David Einhorn Quotes
101 David Einhorn Quotes
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I majored in government at Cornell University…
David Einhorn
I did not understand what the company’s representatives meant when they asked me during the recruiting process, ‘Are you willing to work hard?’ I gave the right answer, but I didn’t realize I had just committed to 100-hour-plus work-weeks.
David Einhorn
There were three basic questions to resolve: First, what are the true economics of the business? Second how do the economics compare to the reported earnings? Third, how are the interests of the decision makers aligned with the investors?
David Einhorn
Our goal is to make money, or at least to preserve capital, on every investment.
David Einhorn
It is psychologically challenging to manage a portfolio that outperforms only a falling market. I have no desire to spend my life hoping for a market crash.
David Einhorn
Sometimes, after analyzing the risk and reward, an investment appears attractive, but the unfortunate or unlikely happens. Such is life. Other times, the analysis is simply flawed…
David Einhorn
We invested 6 percent of capital into Reliance Acceptance, which charged 18 percent for car loans to people with tarnished credit. They key investment issue: Was that 18 percent enough to cover the losses from loan defaults, which were harder to estimate? I analyzed the car repossession data and determined that Reliance repossessed 20 percent of the cars and lost 40 percent of the loan each time. The loans lasted two years, so I calculated annual losses to be 20 percent x 40 percent / 2, or 4 percent. The high interest rate appeared sufficient to cover the losses and the stock appeared cheap, at a discount to book value. I erred by not framing the loss analysis properly. The repossession statistics did not include about 10 percent of the loans where the repossessor could not find the car. Obviously, these loans were 100 percent losses. This meant the real losses were more than twice what I’d calculated. The 18 percent interest did not cover the cost of funds, the true losses, and the operating expenses.
David Einhorn
Management’s simple self-interest is to stay solvent.
David Einhorn
We decided not to accept additional money until we were prepared to invest it. Why? Adding too much new capital to a portfolio too quickly is a problem. It creates undue pressure to find new investments or to add to existing
David Einhorn
We do not deploy new capital into existing positions unless they are either fresh ideas or positions to which we really want to add.
David Einhorn
While professional money managers habitually put new money into existing ideas, we don’t feel comfortable doing that when an investment is already in the middle innings.
David Einhorn
If we buy something at $10 thinking it is worth $20, do we really want to add to it at $16 if we think the value hasn’t changed? It is better to wait for a fresh opportunity or to close the fund to new investment.
David Einhorn
Our goal is to make 20 percent per year.
David Einhorn
I believe in setting high goals rather than easily clearable low ones.
David Einhorn
Many times, the bulls win the battle on the core criticism, but the bears win the war, as business or accounting reforms cause disappointing performance.
David Einhorn
[On Coca-Cola trading around fifty times earnings] I did not have the guts to short Coca-Cola, but I should have.
David Einhorn
I evaluated shorting America Online and determined that even if the accounting were wrong, it was a lousy short because the true economics of the business were incredibly compelling.
David Einhorn
By early 1999 the market saw that the best and the brightest of the short-sellers had been proved wrong on America Online. If they were wrong about America Online, they could be wrong about every other Internet stock. Never mind that only a handful had viable, let alone robust, business models.
David Einhorn
At the top of the bubble, technology stocks seemed destined to consume all the world’s capital. It was not enough for all the new money to go into this sector. In order to feed the monster, investors sold everything from old economy stocks to Treasuries to get fully invested in the bubble. Value investing fell into complete disrepute.
David Einhorn
I believe the Internet bubble made its ultimate top the day the last short-seller could no longer afford to hold his position and was forced to cover…
David Einhorn
Spinning so fast leaves most people dizzy.
David Einhorn
When you have perfect knowledge, it’s really easy to get the valuation exactly right.
David Einhorn
The next private-equity investor I meet who says he just puts money in and sits on his hands will be the first. They all say they provide services and add more than money to their investments.
David Einhorn
[In December 2010] I think there is a lot of unfinished business that will come from the last crisis.
David Einhorn
I feel like a lot of what we did was sort of sweep things under the rug and put short-term bandage fixes on things. And I think we managed to transfer a lot of the problems sort of from the private sector to the public sector.
David Einhorn
[In December 2010] Apple is a very interesting company because it has arguably one of the best brands that we have in the country. And it’s growing at an enormous rate.
David Einhorn
A head-hunter called me up and said ‘Would you like to interview at a hedge fund?’ I said ‘What’s a hedge fund?’ And they told me, and I said ‘let’s do that.’
David Einhorn
I am not a huge fan of derivatives from a social perspective…
David Einhorn
I’m not an efficient-market person… I don’t think the market solves things.
David Einhorn
I actually saw a lot of the problems that led to the crisis, and essentially, they’re told through a small story of Allied Capital, where essentially you saw that the regulators weren’t doing their job in enforcing the rules and leveling the playing field. You saw that the credit rating agencies weren’t doing their job in evaluating the company, so the auditors weren’t doing their job. You saw that the Wall Street analysts weren’t doing their job. And you saw that the media wasn’t doing its job.
David Einhorn
[In December 2010] It seemed to me if the Federal Reserve was willing to cut interest rates 75 basis points because some French bank was unwinding a proprietary position when nobody was around, I knew that that was what really their primary focus was. And as I have watched things since then, nothing has really sort of taken me off this belief.
David Einhorn
[In May 2008] Over the past six years I have learned a lot and grown a little, and formed some strong views about Wall Street regulation and the muzzle it often places on free speech.
David Einhorn
Hedge fund managers at their core are simply investors.
David Einhorn
[In May 2008] The turn of the cycle has created some tough choices. Warren Buffett has said, ‘You don’t know who is swimming naked until the tide goes out.’
David Einhorn
In the real world, illiquid assets carry a discount. In the current melee the opposite seems true: illiquid assets are more valuable because it is easier to convince the accountants that they have not declined in value compared to liquid assets where there is more transparent pricing data.
David Einhorn
[In May 2008] I suspect that some of the authorities applaud Lehman’s accounting ingenuity.
David Einhorn
Either they will recognize losses or they won’t. If they do, everyone will be surprised…
David Einhorn
One of the nice aspects of trying to solve investment puzzles is recognizing that even though I am not always going to be right, I don't have to be. Decent portfolio management allows for some bad luck and some bad decisions.
David Einhorn
When something does go wrong, I like to think about the bad decisions and learn from them so that hopefully I don't repeat the same mistakes. This leaves me plenty of room to make fresh mistakes going forward.
David Einhorn
Some of my MDC analysis was correct: it was less risky than its peers and would hold-up better in a down cycle because it had less leverage and held less land. But this just meant that almost half a decade later, anyone who listened to me would have lost about forty percent of his investment, instead of the seventy percent that the homebuilding sector lost.
David Einhorn
For years I had believed that I didn't need to take a view on the market or the economy because I considered myself to be a ‘bottom up’ investor. Having my eyes open to the big picture doesn't mean abandoning stock picking, but it does mean managing the long-short exposure ratio more actively, worrying about what may be brewing in certain industries, and when appropriate, buying some just-in-case insurance for foreseeable macro risks even if they are hard to time.
David Einhorn
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