Folks from popular stock market blogging website Seeking Alpha will appear in court on Tuesday to explain to a judge why they shouldn't have to hand over the identity of an anonymous blogger to hedge fund manager David Einhorn.
Last month, Einhorn, who runs Greenlight Capital, filed a court petition requesting that Seeking Alpha reveal the identity of an anonymous blogger called "Valuable Insights."
Greenlight alleged that Valuable Insights disclosed the hedge fund's trade secrets and breached confidentiality by revealing his fund's stake in Micron Technology before it was made public. (Einhorn didn't publicly reveal his investment in semiconductor producer Micron until the inaugural charity Robin Hood Investors Conference on November 21, 2013.)
Greenlight explained in its court petition that the fund began building its Micron stake on July 2, 2013, which was during the third quarter.
Forty-five days after each quarter ends, hedge funds of a certain size are required to report their long stock holdings with the Securities and Exchange Commission in a form known as a 13-F. Greenlight Capital didn't report the Micron stake in the third-quarter 13-F dated November 14, 2013.
Greenlight said it requested confidentiality treatment via a "Confidentiality Letter" request filed with the SEC on November 14, 2013. The fund did that so they could continue to add to the position, the court petition said.
According to Greenlight, the only people who knew about the Micron investment were Greenlight's employees, legal counsel, prime and executing brokers and other agents, the court document says. Those people have a contractual or fiduciary responsibility to keep these investments confidential.
Greenlight claimed that before 9:32 a.m. EST on November 14, 2013, before it had filed its "Confidentiality Letter" with the SEC, Valuable Insights wrote on Seeking Alpha, "Expect one mega hedge fund rock star to show up as [Micron] holder today, not Ackman, Icahn or Loeb..."
Greenlight said that Valuable Insights also posted hints on Seeking Alpha about the identity of the fund manager and later confirmed it by saying "you heard it hear first" when one user on the site guessed "Einhorn."
Greenlight said that it believes that Valuable Insights owned Micron's stock. We didn't see a posting about Micron before November 14, 2013. However, according to a November 18, 2013 post we found, Valuable Insights wrote that they were long Micron (MU).
Consequently, Greenlight said that they had to purchase the stock at a higher price point following the Seeking Alpha posting.
Greenlight has also said that Seeking Alpha has refused to voluntarily disclose the Valuable Insight's identity. That's why they're petitioning the court.
On Tuesday, we'll get to see what goes down in court and perhaps if the user's identity will have to been handed over.
Seeking Alpha's site says that they like people to use their real names, but many "well-known, veteran stock market bloggers" use pseudonyms.
"While Seeking Alpha editors greatly prefer that our authors use their real names, we recognize that is not always possible. Due to regulations at their workplace or other factors, some contributors are not able to reveal their real names. In addition, many well-known, veteran stock market bloggers (some of the finest, in fact) write under a pseudonym,"the site's policy states.
A representative for Greenlight Capital declined to comment. Seeking Alpha also declined to comment for this story.
Greenlight Capital, the hedge fund run by David Einhorn, has discovered the identity of the anonymous Seeking Alpha blogger that revealed one of the fund's stock positions.
"Greenlight has identified the anonymous blogger and has resolved the matter privately to our satisfaction," the fund said in an emailed statement to Business Insider.
"Greenlight dropped the suit of its own accord. We did not at any time disclose the author's identity formally or informally, and at no time were our actions dictated by reaching a deal with Greenlight," a spokesperson for Seeking Alpha said in a statment. "We're happy Greenlight is no longer pursuing the case, and has resolved the issue to its satisfaction."
Last month, the hedge fund had filed a court petition requesting that popular stock blogging website Seeking Alpha reveal the identity of an anonymous blogger called "Valuable Insights."
Greenlight alleged that Valuable Insights disclosed the hedge fund's trade secrets and breached confidentiality by revealing his fund's stake in Micron Technology before it was made public. Einhorn publicly revealed the position at a charity hedge fund conference in late November.
What's more is Greenlight said in the court petition the only folks aware of the Micron stake were Greenlight employees, counsel and prime brokers. Those people have a contractual or fiduciary responsibility to keep these investments confidential.
Here's Seeking Alpha's full statement:
Greenlight dropped the suit of its own accord. We did not at any time disclose the author's identity formally or informally, and at no time were our actions dictated by reaching a deal with Greenlight.
We're happy Greenlight is no longer pursuing the case, and has resolved the issue to its satisfaction.
This is not the first demand we have had to disclose pseudonymous authors' identities; we have yet to disclose author identity in any claim submitted to court.
Platforms such as Seeking Alpha are protected by Section 230 of the Communications Decency Act, which provides immunity from liability for providers and users of an "interactive computer service" who publish information provided by others. This doesn't stop attempts to file pre-action motions to try and get to specific posters, but so far our experience has been that the claims get shut down or withdrawn.
We continue to support third-party posters, and their decision as to whether to publish under real or assumed names. We will continue to step in to the extent we deem reasonable against claims submitted, as we believe in the value that psuedonymity builds for the community.
Michael Lewis is getting tons of attention for his new book, "Flash Boys," which questions the murky world of high-frequency trading.
Lewis concludes that the stock market is rigged, and that, he argues, hurts both amateur and professional investors.
Appearing on Bloomberg TV this morning, Lewis and anchors Stephanie Ruhle and Erik Schatzker lasso in famed hedge-fund manager David Einhorn.
Here's the exchange (emphasis added):
LEWIS: Let me give you an analogy and I think is a very close analogy to the way the stock market is structured. It's a casino analogy. So I have a casino and I want to start a poker game in the casino, so I get three card sharks and I tell them, go sit there and start the game. Make it look like a good game's going on. There are no 4s, 9s, there are no queens in the deck. Only you will know that. And we will pay some tour group operators to bring like a bunch of dumb tourists in to pay with you. They won't know. You'll —
RUHLE: Hold on, a bunch of dumb tourists? So is David Einhorn is a dumb tourist?
LEWIS: Yes.
RUHLE: Come on now.
LEWIS: In this analogy. Hold on. In this analogy, every investor — David Einhorn did not know; he did not understand. He understood that whenever he tried to do something in the market, the market moved like someone knew what he was up to. In the same way that big pension fund managers and mutual fund managers saw when they tried to execute big orders, oh my god, it's like someone knows I want to buy before I buy. But he didn't know why. He didn't know — he didn't understand that high-frequency traders were putting machines in exchanges to be closer to the exchange so that they could get price information in two milliseconds before him. And so on and so forth.
Let me — can I finish my analogy?
SCHATZKER: Absolutely.
LEWIS: So of course the tourists get fleeced all the time in the poker games, because they don't know the deck is rigged. The poker players pay the casino a cut of what they make. The casinos, operators, pay the tour group — the tour group company money to bring in the tourists.
So in this case, casino's the exchange, the poker players are the high-frequency traders, and the tour group operators are the banks and the brokers that handle the stock market orders. And I think the analogy is pretty close. So is that rigged? Is that a rigged game? I think it is a rigged game.
