A rare look inside the world of activist hedge funds from one of this country's top investors.
In 2002, David Einhorn, the president of Greenlight Capital, gave a speech at a charity investment conference and was asked to share his best investment idea. He described his reasons why Greenlight had sold short the shares of Allied Capital, a leader in the private finance industry. What followed was a firestorm of controversy.
Allied responded with a Washington, D.C. style spin-job - attacking Einhorn and disseminating half-truths and outright lies. Undeterred by the spin-job and lies, Greenlight continued its research after the speech and discovered Allied's behavior was far worse than Einhorn ever suspected. Fooling Some of the People All of the Time is the gripping chronicle of this saga, and this edition contains all new updates from the author.
Minute by minute, it delves deep inside Wall Street, showing how the $6-billion hedge fund Greenlight Capital conducts its investment research and detailing the maneuvers of an unscrupulous company. Along the way, you'll witness feckless regulators, compromised politicians, and the barricades our capital markets have erected against exposing misconduct from important Wall Street customers.
At its most basic level, Allied Capital is the story of Wall Street at its worst. But the story is much bigger than one little-known company. Fooling Some of the People All of the Time is an important call for effective law enforcement, free speech, and fair play.
©2008 David Einhorn (P)2010 Audible, Inc.
"[A] welcome antidote to the thousands of books written for investors that paint a sunny picture of companies.... Mr Einhorn's book recounts behind-the-scenes details of the sort that are seldom made public...an instructive guide for general investors." (Financial Times)
A wonderful, albeit heavily detailed account, of Einhorn's search for corporate justice. Given what has happened in the capital markets the past several years, it is easier now to understand the incompetence of regulators. Still, it is a little curious that Einhorn found so few takers of his perspective among what would have appeared to be unbiased professionals (journalists, professors, investors). Also disappointed how casually he dismissed the abusive and illegal tactics of naked short selling. But he does tell a convincing tale and one that should make us think every time we read a glowing account from a Wall Street analyst.
My biggest disappointment was the absence of the epilogue that is included in the newly published book version. Since Allied hit the wall after the completion of this book, I was very much looking forward to hearing how the market finally caught on to the systematic fraud and deception. It would be nice if Audible.com could offer this add-on to its customers who bought this book.
I discovered audio books when my required reading for my profession left me with no time to read for pleasure. Now every chore is a read.
Yes. I am very unsophisticated about the financial system. Since the Recession began I have comprehended small bits of what happened and who the players are, but the picture is so big it's overwhelming. There is plenty of blame and finger-pointing to go around. This is essentially the story of one man's attempt to call attention to corporate criminal behavior and hold the felons accountable. However, it gave me a window into the workings of the financial system, its non-regulators, and the how fraud corrupts our political and financial system to threaten our way of life. I also gained insite into the paralysis of government, and why our politicians have become so unrepentant about their corruption.
The Sociopath Next Door because it explains institutional sociopathy clearly without completely talking down to the reader. Pushing readers out of their intellectual laziness without alienating them, when it's so much easier to take spoon-feedings from those who have the most to gain by fooling them, is a challenge beyond the grasp of most writers.. Most forms of media try to reduce your concentration level, so grabbing your attention and forcing you to work at understanding something complex, requires continually reminding the reader the information is important to them.
The author/protagonist's matter-of- fact incredulity was refreshing.
The Roman Empire with computers.
I was depressed that our problems seem so unfixable, yet the writer's unflagging optimism shines though. Hopefully, enough "smart people" will realize that winning by everyone else losing will ultimately erode the prey base so much they can't survive either.
This was an incredibly enjoyable book on all levels. You just have to admire the tenacity and intellect of Einhorn. It would have been the easy way out to cover the short on Allied and let it go, but he stuck with it as he had strong conviction. The amount of detail in his research is astounding. You have to hand it to Einhorn: he deserved to come out victorious in the end. He just did his homework better than anybody else.
The author reports about uncovering a tax payer funded, government enabled fraud through the SBA, of a company called Allied Capital through subsidiary BLX (Bussines Loan Express). The main idea is to hand out loans fast and furious witouth much scrutiny, take big commisions on these loans and keep them on the books as healthy, long after they have gone bad. Like buying rotten fruits and putting them in a box and let nobody look inside the box, selling the box on the stock market as a box with fresh fruit. Ofcourse only possible because the tax payer is on the hook in the end through the SBA.
Einhorn tracked this fraud down and decided to short Allied Capital stock and expose the fraud to the government.
Here is the surprising part. Einhorn is truly amazed to get little cooperation from the government to expose the fraudulent individuals, while it is the same government that enables the whole thing. He is even treated as an evil short seller suspect by them.
He claims suprise over 'individuals who have chosen to fight fraude as a profession' that showed little interest. He fails to recognize is that it should immediately be obvious that these crime fighters get their pay check through taxes. Which means that if you do not purchase their services, they drag you of to jail under threat of force. These people are not interested in uncovering crime. They gravitate to a position of power, to cash in on it. The official function of crime fighter is just a fence. It's a racket. It's like being surprised that paying protection money to the maffia, does not get you protection.
Eye opening and chilling account of the inability of the authorities to regulate companies in their purview and management's competence in fudging accounts.
This book could be improved by being shorter and less information rich, especially details which are not so interesting. The story also lacks the dramatic nerve that a good story should have.
Sophisticated or unsophisticated, rich or poor, the only way to remedy what has been described in this book is to read it and stand up for the country. So many charged with that responsibility are not.
This book is very good if you are interested in investing, Einhorn is a gifted writer and obviously a financial genius. However, be warned that it is full of accounting and regulatory jargon that fill up chapters at a time as Einhorn goes into immense detail of the problems of Allied and the regulatory bodies. Overall, a fascinating story that takes you into the mind of one of modern day's best investors.
Liked the book as it is relatively light reading and gives an insight into how a hedge fund guy like Einhorn approaches his short positions. Really seems like alot of fundamental block and tackling to be sure. I would have guessed he is far more aggressive than it appears in the book and press reports.
Having worked in the commercial, state, and federal sectors, I thought I had gained enough perspective to understand the differences and critical insights across the sectors. This book showed me I don't have a clue as to the depth of problems that have been created across these sectors by our "well-intentioned" representatives.
Democrat, republican, independent, we've sent these people down to Washington and they've given us what we probably in retrospect should have expected. A bureaucracy beholden to none except those willing to buy political influence. A modern day PIIGS come to the new world. This book will show you how a wall streeter attempted to cajole push and gain insights into the role function and workings of the SBA, SEC, and DA's organizations. Ultimately it sounds as if nothing would have happened were it not for Homeland Security being concerned about SBA fraud being utilized to finance jihad against the US.
You can't make this stuff up. You can't help but be worried for our children when a mild mannered guy like Einhorn is in one of the leading proponents of capital markets efficiency.
Ultimately this book won't tax you mentally, but will probably spark deeper interest in various topics contained within the book. Would love to see Einhorn's next book describe how "well intentioned" legislation such as Reg FD, Dodd-Frank, etc, etc have changed the relationship that corporate management has with the media, wall-street, and shareholders. Most companies are reasonably well run, but there are some companies that appear to be relying upon the holes and lack of transparency and accountability this legislation has created. It would be interesting to read a book comparing and contrasting of the various mechanisms hedge funds use to find short ideas, propagate analysis, and ultimately effect change that brings more efficiency to the capital markets. Shorting is just mathematically such a nutty idea, but with the changes being brought into effect by legislation I have to imagine short hedge funds are likely to be a growth business in the years to come.
great story. I guess sometimes the bad guys win...well for a while at least before the market invariably destroys them....
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