David Einhorn, one of the most closely followed managers in the $2 trillion hedge fund industry, had some blunt advice on Wednesday for his fellow investors: Do your own homework.
Einhorn, this year's star attraction at the Sohn Investment Conference, an annual confab where the industry's top investors share their favorite trade ideas, wrapped up his presentation by offering some words of warning about his public comments.
"It doesn't make sense to blindly follow me or anyone else into a stock," said Einhorn, president and co-founder of the $8.8 billion hedge fund Greenlight Capital. "Do your own work."
He may have been talking to the converted. Einhorn's limited impact on Apple Inc shares after he implored the technology giant earlier this year to better use its cashpile has been noted by industry analysts. A cover piece in March by Bloomberg Businessweek, "When David Einhorn Talks, Markets Listen -- Usually," highlighted the failure of the "Einhorn effect" to work its magic on Apple.
Einhorn is perhaps best known for his prescient call on the demise of investment bank Lehman Brothers before the financial crisis, a trade idea he made public at the 2008 Sohn conference, and for his short position in Green Mountain Coffee Roasters.
While the conference is one of the high points of the year for investors, it has also been criticized as a forum that allows money managers to move stock prices and advance their trades. Einhorn's remarks seemed to address those concerns.
The 44-year-old manager said he did not "speak about stocks to benefit from any price appreciations that might occur" and reiterated that his fund invested on a medium- to long-term horizon.
He said Greenlight had not liquidated any of the 30 trading positions he had advocated at past Sohn events "within three months of first speaking about it publicly", and added that 90 percent of the ideas were still in the fund's portfolio.
After a year, he said the fund had increased positions in about half of the calls and decreased positions in the other half.
Einhorn's plays do not always turn out well. While bullish bets on Norwegian insurer Gjensidige and a bearish call on U.S. Steel Corp. proved prescient, Einhorn spent a portion of his 15 minutes at last year's conference praising shares of Apple. The company's stock price has fallen about 16 percent since he gave that presentation.
Greenlight Capital is up 5.5 percent this year through April 30, according to a person familiar with the numbers. The S&P 500, meanwhile, rose 12 percent over that period.
This year, Einhorn suggested a long position in oil field services provider Oil States International Inc, saying that it was a high-quality business that markets did not appreciate.
"We didn't come up with a thesis on OIS in 15 minutes, and the data says there's a decent chance we won't change positions" in the near term, he said. "At Greenlight, when we find a good idea we tend to stick with it."
Investors who may have wanted to quickly put on trades based on Einhorn's ideas this year faced another complication: He did not begin his presentation until 6:30 p.m., two and a half hours after the close of the U.S. trading day.