It's worth noting that Einhorn is one of the most accomplished poker players Wall Street has ever seen. So he'd probably take issue with anyone who characterizes him as a dumb card player or duped fund manager.
Closely followed hedge-fund manager David Einhorn has sent out Greenlight Capital's quarterly investor letter, and some stocks are going bonkers.
Bloomberg News reports that he revealed a long position in Conns Inc. (CONN). That stock was last trading up about 9% on the Einhorn news.
He also disclosed a "large" long position in SunEdison (SUNE), according to Bloomberg News. That stock was last up more than 8%.
During the first quarter, Einhorn closed his Chipotle (CMG) short. Shares of Chipotle had soared since Einhorn publicly revealed his short at the Value Investing Congress in October 2012.
Einhorn exited his positions in General Motors (GM), DST Systems (DST), and NCR Corp (NCR).
"Now there is a clear consensus that we are witnessing our second tech bubble in 15 years. What is uncertain is how much further the bubble can expand, and what might pop it,"Einhorn wrote in the letter (PDF) posted online by @Levered_Hawkeye.
He continued: "In our view the current bubble is an echo of the previous tech bubble, but with fewer large capitalization stocks and much less public enthusiasm. Some indications that we are pretty far along include:
"The rejection of conventional valuation methods;
"Short-sellers forced to cover due to intolerable mark-to-market losses; and
"Huge first day IPO pops for companies that have done little more than use the right buzzwords to attract the right venture capital."
In the letter, Einhorn writes that Greenlight is short some "high-flying momentum stocks" and "cool kid" companies that he's dubbed the Bubble Basket.He explains that the basket approach allows him to make each individual short small in an effort to reduce risk.
The short positions weren't disclosed in the letter.
Unfortunately, it's only after a bubble bursts that we realize we were in a bubble.
Einhorn, famous for his prediction of the Lehman Brothers collapse, also detailed a number of stocks in the letter that he's long as well as some positions he exited during the first quarter of this year.
NOW WATCH: Here's What Happens To Investments On 'Shark Tank' After The Cameras Stop Rolling
Everyone's still a little confused about "Flash Boys," Michael Lewis' new book about the obscure world of high frequency trading.
On 60 Minutes and a bunch of other media outlets, Lewis has been arguing to the world that his book shows how the stock market is rigged. And without actually understanding or reading the story, many people on main street were quick to express their outrage.
But for those who are looking for an understanding that's slightly better than no understanding, hedge fund manager David Einhorn distills the whole debate in one sentence.
High frequency traders offer tons of liquidity to the markets which is actually great for investors. But in that process, they're able to skim tiny amounts of money for themselves.
But for the most part, experts seem to agree that high frequency traders may actually be bringing more good than harm.
The only people who might be losing out in a material way are large investors like the hedge funds.Einhorn addresses this:
Lots of investors lose pennies and as a result don’t care too much about market structure; the firms who have based their business around picking up those pennies care a lot about shaping the structure. To overcome this imbalance of interests, the issue needs attention and discussion so that the many who are losing pennies can organize a response. In this regard, Flash Boys has provided a great service.
Although we believe that the abuses identified in Flash Boys don’t significantly impact us, our traders Bruce, John and Alex are incredibly aware of how market structure imperfections can add to our trading costs, and are vigilant about minimizing their impact on the Partnerships. One such countermeasure has been to support a new trading venue called IEX, which was the central focus of Flash Boys. We believe that the best response for any investors that are worried about fast computers taking advantage of them is to ask that their orders be routed to IEX, a company in which we hold a small stake.
I totally agree with David Einhorn’s assessment that we are witnessing “our second tech bubble in 15 years.”
I agree mainly because of how nuanced his analysis is – he’s not calling the whole market a bubble or even the entire tech sector – he’s speaking about a select group of popular momentum names that had been deified over the course of 2013 but are now starting to look shakier.
From the Greenlight Capital Q1 investor letter:
David’s right. But if you’re not riding these highfliers in a race against your fellow investors for short-term gain supremacy, you don’t have much reason for concern, in my opinion. It’s probably their problem, not yours.
Most large cap tech stocks are selling market multiples or below. But there are several large and mid-cap tech stocks (mostly tech and biotech) trading as though the laws of physics and finance simply do not apply. I talked about the new bubbles in January of this year – they are everywhere – but there is not a wholesale participation in them across the nation. Only hedge funds and the very wealthy seem to be playing along this time. Which means they will be less societally painful as they pop or deflate.
Today is the last day to enter an investment idea contest at one of the biggest hedge fund events of the year.
Entries for the Sohn Investment Idea Contest are due by 5 p.m. today.
The judges include Michael Price, Bill Ackman, David Einhorn, Joel Greenblatt and Seth Klarman.
If you win, you get to present your idea before an audience of 3,000 in the buy-side community at the Sohn Conference on May 5th in New York City.
Not to mention, some of the biggest money managers will be there including, Ackman, Einhorn, Jeffrey Gundlach, Paul Tudor Jones, Philippe Laffont, Michael Novogratz, Larry Robbins and Chris Shumway.
To enter the contest, your investment idea must be a publicly traded security with a market cap of $1 billion or greater.
The contest is sponsored by Bloomberg Radio and GLG. Bloomberg has partnered with the Sohn Conference this year. For more information about the contest and to enter visit sohnconference.org/contest.
Today, hundreds of investors will be gathering at Lincoln Center in Manhattan for the 19th annual Sohn Investment Conference.
This charity conference brings together some of the biggest names in the hedge-fund community to share their best ideas. Some of them are stock picks and others are investment ideas.
This year's line-up includes Paul Tudor Jones II, Bill Ackman, David Einhorn, and Jeffrey Gundlach.
Not all of the investment picks have been winners, though.
We've included a roundup of last year's equity picks and how they have performed since then. Some of them were big losers. A few turned out to be winners.
Here's the rundown of how they performed from May 8, 2013, through May 2, 2014:
Kyle Bass (HaymanCapital) said he likedDex Media. He called it an event-driven trade. Since last year's conference, shares of DXM have fallen more than 53%.
Icahn alum Keith Meister (Corvex) said that he liked TW Telecom and that he thought it would get picked up by Level 3. Shares of TWTC are up about 8% since last year's conference. Shares of Level 3 have risen more than 79% since then.
Bill Ackman (PershingSquare) said he was long Procter & Gamble. Last summer, Ackman significantly cut Pershing Square's stake in P&G. As of his last 13F filing, he still held several hundred thousand shares. Share of P&G are up about 4.4% since then.
Steve Eisman (Emrys Partners) said that he really likes Ocwen Financial (OCN). Shares of OCN are down more than 13% since last year's Sohn conference.
Jeff Gundlach (DoubleLine Capital CEO) said he was short Chipotle (CMG). "I don't believe in any business where all you need to be competitive is a taco truck." That trade hasn't played out well for the bears. Since then, share of Chipotle have surged more than 36%.
