Capital’s trading prowess in 2011 is being credited by sources to a single team led by Gabe Plotkin. His $1.2 billion book is one of the largest at SAC Capital and has generated between $150 million and $200 million in profits.

Indeed, only Cohen’s own 2 billion book–called the “big book,” the “Cohen account,” or simply “COHE”–is believed to manage more money at the $14 billion fund.

David Einhorn’s nothing month

By Matthew Goldstein

If numbers told the entire story, one might conclude that hedge fund manager David Einhorn took the month of May off.

That’s because Einhorn flagship fund at his Greenlight Capital registered a big nothing for the month. In other words, Greenlight’s flagship fund registered a zero percent gain/loss, according to my colleague Svea Herbst-Bayliss.

Of course, May was a very big busy month for Einhorn. At the annual Ira Sohn charitable event, Einhorn unleashed a blistering attack on Steve Ballmer, in which the 42-year-old hedgie called for the ouster of the Microsoft chief executive officer. Then, the very next day, Einhorn announced he had reached a deal with New York Mets owner Fred Wilpon to buy a minority stake in the Major League Baseball team for $200 million.

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