Masters in Business David Einhorn: Market Structures Are Broken
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Feb 8, 2024 
David Einhorn, Chairman of Greenlight Capital, discusses broken market structures and the death of value investing. He shares his successful shorting of Lehman Brothers and explores the psychology behind wealthy investors. Einhorn also discusses Greenlight Capital's decision-making process, investment strategy, and the SEC's handling of accounting fraud allegations against Tesla. He delves into the process of writing quarterly letters and post-mortems, a day at Greenlight, and the Fed's handling of inflation. Einhorn Collaborative's effort to bridge people together and advice for recent college grads are also discussed.
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Greenlight's Early Days
- David Einhorn and his partner started Greenlight Capital with only $1 million.
- Their first year yielded 57% returns, leading to partner concerns about managing increased capital.
Narrative-Driven Investing
- Greenlight Capital's investment approach prioritizes narratives and qualitative assessments over quantitative metrics.
- They seek misunderstood or overlooked aspects of a company's story, leading to potential mispricing.
Apple Investment
- Greenlight bought Apple at nine times earnings, recognizing its potential as a software and services company.
- The market, however, viewed it primarily as a hardware company susceptible to competition.