Jim Chanos (Kynikos Associates) said he was short Seagate Technology (STX). He said that hard-disk-drive manufacturers appear "cheap" but are "value traps." Shares of STX have risen more than 20% since.
Jonathon Jacobson (Highfields Capital Management) said he was short Digital Realty Trust. Shares of DLR are down more than 21% since.
Clifton Robbins (Blue Harbour Group) said he was long CACI and Akamai Technologies. CACI International is up more than 18% since last year. Akamai shares have risen more than 17%.
David Einhorn (Greenlight Capital) said he was long Oil States International (OIS). To date, shares are off about -0.8%.
As Einhorn always says, "It doesn't make sense to blindly follow me or anyone else into a stock ... Do your own work."
Hundreds of investors are gathering at Lincoln Center in Midtown Manhattan for one of the most stacked hedge fund conferences of the year, the 19th annual Sohn Investment Conference.
For years Sohn has been a forum for investors to share some of their biggest ideas, sometimes they're even new ideas. Most of the time, those ideas move markets.
Already, Bond God Jeff Gundlach has said that it's time to short homebuilders, and Philippe Laffont presented his long case for Liberty Global.
Larry Robbins of Glenview, who crushed it in 2013, is bullish on HMOs. He also likes Monsanto as a long play.
We've got notes on all of that below.
So follow along with us, as Business Insider will be live blogging the event throughout the afternoon, so check back for updates.
Closely followed fund manager David Einhorn, who runs Greenlight Capital, presented one of the short positions from his "bubble basket."
In his latest investor letter, he wrote about how a bunch of "cool kid" stocks made him think we're seeing the second tech bubble in 15 years. He's short a number of these companies in what he's calling the "bubble basket."
He's going to illustrate his bubble basket by talking about one company and not disclosing the others.
His short is AthenaHealth.
Shares of the stock have fallen more than 7.7% in the after-hours session.
He said it's an excellent company and has a great CEO.
He doesn't want it to fail. He just thinks it's over-priced. He thinks this stock can fall 80%.
He also said the company isn't positioned to succeed the way the bulls hope.
The 'Einhorn Effect' is not only brutal but also takes a while to wear off, apparently.
This morning, after the hedge fund manager laid out his short thesis on athenahealth (ATHN) at the Sohn Investment Conference, the stock is still plunging, and has fallen over 12%.
Einhorn said that athenahealth's CEO, Jonathan Bush, and Wall Street banks like Morgan Stanley are deluded about its capabilities, and consequently its stock price.
At that point it was at $126, but as Einhorn spoke the stock fell 7% in after hours trading.
“Jonathan Bush likes to compare athenahealth to Amazon because they both have websites," he said during his presentation — and followed that comment with brutal clip after clip of a giddy Bush ("yes, that Bush family," said Einhorn) talking about the company's wildly optimistic future.
Einhorn's bull thesis for the stock is for it to fall to $50, his bear case is that it could go to $14.
Anyway check out the chart below. That's what it's like to get 'Einhorn'd.'
Greenlight Capital's David Einhorn, who has been critical of the Federal Reserve's monetary policy, told Bloomberg TV's Stephanie Ruhle and Erik Schatzker about a dinner conversation he had recently with former Federal Reserve Board Chair Ben Bernanke.
"I got to ask him all these questions that had been on my mind for a very long period of time," he said. "And then on the other side, it was, like, sort of frightening, because the answers weren’t any better than I thought that they might be. I asked several things. He started out by explaining that he was 100% sure that there’s not going to be hyperinflation. And not that I think that there’s going to be hyperinflation, but it’s like how do you get to 100% certainty of anything?"
"My [jelly donut] thesis is that it’s like too much of a good thing," he explained. "Like lowering rates and quantitative easing and these stimulative things, they help but with a diminishing return. And eventually you go too far and it’s like eating the 35th jelly donut. It just doesn’t help you. It actually slows you down and makes you ... makes you feel bad. And my feeling has been that by having rates at zero for a very, very long time, the harm that we’re doing to savers outweighs the benefits that might be seen elsewhere in the economy."
Bernanke told Einhorn that he was just wrong. Here's Einhorn:
Well, he said ... first of all, he says, you’re wrong. That was good. And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy because for every saver there has to be a borrower.
And what I came back to him [with] was ... I said, but wait a minute. You said for a long time we haven’t had enough fiscal stimulus, and who’s on the other side of the low-interest trade? It’s the government. And so if the government ... if we raise the rates, the government would have to pay more money to savers. You’d have the bigger deficits. You’d create the stimulus, the fiscal stimulus that you’ve been complaining that Congress wouldn’t give to you, right? And savers would benefit from the higher rates and because savings is spent at a very high rate in terms of interest — interest income on savings is spent at a high percentage, you’d get a real flow through into the economy.
The interview then pivoted toward the effects of monetary policy on inequality, and Einhorn said he couldn't remember exactly what Bernanke had said.
As for new Federal Reserve Board Chair Janet Yellen, Einhorn said he's keeping an "open mind."
"I would love to see if she had a better reason for rates to remain at zero at this stage of the economy," he said.
Einhorn also talked about technology stocks, investment strategy, activist investing, and high-frequency trading during his hour-long segment on Bloomberg.
Here's the full transcript, courtesy of Bloomberg TV:
STEPHANIE RUHLE: We’re going to get right to our second big exclusive guest this morning. We are shifting from telecom to hedge funds. David Einhorn is here. He runs the $10 billion long-short fund Greenlight Capital, and he made headlines recently by declaring the tech sector to be in a bubble. So we need to clarify that because as usual, the media never seems to get it right David, now do we?
DAVID EINHORN: Well, I don’t know. We’ve written -- we wrote in the letter that there’s -- that we thought there’s another tech bubble, but we said it was an echo bubble. And I’d like to emphasize the echo, meaning it’s a smaller bubble. It’s not contained with all tech. We’re actually massively long tech. We’re -- our biggest position is Apple and then Micron and Marvel (ph), but we think that there’s a sub-segment of tech which is high momentum stocks that have gotten completely out of control in terms of their valuation, and we think that those stocks actually did reach sort of a bubble proportion.
RUHLE: And they’ve gotten out of control why, because everyone’s just rushing to be in the tech sector and buying anything that they’ve got (ph)?
EINHORN: Well it’s a combination. These are mostly very good businesses, but there’s a difference between what the right price for a very good business is and where some of these stocks have gotten. And this is what happens in bubbles and what happens in momentum. If you have good news and it’s a penny or a percent better than you thought it was and then the stock has to gap up 15 percent higher in response to that, and you do that four or five or six quarters in a row, before you know it the stock has doubled or tripled but the results might only be 5 percent better than you thought that they were and the valuations got out of control.
ERIK SCHATZKER: Valuations out of control. David, you wrote in your letter to investors for the first quarter that you see some of these stocks dropping by 90 percent. So good businesses that are overvalued by that much?
