David Einhorn is the founder of Greenlight Capital. This collection gathers his own words from Greenlight investor letters, conference speeches and a Masters in Business interview. — Greenlight Capital Q4 2023 letter (Hedge Fund Alpha).

Infographic for "Lessons from David Einhorn".

Value Investing Philosophy

  1. On what a value investor does: David Einhorn: "I think the idea that we had back then, which a value investor to us means buying something for less than it’s worth." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  2. On starting with a cheap-looking stock: David Einhorn: "Like this thing is trading at half a book value, let’s go figure out why it’s a good thing to buy or not." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  3. On managing possible risks: David Einhorn: "Now, the question for us as investors is how to manage some of these possible risks." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  4. On where nobody is paying attention: David Einhorn: "But there’s entire segments now mostly in the smaller part of the market where there’s literally nobody paying any attention." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  5. On what mispricing requires: David Einhorn: "And if they are in fact overlooking something and then we deem it to be important, perhaps it’s mispriced." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  6. On why overvalued stocks go up: David Einhorn: "And that’s, that’s a change in the market and it’s a structure that means that almost the best way to get your stock to go up is to start by being overvalued." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  7. On sustaining high ROEs: David Einhorn: "The problem with high ROEs in capital intensive businesses is that it is hard to sustain the ROEs." — Transcript of David Einhorn's Speech at the Value Investing Congress, November 10, 2006.
  8. On defining a capital intensive business: David Einhorn: "I define a capital intensive business as a business where the size of the business is limited by the amount of capital invested in it." — Transcript of David Einhorn's Speech at the Value Investing Congress, November 10, 2006.
  9. On when ROE matters: David Einhorn: "I believe it is very important to analyze ROE and marginal returns on capital…but only in capital intensive businesses." — Transcript of David Einhorn's Speech at the Value Investing Congress, November 10, 2006.
  10. On stocks diverging from value: David Einhorn: "So the, so what happens is instead of stocks reverting toward value, they actually diverge from value." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).

Contrarian Thinking & Short-Selling

  1. On looking for what is misunderstood: David Einhorn: "What is it that we think is true that other people or the consensus or whatnot are overlooking or not putting weight on or where they’re putting too much weight on something that is unimportant." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  2. On when to take a short position: David Einhorn: "And then we decide whether we think that it’s misvalued and that as a result, whether we think that the risk reward of owning the stock is sufficiently unfavorable that it makes sense to take a short position." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  3. On expressing an opinion directly: David Einhorn: "And so I always find if we can find a direct way to express an opinion that’s better than an indirect way." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  4. On the lesson of Lehman: David Einhorn: "The lesson of Lehman should be that Lehman should not have existed at a scale that allowed it to jeopardize the financial system." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  5. On smart investors and the housing bubble: David Einhorn: "Smart investors had been complaining about the housing bubble since at least 2001." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  6. On a short when the news is good: David Einhorn: "You come in every day, you check your work, you see your stocks are undervalued, whatever you think your shorts are overvalued, you see the news, the news actually is positive." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  7. On translating insight into the investment: David Einhorn: "And I find that if you can make your insight translate most directly into the investment, then at least if you’re right or you’re wrong, it’s going to be for the reasons that you thought." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  8. On bad ideas on Wall Street: David Einhorn: "Wall Street has lots of bad ideas, and people can get rich by ignoring them." — The Complete Transcript of David Einhorn's Speech at the Ira Sohn Conference (Business Insider, 2011).
  9. On weakened corporate oversight: David Einhorn: "And then you add in that the regulatory infrastructure is essentially gone, like there is gone, Gone there, there is no SEC policing corporate behavior." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).

