FOOLING SOME OF THE PEOPLE ALL OF THE TIME by David Einhorn
Author: David Einhorn is a well know American hedge fund manager. He is the founder of Greenlight Capital, a Value oriented L/S fund popularized in 2008 as they shorted Lehman Brothers. More recently Mr Einhorn has also been on the front page due to his short position on Tesla.
Book: Fooling some of the people all of the time, narrates the history of Greenlight Capital shorting Allied Capital, a leading company (then) in the private financing industry. The thesis behind the short was a fraudulent accounting system. When the first edition of the book was published, the history was not solved. However, in this new edition, it is. Won’t do a spoiler.
Opinion: This is an entertaining book, not an informative one. However, I’m convinced it could be useful in some way for those with some experience in the field. Once you have a solid theoretical base, real histories and experiences like this may serve almost like real experience in investing (well, not really as there’s no #skininthegame and you just read, but it could be an approximation). I read this book long ago, however, two things got grabbed in my mind apart from the main history. The first one is Greenlight’s variant methodology in the search of stocks (They spend more time than usual understanding who is at the other side of the trade. Instead of looking for cheap stocks and then justifying the reason to be cheap, first, they try to understand the concrete places in the market more susceptible to suffering inefficiencies.) The second one is about how he hated his graduate job in investment banking before joining a hedge fund...
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