EINHORN: Well let me clarify it. What I was saying was is in the previous bubble back in 1999-2000, even the best stocks fell --
SCHATZKER: Right, like Amazon for example or Cisco, right?
EINHORN: And those were the best ones. The worst ones fell even more than that. Some of them practically went out of business, right? And what I’m saying is when these stocks become disconnected, they’re very difficult to short because when they’re at a price that’s a silly price they can just keep going. And so twice a silly price is not twice as silly.
SCHATZKER: And some of them are recent IPOs where the float is tiny, right?
EINHORN: Well that too, but it doesn’t matter because it can be a very big company or it can be a small company. But twice a silly price is not twice as silly. It’s still just silly. And so once these things disconnect and then they decide to come back the other way and people say, all right, I’m a grown investor. What would I be willing to pay for this? But I’m disciplined, so I have to look at the multiples now. And now you start looking at the multiples. There’s a really long way for these stocks to fall. And then where a value investor gets interested it’s -- it’s even less (inaudible).
SCHATZKER: Which multiples matter to you the most?
EINHORN: Well for simplicity, just cal it PE for now.
SCHATZKER: Well some of them don’t have E.
EINHORN: (Inaudible) that’s a problem because some of these businesses, not only don’t they have earnings, they don’t really have serious plans to make earnings in the future.
SCHATZKER: I look -- I ran a -- because I know you do this kind of thing. Now my attempt at it is far less sophisticated and comprehensive than yours, but I looked at stocks with a billion dollars of market cap trading at 10 times price to sales and that are traded here in the United States. There’s 89 of them, and the first nine that come up don’t have any earnings at all and aren’t expected to have any earnings in the next 12 months. And we’re talking about stocks trading at as many -- as much as 2,900 times sales.
EINHORN: Wow. That’s a lot.
SCHATZKER: Yeah. Now 89, and that doesn’t even include the one that I know you’ve shorted, Athena Health.
EINHORN: Right. Right. No. Look, I don’t think we have a generalized stock market bubble, but I do think we have a certain number of stocks that have caught everybody’s fancy, attention. There’s good stories behind a lot of these stocks and these companies, but the valuations I think have just gotten out of control.
SCHATZKER: So what’s in -- you’ve taken a different approach than perhaps the conventional route, which would be pinpointing, identifying overvalued single-name stocks and shorting them and instead gone for a basket approach. What’s in the basket?
EINHORN: Well, a whole number of stocks. Probably many of the ones on your list. We identified one yesterday as an example. I don’t really want to get into all the different ones that are in the basket, but I think it’s -- I think people can more or less sort these things out. Certainly we’re not saying like Apple is a short or Micron is a short. We’re long those things.
SCHATZKER: But is Twitter a short, for example? Twitter’s a company that people, as you know, have raised many valuation concerns about and it shows up on my list.
EINHORN: Yeah. Well here’s the thing. Like when we put out this letter, half the people were very upset that they thought we were talking our book. And the other half of the people were upset that we weren’t telling them all the names. So you really couldn’t please anybody. So I thought I’d bridge this yesterday by giving out one, by giving out one.
RUHLE: But why do you have to please anyone? You’re a hedge fund investor. The only people you need to satisfy are your investors. Go fish. You don’t have to write a letter. You don’t have to tell anybody anything.
EINHORN: Well let’s be clear. The letter is to our investors.
RUHLE: But everybody gets it.
EINHORN: This is an investor letter, right? It gets out there. We have a lot of investors, so we have to send it to a lot of people. And as a result, it does -- it does get out there. And (inaudible).
RUHLE: Well why can’t you talk your book? Isn’t that what everybody does every day of their lives?
EINHORN: I think adding information to the market so that people can sort these things out, I think it’s constructive and that’s why we tend to sometimes share our thinking.
SCHATZKER: You started to come to these ideas not just in the first quarter but several quarters ago. In fact, in the third quarter you wrote to your investors that investors that -- that the market tin general was getting increasingly creative in its behavior. What did you mean by that and is it more creative now, and if so, how?
EINHORN: Yeah. Well look, I think we -- the best we can do as value investors is we’re never going to be long these things. We’re not going to be long Athena Health at --
(CROSSTALK)
SCHATZKER: -- guy. I can see that.
EINHORN: We’re disciplined value, guys. So the best that we can do is hope to not be short them too much at the wrong time. And so we did a very good job I think in hindsight last year not really being short these or not being short much of them. And then this year it seemed like the environment was beginning to turn and maybe things were heading towards a peak, and so we shorted a whole bunch of them.
RUHLE: You want to talk about Athena?
EINHORN: Sure.
RUHLE: So walk us through the idea behind it.
EINHORN: Sure. Look, I think Athena is -- is a very good example of this. This is a good business with a good strategy and a good product and a good management that’s doing good things for the world, but it stock is just at the wrong price and it’s really as simple as that. And what happened was is a few weeks ago Morgan Stanley came out with this conventional DCF valuation where they projected out the results until 2030 and we just looked at that and said, wow, how are you going to get from a 10 percent margin before stock comp to a 30 percent margin? And we thought about the business, and we just don’t think that the assumptions that they’re using there are plausible.
RUHLE: Well you say -- or you said in your presentation they weren’t a cloud company. What exactly would constitute a cloud company then?
EINHORN: Well the way I look at it is there’s two types of -- of these Internet companies. There’s ones that have sort of a network effect and there’s others that don’t really have network effects. A network effect to me means that having more users on the network makes the site more valuable to each user. So eBay is a great example of this. Everybody likes auctions and -- and knows if you want to auction something off you go to eBay because that’s where the buyers are going to be and the buyers know where the sellers are going to be. So it’s very hard for a new entrant to come in and penetrate that. So eBay is able to extract value from that network by charging fees and commissions and so forth.
But there’s other types of Internet companies where your relationship is very much with the provider. So having lots of customers, it might help the provider be a little more efficient. It might help them run their business better, but it doesn’t really present them with a competitive position that allows them to earn like huge excess profits over a long period of time. And I think Athena sort of falls more into that latter category.
SCHATZKER: David, if I understand it correctly, you have raised the concern that Athena may not be able to compete with other large vendors like Epic (ph), for example.
EINHORN: Yes.
SCHATZKER: Now --
EINHORN: And the bull case really requires them to make a huge inroads into the hospital market.
SCHATZKER: Okay. So I can understand how investors may have duped themselves into believing that Athena Health can do that, but what about customers? Ascension Health is become a client of Athena Health and that’s a pretty big company. Are they similarly duping themselves?
EINHORN: No, no, no. Athena has a good product and -- and they have customers and they have real customers, and I wouldn’t tell Ascension or anybody else not to use their product. I think it’s a fine product. I think the market opportunity is maybe smaller than people think because they’re already up to 37,000 doctors, which is a lot, and they concentrate in these -- in the ambulatory business, so not in the hospitals.
