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David Einhorn Discusses Why The Endgame For The Rating Agencies May Be Close

Tyler Durden's picture




 

Perhaps the Oracle of Omaha was right in starting to get out of Dodge with his MCO position, after he sold 8 million shares in mid-July, and noting that he very well may continue selling his remaining 40 million share stake. David Einhorn clarifies why.

 

 

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Tue, 09/08/2009 - 11:09 | 62218 MsCreant
MsCreant's picture

Because of gems like upgrading GE because investors are "comfortably numb?"

Tue, 09/08/2009 - 11:15 | 62225 Hephasteus
Hephasteus's picture

Ya. It's like when a bank gives a loan to a guy because he look alright and seems nice.

Tue, 09/08/2009 - 11:11 | 62220 Anonymous
Tue, 09/08/2009 - 11:13 | 62222 Hephasteus
Hephasteus's picture

But they need the ratings agency to strangle certain businesses or give some a little help with cheap money.

Tue, 09/08/2009 - 11:15 | 62226 Anonymous
Anonymous's picture

Nice trade by Buffett selling 744k shares before MCO tanked on Wednesday last week.
http://www.tradethepicture.com/?p=4113

Tue, 09/08/2009 - 13:19 | 62397 Anonymous
Anonymous's picture

And only 40,000,000 to go!! Wish I was that good.

Tue, 09/08/2009 - 11:20 | 62230 blackebitda
blackebitda's picture

hey einhorn, i always wonder why investors share their positions...such philanthropy. well i guess it helps to have more action to help buy to cover into. nice trade though. 

Tue, 09/08/2009 - 11:26 | 62237 chunkylover42
chunkylover42's picture

"Lehman was last year, I don't really have much to add to it."

nice.

Tue, 09/08/2009 - 11:30 | 62242 Anonymous
Anonymous's picture

CNBS

can't wait for Thursday with Liesman and Erin hosting a Town Hall meeting with special guest Timmy.

We really need to stop supporting that network including links such as the above. A full on boycott. Bloomberg and FoxBiz are reasonable (not great) alternatives.

Tue, 09/08/2009 - 11:31 | 62243 JohnKing
JohnKing's picture

Einhorn captures CNBC!

 

 

David Einhorn’s wife is Cheryl Strauss-Einhorn, who is, or was, an editor at Barron’s. It’s fair to say that Cheryl Strauss Einhorn’s favored sources over the years have been the short-selling friends of her boyfriend/husband. As a couple, they illustrate the intersection of money management and compliant journalism whose description is Deep Capture’s mission.

Good Catch David!

Tue, 09/08/2009 - 11:32 | 62246 Anonymous
Anonymous's picture

Funny, they didn't mention that he was short GE, wonder why??

Tue, 09/08/2009 - 11:35 | 62247 Anonymous
Anonymous's picture

What is with the camera constantly moving back and forth? Can't they just put his picture up and saw on the phone?
And seriously, can't the guy bother to take them off speaker?

Tue, 09/08/2009 - 13:05 | 62379 glenlloyd
glenlloyd's picture

yeah, that cavitating camera deal was making me sea sick!

Tue, 09/08/2009 - 11:46 | 62266 Anonymous
Anonymous's picture

I like Einhorn, but he is dead wrong on the rating agencies.

As for Buffet, his selling may simply be to get down to a lower ownership position, like 15%, in MCO. Berskshire's percentage ownership had increased to 20% simply due to MCO stock buybacks shrinking the share count.

Those buybacks continue; MCO generates a lot of free cash flow.

Tue, 09/08/2009 - 12:36 | 62340 Anonymous
Anonymous's picture

You are wrong.

Tue, 09/08/2009 - 13:22 | 62402 Anonymous
Anonymous's picture

God I hope you don't manage my money.

Tue, 09/08/2009 - 11:49 | 62272 Cap
Cap's picture

I will try this again ...

 

I like Einhorn, but IMO he is wrong on rating agencies.

 

Buffet may simply be shrinking MCO position to get down to 15% ownership.  He had been up to 20% due to MCO stock buybacks, which continue.

 

MCO generates a lot of free cash flow.  Their business is pretty strong even in the aftermath of the financial crisis and all this new issuance is good for them.

Tue, 09/08/2009 - 11:58 | 62283 Anonymous
Anonymous's picture

Yea they generate allot of fraudulent cash flow from lie cheat and steal; one lawsuit loss and these guys are toast possibly many times over according to the possible size of lawsuits and their current debt load.

Tue, 09/08/2009 - 11:58 | 62282 Nathan Smith
Nathan Smith's picture

They own 40,000 puts on GE with an estimated value on 8/13/2009 of ~47 million, which values the puts at ~11.75 per contract. 

The CUSIP for the option is 369604103, so someone with higher tech capabilities could be able to share the exact contracts they own, por favor.

The maths can be checked at http://www.sec.gov/Archives/edgar/data/1079114/000092963809001361/0000929638-09-001361.txt

 

 

Tue, 09/08/2009 - 12:37 | 62342 Anonymous
Anonymous's picture

700k SPDR puts as well

Tue, 09/08/2009 - 16:14 | 62697 market folly
market folly's picture

Minor correction if you don't mind. That 40,000 figure you pulled is actually the value of the puts in thousands, so they essentially have over $40 million worth of puts if you add the two sets together.  The nominal amount of shares represented is the column over and if you total them together is 4 million shares or so.  We track hedge fund movements on our site and we covered all the moves in Greenlight's 13F filing here:  http://www.marketfolly.com/2009/08/david-einhorns-greenlight-capital-loa...

 

Keep in mind that those positions are as of June 30th, 2009 and are only show the long US equities, options, or notes.

 

Jay

@marketfolly

Wed, 09/09/2009 - 10:29 | 63393 Nathan Smith
Nathan Smith's picture

That's exactly what I said dumbass.

40,000 contract= 4,000,000 shares.  The value is 47 million.  I was trying to identify the strike.  You have added nothing to the discussion. I won't be checking out your site either.

Tue, 09/08/2009 - 12:45 | 62344 Gordon_Gekko
Gordon_Gekko's picture

Looks like CNBS has already decided the case in favor of the corrupt rating agencies.

 

BTW, Einhorn is one of the few really smart money managers out there.

Tue, 09/08/2009 - 14:00 | 62449 percolator
percolator's picture

I thought the same thing while watching it.

Tue, 09/08/2009 - 13:54 | 62437 Missing_Link
Missing_Link's picture

WTF is up with the dude waving the camera around in front of the screen with Einhorn on it?  CNBC, learn how to hold a camera still, FFS.

Tue, 09/08/2009 - 15:12 | 62562 Anonymous
Anonymous's picture

Investment banks set up the rating agencies to hold the bag when the drek hit the fan. The investment banks had no idea that senior portions of the securities they had created did not justify a AAA rating? Give me a break. Who gave the the rating agencies the models used to create the newly crafted toxic securities? Thats right, the investment banks. Maybe subrogation is the Trojan Horse. This may be the proverbial chink in the legal armor surrounding the investment banks that is needed to expose the incestuous relationship that was needed to accomplish what happened. Let the games begin.

Wed, 09/09/2009 - 03:14 | 63237 Anonymous
Anonymous's picture

+1
Follow the money. Sue 'em all, let God sort 'em out.

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