- David Einhorn reminded investors that not every unprofitable startup is the next Amazon.
- The Greenlight Capital boss said crypto is too complex and uncertain for him to own.
- Einhorn blamed underinvestment in staid businesses for some of the current product shortages.
Hedge fund manager David Einhorn cautioned that not every loss-making startup will be the next Amazon, complained that too few investors are scrutinizing company accounts, and predicted stubborn inflation in a RealVision interview this week.
The Greenlight Capital boss also bemoaned the trend of people investing based on market sentiment instead of fundamentals, and said cryptocurrencies are too complex and uncertain for him to trade them.
Here are Einhorn's 10 best quotes from the interview, lightly edited and condensed for clarity:
1. "The poster child for the bubble debate is Amazon. It was a company that had no real prospect of margin, but eventually it turned out to be a very profitable thing. There's all kinds of companies right now that are being given the benefit of the doubt as a result."
2. "America Online didn't remain the dominating company that it was. There might be some companies today that are thought to be similarly dominant or potentially dominant, that 20 years from now, might easily turn out to be America Online-like."
3. "People have basically given up on critical analysis of accounting. It's not something that anybody is particularly interested in. Companies that have ethics do their accounting correctly. And companies that don't, they don't. There's really nothing that limits that."
4. "The discussion now isn't even necessarily about the viability of a business. There's not a lot of people doing financial analysis. There's just, 'Hey, people are going to buy the stock, and they're going to hold on for dear life.'"
5. "Companies can report stupendous news and have very, very minimal share-price reaction to it. It's not that the stocks are hated; there's nobody actually listening. There's nobody on the call, there's nobody performing analysis, there's nobody recommending the stock. There's nobody there to buy the stock."
6. "I'm not in the transitory-inflation crowd. The private sector is allocating all the money to the fast-growing, software, eating-the-world companies. It's not allocating money to companies that actually make things and provide other kinds of services that people find less exciting, meaning there are shortages of these things now."
7. "We're seeing shortages in the economy because people haven't invested. There are shortages of copper, coal, natural gas, oil, and all kinds of other basic materials and agricultural-related stuff too. It's the result of the market just refusing to put a reasonable cost of equity on firms that are a little bit more boring than the software-as-a-service companies. We're truly starving them."
8. "There's a lot of things going on right now that I just put in the 'too hard' bucket. Crypto is too hard for the time being, at least for me. It's unregulated. It's unlimited. On the other hand, it has a real appeal. It kind of goes with the fraying of the social norms of the society. I don't have a strong view that it's an enormous waste or some phenomenal opportunity."
9. "Some people think, 'This is where we are right now, these are the kinds of things that you need to own, and they will go up and you should own them.' I have trouble with it because I don't really understand why they're good investments. Those people have done much better than I've done because they've owned things that should be owned right now."
10. "There's an offchance that owning a share of stock still represents a proportional ownership in the cash flows and profits of the company. And on that offchance, I'm positioned to do very well if that proves to be the case."
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