So a large amount of the doctor population is away from them. And if hospitals buy up doctor practices, the available pool shrinks. Plus there’s been a huge move towards electronic health records. The stimulus provided huge incentives for doctors to take these systems on and a lot of them have done that. And Athena has captured part of that, but there’s been now a huge penetration of electronic health records and in the next year or two we think they’re going to run into a saturation and their growth is going to slow down.
RUHLE: And what’s your timing? So I want to just make it -- I know you’ve said -- I want to make it very clear. This is not the case -- the way you’re looking at this, you’re saying it’s a good company. This is not a Green Mountain, a Lehman. Those were much different scenarios. For here, this is about price. Correct?
EINHORN: That’s correct.
SCHATZKER: When does the market wake up and revalue these overvalued stocks?
EINHORN: Well I don’t know. Perhaps it already has. It’s possible that the top was in -- a few weeks ago.
SCHATZKER: So the biotech sell-off, for example --
EINHORN: The stocks have come in a lot. Now we won’t know. In a year it will be very clear was that the top, was that not the top, did they rally back. Certainly they’re going to have sharp rallies even if they are going to continue to go down, and we’ll know in hindsight whether this was the top or whether this was a correction and so forth. Our strategy is to have relatively small positions in a large number of these things and let time be on our side.
SCHATZKER: Talk to us a bit more about the warning signs. Stephanie and I remember what they were -- what they were back in the 1999-2001 timeframe.
RUHLE: Every single night in New York City another tech party for another company that you didn’t know what they did.
SCHATZKER: Eyeballs, for example, price to earnings ratios of 1,000 or more. What are they today?
EINHORN: Look, I don’t know about the multiples, but we’ve seen -- we’ve seen a lot of concentration on addressable markets. We’ve talked about a lot of things with average (inaudible).
SCHATZKER: So people just like blue-skying their opportunities.
EINHORN: You mentioned it. Price to sales because there is no earnings, right? And there’s not really a forecast for earnings over any intermediate period of time. There’s just a hope that you’ll achieve a critical mass and eventually margins --
SCHATZKER: Well hey, there’s a good example for that, right? Amazon generates profit but at an incredibly skinny margin. And it seems focused on building a customer base and revenue more than anything else, and for a long time investors have been pretty happy with that idea.
EINHORN: The stock has done terrifically.
SCHATZKER: Until earlier this year.
EINHORN: The stock has done terrifically, absolutely, and they can continue to do terrifically until -- until they don’t. But the truth of the matter is with something like like Amazon --
SCHATZKER: (Inaudible) the way things go, right?
EINHORN: With Amazon you’re still looking at a rather fancy -- fancy PE there.
SCHATZKER: So back to the warning signs. What else? What else --
(CROSSTALK)
EINHORN: -- you saw things that -- look, I went through this in 1999 and 2000 and -- and tried to watch what I saw. Some things happened was shorts couldn’t stay involved. The daily pain was simply too much and you saw these parabolic or whatever kind of moves, and you saw that in a lot of these stocks. If you put up the stock chart of Athena, it certainly did that up to 200. And it was very, very hard. You could see short sellers being carried out of these things where even if they thought that they were right they weren’t able to keep (inaudible).
SCHATZKER: And there we see the corrections.
EINHORN: And then you also see that the short interest goes way down, right? And so in a lot of these stocks there’s much lower short interest now than there was before. Another thing you saw was I think the King Digital IPO. These IPOs -- people were buying these IPOs without thinking too much about them because they were going up 40 percent the next day or 30 percent the next day.
SCHATZKER: Or because their kids played Candy Crush.
EINHORN: No, not that one, but all the other ones that came out in the previous few weeks were having these huge pops. And when there’s huge pops in the IPOs, everybody calls up the underwriters and just gets them whatever it is and they don’t really analyze the companies or think about it. They just want the money on the first -- first day’s worth of trading. And then if the stocks hold those prices it brings out the next IPO.
What you saw with King, they priced it not so well and then the stock traded down. And I think around that same time there was a secondary offer of -- of Veve. VEVE is the ticker that the -- that they did. They priced that in the hole (ph) and then that didn’t trade very well. And that sort of told me that we were beginning maybe to get towards the end of -- of the cycle.
RUHLE: Had those two names in your basket?
EINHORN: I’m not mentioning any more names.
SCHATZKER: How many are in the basket?
EINHORN: Lots
SCHATZKER: How many is lots? Well I don’t know, are we talking about 100 names?
EINHORN: Dozens. Dozens of names.
SCHATZKER: So bigger than a bread box, smaller than a Volkswagen Beetle.
EINHORN: Perfect.
RUHLE: Does it make it exceptionally hard to know how to be a value investor right now? Because fundamentally, no one’s going to disagree with you. But when we look at the IPO market, when we look at hedge funds, insurance companies everyday walking into work, they need to return. These deals look great. When they know they can get a big allocation, it’s attractive to buy. How do you keep that discipline at a time when momentum seems to be on your side?
EINHORN: Well, sometimes it’s a struggle and -- and you have to play -- we like -- we like the time arbitrage. We like to get our analysis right and sometimes just wait longer than other people, and that’s one of the things that -- our horizon for investments is not usually a day or a week or a month. We tend to on the long side be really one to four years, which is ancient on Wall Street these days particularly with hedge funds.
RUHLE: Then is it unfair that --
EINHORN: There’s a lot to do on the long side.
RUHLE: Then is it unfair that activists are getting this brand right now? They’re good-time Charlies. They’re only in for a very short period, when Bill Ackman just said yesterday he’s got a six to seven-year time horizon. You’re saying four years. Do activists have the wrong brand right now?
EINHORN: Well I’m not going to sort out the differences between me and Bill. I think that they’re considerable. I think for us we’re doing the same thing that we’ve always done. We’re not suddenly more activist. In fact, we’re really not that activist. We did a thing with Apple about a year and something ago. Before that I think it was four or five years prior to our prior activism thing. It doesn’t mean we couldn’t turn around tomorrow and wind up declining to do something, but these are very -- very infrequent. Yes, but I’m not going to argue with people who want to characterize. I don’t see myself that way.
RUHLE: All right. David, we have to take a quick break.
SCHATZKER: I’m Erik Schatzker with Stephanie Ruhle and David Einhorn. He’s --
(CROSSTALK)
SCHATZKER: -- of Greenlight Capital. So far a terrific conversation. David, I want to turn our attention away from individual stocks, we might go back there in a moment, and talk about the macro environment, quantitative easing, things that you have for a long time raised concerns about.
You were at the Ira Sohn conference yesterday presenting one of your best investing ideas, shorting Athena Health. And Paul Tudor Jones, another hedge fund manager, was at Ira Sohn yesterday and he said this. “What we desperately need is a macro doctor to prescribe central bank Viagra because otherwise it’s going to continue to be somewhat dull.” Now Paul may share your concerns about quantitative easing, but quantitative easing has been awfully good for people who are long the stock market at the very least. Do you share that view?
EINHORN: Well look, I adore Paul. We do Robin Hood together. He is one of my -- my favorite managers around.
SCHATZKER: And an awfully smart guy.