Risk Management & The Poker Analogy

  1. On poker and six months of results: David Einhorn: "One poker tournament isn’t very different from a coin-flipping contest and neither is six months of investment results." — Transcript of David Einhorn's Speech at the Value Investing Congress, November 10, 2006.
  2. On learning from 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." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  3. On the possibility of being wrong: David Einhorn: "Of course, just like MDC, there remains the possibility that I am completely wrong." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  4. On focusing on the wrong thing: David Einhorn: "People often look at just like the wrong thing or, or they look at, they find something very irrelevant and they spend a lot of time on it." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  5. On keeping the eye on the bigger picture: David Einhorn: "And I think that the easier thing to do is to keep the eye on the bigger picture, which should play itself out maybe over the more intermediate term." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  6. On the size of a position: David Einhorn: "However, if I own 5 million shares it is not liquid to me, because of both the size of the position and the signal my selling would send to the market." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  7. On portfolio concentration: David Einhorn: "Look, we have always had generally between 30 and 60% of our capital in our top five names, and we have maybe 15 or 20 names that make any difference at all in the long part of our portfolio." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  8. On buying at four times earnings: David Einhorn: "We’re buying things at four times earnings, five times earnings, and we’re buying them where they have huge buybacks and we can’t count on other long only investors to buy our things after us." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  9. On six down months and redemptions: David Einhorn: "And by the end of the year, some people were beginning to redeem because we had six straight down months from like March to September." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  10. On the opportunity set: David Einhorn: "And so I just think the opportunity is actually probably as good or better than, than it’s ever been." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).

Market Insights & Psychology

  1. On the limits of timing: David Einhorn: "Figuring this out to the nearest moment is impossible because it’s a question of confidence." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  2. On moral hazard: David Einhorn: "Now there’s a moral hazard that comes from that because you condition people to think that things won’t be allowed to go bankrupt." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  3. On institutionalizing too big to fail: David Einhorn: "With the ensuing government bailout, we have now institutionalized the idea of too-big-to-fail and insulated investors from risk." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).
  4. On low rates slowing the economy: David Einhorn: "Because I believe that when rates get low below a certain amount, they actually slow down the economy by lowering them further." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  5. On motivations: David Einhorn: "If you figure out what the motivations are, you can often understand people’s actions." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  6. On the risk of cutting rates: David Einhorn: "And so as a result, I’m still more worried that if they lower rates a whole bunch, they’ll get the inflation to come back." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  7. On the Fed and inflation: David Einhorn: "Then they had the period of pretending that there wasn’t going to be any inflation no matter how much money that they printed." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  8. On advice for young people: David Einhorn: "My advice for all young people is figure out what you’re good at and find something that you can do that plays to your strength, right?" — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  9. On deficits at full employment: David Einhorn: "And you’re at a six point half percent deficit to GDP with full employment, which is something we’ve never seen before outside of a war." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  10. On the Einhorn Collaborative: David Einhorn: "The Einhorn Collaborative is my philanthropic effort, and it is a view that we’re, have a, a crisis of connection." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).

Lessons from Experience

  1. On how most businesses operate: David Einhorn: "Look, most people in business who are running companies try to conduct their business basically, honestly." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  2. On a long stretch of underperformance: David Einhorn: "From 2010 to 2014, we were fine, but then things got a little tougher in 2015 and we ran through five years where we had two awful years and three mediocre years." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  3. On money without a view on value: David Einhorn: "There’s all the machine money and algorithmic money, which is, which doesn’t have an opinion about value." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  4. On losing money on a stock: David Einhorn: "We invested in this particular stock and it didn’t work out the way that we wanted it to and we lost a whole bunch of money." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  5. On learning as a young analyst: David Einhorn: "And I would go and read all the stuff and spend a week getting ready and making spreadsheets and talking to people." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  6. On getting the right people: David Einhorn: "All companies of any size have to continue to push to make sure they get the right leaders, the right team, the right people to be fast-acting and fast-moving in the marketplace." — The Complete Transcript of David Einhorn's Speech at the Ira Sohn Conference (Business Insider, 2011).
  7. On engaging people you disagree with: David Einhorn: "It’s the people who you disagree with that can point out your biases and you can notice their biases." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  8. On investors losing sight of value: David Einhorn: "Many of the professional investors have completely lost their, their view of what value is." — Transcript: David Einhorn (Masters in Business, Ritholtz; his turns).
  9. On bad analysis versus bad luck: David Einhorn: "I want to revisit this because the loss was not bad luck; it was bad analysis." — Greenlight Value Investing Congress Speech Transcript, October 19, 2009 (David Einhorn).

Learn more:

  1. Transcript: David Einhorn, Greenlight Capital - The Big Picture - Barry Ritholtz
  2. Greenlight Registers As Commodity Pool Operator As Fund's Solid 23 Dampened By Q4 Buying Frenzy