Insiders

Investor Einhorn says Palihapitiya, Musk poured 'jet fuel' on GameStop

April 15, 2021 at 06:17 pm EDT

BOSTON (Reuters) - Investor David Einhorn said on Thursday that prominent venture capitalist Chamath Palihapitiya and entrepreneur Elon Musk threw "jet fuel" on the GameStop Corp trading frenzy in January when the video retailer's shares rose by 2,000% and later prompted a hearing in U.S. Congress.

Einhorn, who runs hedge fund Greenlight Capital, also said U.S. lawmakers seeking answers to how day traders were able to wrest control of GameStop's share price from established hedge funds should probe regulators instead of investors.

Amateur investors organized on social media sites such as Reddit staged a stubborn buying spree three months ago, winning out over Wall Street hedge funds that had shorted GameStop's shares or bet that the price would fall.

The wild price swings caused heavy losses for hedge fund Melvin Capital, among others. U.S. lawmakers reacted by organizing a U.S. House of Representatives hearing in February where they quizzed hedge funds, a day trader and the chief of the online trading app Robinhood.

Einhorn on Thursday blamed Palihapitiya and Tesla Inc's CEO, Musk, for throwing what he called "jet fuel on the GME squeeze." His comments appeared in a quarterly letter to Greenlight Capital investors which was seen by Reuters.

Representatives for Palihapitiya and Musk did not immediately respond to requests for comment.

Einhorn said it is appropriate for investors to discuss stocks.

"Investors discussing why they think GameStop (or any other stock) should go up or down ought to be encouraged," he wrote. "There is no reason to drag anyone before Congress for making a stock pick."

Einhorn said Palihapitiya, who appeared on TV in late January and dismissed criticism of day traders, might have been trying to harm Robinhood because it competes with fintech startup SoFi, which was backed by Palihapitiya.

And Musk, whose Tesla shares Einhorn has long bet against, waded in to the drama by tweeting "Gamestonk!!" and adding a link to the Reddit forum where day traders were discussing GameStop.

"If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla's shares in 2018," Einhorn wrote.

Einhorn said if lawmakers wanted to understand "why GameStop did what it did ... it would be better to call to account the absentee regulators and their philosophical backers."

He told investors that his Greenlight Capital Funds were essentially flat in the first quarter, inching down 0.1%, while the S&P500 index gained 6.2%

(Reporting by Svea Herbst-Bayliss in Boston; Editing by Matthew Lewis)

By Svea Herbst-Bayliss

Stocks mentioned in the article

Add to a list Add to a list 0 selected To use this feature you must be a member Log in Sign up	Price	Change	5d. change	Capi.
NASDAQ COMPOSITE	15,601 PTS	-0.52%	-3.52%	-
DOW JONES INDUSTRIAL	37,775 PTS	+0.06%	-1.38%	-
NASDAQ 100	17,394 PTS	-0.57%	-3.43%	-
S&P 500	5,011 PTS	-0.22%	-2.90%	-
GAMESTOP CORP.	10.31 USD	+0.10%	-8.68%	3.15B
TESLA, INC.	149.9 USD	-3.57%	-14.15%	496B
VIRGIN GALACTIC HOLDINGS, INC.	0.97 USD	+2.90%	-13.39%	377M
ROBINHOOD MARKETS, INC.	17.08 USD	0.00%	-10.11%	14.94B

David Einhorn

In 1981, David Einhorm is graduated from Cornell University (New York) where he passed with distinction in all subjects. He is the CEO of Greenlight Capital, a hedge fund which he created in 1996 with a million dollar. In 2008, his fortune was estimated about six billion dollars.

Principally short-seller, the fund’s strategy is lucrative, its profitability was around 26% a year since 1996.

The name of David Einhorm is closely related with the short sale. Even if he appears as a long-term investor, David Einhorm is adulated for his hit-and-run offensives and his bear speculations. Best examples are Allied Capital and Lehman Brothers.

In 2002, during a conference fir a charitable institution, organized by Tomorrows Children’s Fund, David Einhorm presents Allied Capital as an opportunity to sell. While a significant number of indications tend to prove this declaration, Allied Capital blows off steam against David Einhorm. During the struggle, David Einhorm is subjected to underhand tricks (SEC investigation on David Einhorm and his wife’s dismissal at Barron’s, stolen phone records…). David Einhorm wrote a book about this affair: “Fooling some of the people all the time”.

In 2007, he spots before anyone else the pitiful situation of the company Lehman Brothers and while others hedge funds do not say anything, he speaks into microphones.

In May 2008, during another charity event, David Einhorm launches a diatribe against the investment bank accused of hiding the truth about its accounts. A few days later, the equity drops and David Einhorm wins $ 1 billion.

When his detractors accuse him of precipitating the death of his prey, he affirms being an activist for financial transparency.

David Einhorm is also the CEO of Greenlight Capital RE Ltd, based in the Cayman Islands, specializing in reinsurance. He is one of the principal shareholders of the company.

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Linked companies
Greenlight Capital, Inc. Greenlight Capital, Inc. Investment ManagersFinance Greenlight Capital, Inc. is an independent, SEC-registered investment advisor and hedge fund manager headquartered in New York City. The firm was founded by David Einhorn in 1996. Greenlight Capital provides investment advisory services to the Greenlight “Capital Funds”.	Chief Executive Officer
GREEN BRICK PARTNERS, INC.	Founder