EINHORN: And an awfully smart guy. I don’t really think that they should set macro policy to create volatility for macro fund managers. That doesn’t strike me. So I think he’s going to have to live with the environment that -- that he gets on -- on that. That being said, as you know, I’ve been very critical of the monetary policy over the last few years.
SCHATZKER: Jelly donuts and all.
EINHORN: They jelly donuts.
RUHLE: All right. Well you recently had dinner with Ben Bernanke. What went down? We didn’t get to be there.
EINHORN: Well, it was -- I watched him for years in front of Congress and speaking and watched him on TV and “60 Minutes” and --
RUHLE: And what was your opinion of him before you had dinner?
EINHORN: I was -- I’ve been critical. I’ve been critical of him for a very long time. And the dinner for me, in one way it was cathartic because I got to ask him all these questions that -- that had been on my mind for a very long period of time, right? And then on the other side, it was like sort of frightening because the answers weren’t any better than I -- than I thought that they might be.
SCHATZKER: What did you ask him?
EINHORN: I asked several things. He started out by explaining that he was 100 percent sure that there’s not going to be hyper inflation. And not that I think that there’s going to be hyper inflation, but it’s like how do you get to 100 percent certainty of anything? Like why can’t you be 99 percent certain and like how do you manage that risk in the last 1 percent? And he says, well, hyper inflations generally occur after wars and we didn’t have -- that’s not here. And we -- we -- there’s no sign of inflation now and Japan’s done a lot more quantitative easing than we’ve done, and they don’t have it. So -- and if there is a big inflation, the Fed will know what to do. That was kind of the answer. And --
RUHLE: What did you say?
EINHORN: That was it. Then it went to the next question. So then a few minutes later it came back and I got to ask him about the jelly donuts. And my thesis is that it’s like too much of a good thing. Like lowering rates and quantitative easing and these stimulative things, they help but with a diminishing return. And eventually you go too far and it’s like eating the 35th jelly donut. It just doesn’t help you. It actually slows you down and makes you -- makes you feel bad. And my feeling has been that by having rates at zero for a very, very long time the harm that we’re doing to savers outweighs the benefits that might be seen elsewhere in the economy. So I got to ask him about this
SCHATZKER: Okay, and what did he say?
EINHORN: Well he said -- he said -- first of all he says, you’re wrong. That was good. And then he said the reason is if you raise interest rates for savers, somebody has to pay that interest. So you don’t create any value in the economy because for every saver there has to be a borrower.
And what I came back to him was I said, but wait a minute. You said for a long time we haven’t had enough fiscal stimulus, and who’s on the other side of the low interest trade? It’s the government. And so if the government -- if we raise the rates, the government would have to pay more money to savers. You’d have the bigger deficits. You’d create the stimulus, the fiscal stimulus that you’ve been complaining that Congress wouldn’t give to you, right? And savers would benefit from the higher rates and because savings is spent at a very high rate in terms of interest -- interest income on savings is spent at a high percentage, you’d get a real flow through into the economy.
SCHATZKER: One of the questions you’ve raised about quantitative easing in one of your letters to investors was about inequality. Did you get any satisfaction from Ben Bernanke on the question of whether quantitative easing exacerbates inequality?
EINHORN: Yeah. He -- he sort of -- that did come up and I don’t remember exactly what he said. So I don’t want to --
SCHATZKER: It wasn’t memorable.
EINHORN: No.
SCHATZKER: How about this notion that Warren Buffett has propagated that the Fed has become with its $4 trillion balance sheet the greatest hedge fund in history?
EINHORN: Yeah. I’m not sure that’s meant as a compliment.
SCHATZKER: But did that issue come up? There were a number of people (inaudible).
EINHORN: Yeah. There were people -- there were people who were asking, yes, and he says -- he says the Fed can manage their way out of it when the time comes.
SCHATZKER: But in a persuasive way? Did he -- did he convince anyone?
RUHLE: Or did he say Janet’s problem now, not mine? I’ll have another drink.
EINHORN: He was -- he was very supportive of Janet.
SCHATZKER: No doubt.
RUHLE: Are you?
EINHORN: I want to keep an open mind here. I saw her speak at the Economics Club a couple weeks ago and I was impressed by her speech. I thought -- she said, look, we have a base expectation, but things change. And when things change, we’re going to change our policy. I thought that was good. She’s -- I don’t look at one economic factor to drive things. I’m going to look at all of the factors. I thought that was good. I think the way she’s approaching problems at least conceptually is very good. I’d love to see if she has a better reason why rates should remain at zero at this stage in the economy, but you take these things and see where she goes. She’s just gotten started.
SCHATZKER: David, you wrote a few months ago, “No one is really sure what the Fed is focused on.” Between your dinner with Bernanke and Janet Yellen’s public statements to the press or in congressional testimony, do you feel you have any better an idea of what the Fed is focused on?
EINHORN: Well, I’m not sure -- I’m not sure where you’re quoting me from exactly. And so I’m not sure --
SCHATZKER: Third quarter letter to investors.
EINHORN: Yeah, thank you. I could use a sentence on either side.
SCHATZKER: Fair point, fair point. I don’t have the context. I do have it here, but I’m not going to bother looking it up.
EINHORN: Thank you. I apologize.
SCHATZKER: Do you feel -- no, that’s fine. Do you feel any more confident about the Fed’s ability to manage that $4 trillion balance sheet than you felt before? You worry, for example, that if we run into greater economic -- if not greater -- if we run into economic headwinds at some point in the next few years and the Fed still has trillions of dollars, it’s not going to be able to (inaudible).
EINHORN: If you start -- if you start at a zero rate and you start with a huge amount -- huge balance sheet and the economy turns down, the available tools that they will have are limited and there’s a risk that they will have to choose a tradeoff between doing something exceedingly aggressive, right, versus allowing a -- a crisis situation to fester. And they might choose to do something exceedingly aggressive and it may have a -- that 1 percent outcome.
RUHLE: David, why I -- while I only like to see you on Bloomberg Television, we had a chance to see you on “60 Minutes” just a few weeks ago right around Michael Lewis’s book and Flash Boys. And when I first saw “60 Minutes” I said, I get it. David Einhorn’s behind this. He’s supporting Michael Lewis’s argument. And then Michael Lewis sitting right here said David Einhorn’s a dumb tourist in this. Help me make sense of all this. Where do you stand? Because you’re not a dumb tourist to us.
EINHORN: Well thank you. Look, I think what we saw was we saw a little bit of a structural problem in the market. The market has gotten better and better and better over the years, but there’s a little bit of inefficiency with some of the market structure with the fragmentation. And we ran across these fellow who had an idea as to how to make a better platform for investors, IEX. And so we said here’s a little bit of a problem. We can help be part of that solution. We invested a little bit of money with them. We encouraged our friends to invest with them.
RUHLE: All right. David, we have to go to a quick commercial. We’ll be back with more in just a minute. Stay here.
SCHATZKER: With us, David Einhorn of Greenlight Capital. David, we almost did something really unfair to you, and Stephanie and I just aren’t about that. So --
RUHLE: It was filling me with anxiety. You’re giving the answer, the music’s beginning, I’m stressing.
SCHATZKER: Stephanie asked you a really important question and we didn’t give you enough time to answer.
EINHORN: You’re really nice not to give me the hook like that. I appreciate that.
SCHATZKER: So let’s do it again. Stephanie was asking you about high-frequency trading. Michael Lewis’s book Flash Boys, the exchange, the new kind of marketplace -- stock marketplace, IEX, that he’s praised and you’ve supported. And then our interview with Michael Lewis in which he referred to you almost ironically because it was in the context of a poker game, something that you happen to be pretty good at, as a dumb tourist at a casino. So let’s go back to what you were saying before.
EINHORN: All right. I was explaining before that we -- we were educated about some of the problems in the market and we helped gather up friends to invest in IEX and get that platform going off. And I should really actually call out my head trader Bruce Gudkin (ph) who did an amazing job of talking to other traders, talking to the investment banks trying to help them build their -- their network. And we’ve been really big supporters because we think that this is one of several things that probably need to be done to help level the playing -- level the playing field.
SCHATZKER: Okay. So how do you go from being an IEX supporter, backer, organizer effectively, together with your head trader Bruce, to in Michael Lewis’s description a dumb tourist? I don’t -- I don’t really -- do you get --
(CROSSTALK)
SCHATZKER: Why would he single you out as the schmo at the -- at a rigged poker table?
EINHORN: Yeah. Look, that’s okay. Stephanie, you asked him about his fact checking.
RUHLE: Yeah.
EINHORN: What he does is sense checking rather than fact checking. And so that’s probably what he --
(CROSSTALK)
RUHLE: Isn’t that dangerous to do to --
EINHORN: He wanted to tell his story his certain way. I think he was providing a good service because it is based on a true story and I think he is identifying some problems in the market that -- that can be improved upon. And so let’s not quibble too much about how he tells it.
RUHLE: Would you call the stock market rigged in the way that he does or simply needs improvement?
EINHORN: No, I wouldn’t -- I wouldn’t go that way at all. But there are some opportunities for it to get better for investors. And I’m hoping that IEX would -- would be part of that.
SCHATZKER: David, it’s been a pleasure having you back here on “MARKET MAKERS.”
This week, hedge fund manager David Einhorn showed us what one of the "cool kid stocks" he mentioned in his latest investor letter looks like. It's not pretty.
"Cool kid stocks," according to Einhorn, are a pack of stocks that are way overvalued. His hedge fund, Greenlight Capital, is shorting a basket of them and on Monday he presented one, athenahealth to a room full of investors at the 19th Annual Sohn Investment Conference.
Athenahealth is a business that provides outsourced administrative services for healthcare providers that, until Monday, enjoyed a stock price of over $125. Einhorn's bull thesis for the stock is for it to fall to $50, his bear case is that it could go to $14.
And this presentation has everything: a kooky CEO, superenthusiastic Wall Street analysts, jokes, cartoons, YouTube clips, and more. By the time he was done presenting, the stock was down 7%, at Tuesday's close it was down almost 14%.
Wednesday morning the stock started falling; an hour after the open it was down 8%. Carnage.
Einhorn was kind enough to share the presentation on Greenlight Capital's website, and allow Business Insider to upload it with his comments here. Enjoy!
"This is the 19th Annual Sohn Investment Conference. The first time I spoke here was in 2002. It is amazing how this great event has grown, and I am honored to be here."
"A couple weeks ago, we wrote in our quarterly letter that we believe that a narrow group of cool kid stocks have disconnected from traditional valuations and formed a bubble. This got a lot of criticism. Half the critics thought we were talking our book, even though we didn’t name names. The other half were upset that we didn’t tell them which stocks we were short. Since we can’t seem to please anybody, I’ve decided to validate both criticisms. Today, I’m going to illustrate the bubble basket doing a deep dive into one of the companies, while not disclosing the others. This company is an excellent company with an excellent product, run by a well‐meaning and honest, though occasionally promotional CEO. The world may be a better place if it succeeds, and even though we are short, I am in no way rooting for it to fail. Its main problem is that it isn’t positioned to succeed the way the bulls hope, as the assumptions the bulls are making are not plausible. The stock is simply at the wrong price. It’s caught up in a bubble and could easily fall 80% or more from its recent peak. Let me introduce you to athenahealth."
Since Monday the stock of Jonathan Bush's company, athenahealth is down 15%, but he's still optimistic — "I am absolutely confident that athenahealth is $1,000 stock," he told CNBC.
Right now the stock price is hovering around $107, and down over 3.5% in premarket trading. That is in part thanks to hedge fund manager David Einhorn. He presented his short thesis on the stock at this year's Sohn Investment conference, and said that it was at best a $50 stock. At worst he valued it at $14.
Einhorn includes athenahealth among a bunch of stocks he talked about in his latest investor letter — "cool kid stocks" that are driven by buzz words and herd mentality, not actual value. He said that he's shorting a basket of them. At Sohn he revealed only one — athenahealth.
And his presentation got personal.
Not only did Einhorn say that athenahealth was confused about its identity as a business processing company (“Jonathan Bush likes to compare Athena Health to Amazon because they both have websites,” he said) — but Einhorn also showed a bunch of clips of Bush excitedly talking about his product as if it could fly to the moon.
"Sometimes I sound like the guy who's convinced the aliens are going to land, but so far we've been right," said Bush on CNBC Thursday morning.
athenahealth, he added, is a software service company.
That said, Bush admitted that he didn't know how the valuation of his company was done, but he thinks that Wall Street analysts should be the ones to decide it.
Not that Einhorn didn't bash them too, because he totally did.
The biggest news to come out of the biggest investment conference of the year on Monday was that David Einhorn is shorting athenahealth, a company that helps small, non-hospital healthcare firms do things like collect bills, process claims, and manage patient records.
To David Einhorn this looks like a business process outsourcing company (BPO) — a company that helps other companies. Cool solid business but nothing eathshattering.
To athenahealth's CEO Jonathan Bush, this is a radical company changing the face of healthcare through technology.
We published Einhorn's main presentation here, but we also get that some people don't want to click trough 67 slides filled with discounted cash flow projections and what not.
So we'll keep it nice and simple for you. There are really three big reasons why Einhorn thinks this company's stock is ridiculously overvalued.
It simply hasn't met analyst expectations,
it's narrative about itself is all out of whack,
and because of that narrative Wall Street makes wild assumptions about how well the business can do in the future.
Before we break all that down, though, here's a recap of the action this week:
Since Einhorn spoke the athena's stock has fallen over 15% to around $108. His best case scenario is that it will go down to $50 — worst is that it will sink to $14.
Meanwhile, Jonathan Bush, athenahealth's CEO is making the rounds doing damage control, and has said that he still believes the stock is worth $1,000, though he's not sure how anyone comes up with valuations.
"I don't know what we're worth," he said on Bloomberg TV. "What I do - I know we're worth $1,000 a share, no problem, at some point in the future. And it's up to David and others to decide when by discounting back what they think… I pulled [the valuation] out of my ear."
This is probably not the best thing for a CEO to say, especially since (per our first reason why Einhorn doesn't like this stock) his company hasn't met the expectations that analyst set for it over the past several quarters.
The stock started going bonkers back in 2012 when it shot up from $60 to $204 in 16 months. Now, for an explosion like Einhorn says you'd need organic revenue growth of 30%, but athena hasn't come close. In fact, its targets have been lowered for 2014 and 2015. The same thing goes for gross and operating margins.
So why are analysts ignoring the fact that this company isn't performing in line with its stock price? Einhorn argues that it is, in part, because of the company's narrative. Bush says that athena is a revolutionary "cloud based software" solution. He compares it to companies like Salesforce, Facebook, Air BnB, Opentable....
"Saying cloud over and over doesn't make it rain," Einhorn wrote in his slide deck.
His point is that athena is a BPO, period. That means it's in a peer group with margins averaging around 10% before stock based compensation.
Meanwhile, expectations of athenahealth's margins with stock based compensation have been lowered to somewhere around 5% going into 2015.
But analysts keep on plugging in numbers based on this anthena-as-Amazon narrative, which means the assumptions (in Einhorn's opinion) get pretty wild. In his presentation he really ripped into Morgan Stanley for doing this in a variety of ways.
Einhorn says the Morgan doesn't just confuse athena with Facebook, it confuses it with a bigger company that services bigger, wealthier doctors, but it doesn't do that.
From the presentation:
"Morgan Stanley says the average doctor currently collects $636,000 annually, on the way to $1.3 million in 2030. Currently, athena’s doctors collect only $370,000 of which athena keeps about 4.4% or $16,000. Athena’s doctors get much less than the national average because athena has a concentration in low‐earning primary care physicians. Even if athena were to win higher‐billing physicians, athena would adjust its billing rate downward because it prices its business to earn a certain amount per physician, and uses a sliding scale so higher‐billing doctors pay a lower percentage... Morgan Stanley assumes athena will recognize $63,000 in revenues per doctor by 2030 from $16,000 today. We think it is more reasonable to assume that revenue per doctor grows with Ambulatory spending. On that basis, Athena's revenue per doctor would still more than double to $36,600 in 2030."
More than that, if athena wants to get into that bigger doctor, hospital space it has to contend with the leader in that world, Epic Systems, a company with 100% retention rate among its big healthcare customers.
Meanwhile, as those big healthcare customers swallow up little doctors and hospitals (as is all the rage right now), they're switching the little guys into the big guys' system. Einhorn thinks this means that athena could lose customers like Integris, CaroMont, Vanguard and more.
Hedge fund hot-shot David Einhorn offered former television host Regis Philbin a summer internship at Greenlight Capital last night on CNBC's "Fast Money."
Einhorn made a surprise phone call into the show to congratulate Philbin on his Micron Technology call, which is one of Einhorn's big positions.
Philbin was a fan of Micron before Einhorn began to mass his position last July.
"Well, I have an idea for you— You did such a good job finding Micron and it doubled and I thought I thought it was good. And then I thought maybe I could take your advice for the summer, and I was wondering where trying to get some young blood in at Greenlight, some young minds and I was wondering if you want to come intern for the summer."
"Exactly what I've got—Some young blood," Philbin replied, adding, "I'd love to join you, David. I'm not kidding you."
Philbin, who is retired and not working, said that he would be in touch. (We hope this actually happens!)
Einhorn said that he's expecting at least two winning stock picks from Philbin that are going to double.
Einhorn publicly revealed his stake in November the semiconductor producer at the inaugural Robin Hood Investors Conference. Shares of Micron have surged more than 43% since Einhorn made his investment public.
Philbin is out of the Micron trade, but Einhorn says he continues to think that it's "very cheap."
This chart, plotting the greatest investors of all time based on their returns compared to the S&P 500 over time, is getting passed around all over the finance arena on Twitter.
Investors listed range from people still in the game, like David Einhorn of Greenlight Capital, to legends who are no longer with us, like Walter Schloss and Benjamin Graham. U.K. publisher Harriman House made the chart.
What instantly jumps out is that there are a lot of people who have beat the market big-time over the course of a few years. But, there aren't many people with a track record of beating the market over the course of decades. Both Soros and Buffett stand out as guys who crushed the market over many years.
The World Series of Poker (WSOP) is currently going on at the Rio Hotel and Casino is Las Vegas, and we're highlighting our favorite play of the day.
On Thursday the Dutch player Jolmer Meelis made an insane call — and it actually paid off.
The board had a 10♠, 7♣, 3♥ after the flop. Meelis bet 12,000 and his opponent, Steve Tripp, called. The fourth card was a 10♦, and that's when things got interesting.
Meelis decided to check. Tripp bet 32,000. After thinking about his next move for a few moments, Meelis decided to make the call.
A 2♣ came up on the river, and Meelis checked. According to the WSOP blog, approximately 20 seconds later, "Tripp asked Meelis to make his stack visible, and the Dutchman complied by moving his hands". After seeing Meelis' remaining 100,500 chips, Tripp deciced to go all in.
For those who are familiar with poker, you know that generally at a moment like this a player will think about his next move. But not Meelis — he immediately made the call and revealed his A♦ K♠.
Tripp did not reveal his cards, and merely responded "Nice call".
The World Series of Poker (WSOP) is currently going on at the Rio Hotel and Casino in Las Vegas, and we're highlighting our favorite play of the day.
Over the weekend, Poker News reports that Vladimir Bozinovic started with a pair of kings... and it only got better from there.
Even before the flop, things were heating up. Bozinovic opened up with 80,000, "only to have Tony Ruberto three-bet the cutoff to 215,000". Bozinovic then went up to 500,000, which Ruberto called.
The flop showed a 10♦ Q♠ 8♣ — and both players checked.
The next card was a J♦. After Bozinovic checked again, Ruberto bet out 375,000. Bozinovic ultimately called.
After the 9♠ on the river, both players checked.
Bozinovic then revealed his two cowboys, K♠ K♣, which turned into a straight on the river. He increased his chip count to over 4 million.
Additional WSOP News:
David Einhorn, hedge fund manager and renowned poker player, is out. He earned $44,728 — which will be donated to the Robin Hood Foundation.
Huck Seed is out. This means that there will be a first-time winner this year.
Greenlight Capital, the hedge fund run by David Einhorn, has discovered the identity of the anonymous Seeking Alpha blogger that revealed one of the fund's stock positions. 
The World Series of Poker (WSOP) is currently going on at the Rio Hotel and Casino is Las Vegas, and we're highlighting our favorite play of the day.
The World Series of Poker (WSOP) is currently going on at the Rio Hotel and Casino in Las Vegas, and we're highlighting our favorite play of the day.