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Einhorn Ends 2011 Just Over +2%, Closes FSLR Short, Warns On Asia, Mocks "Lather. Rinse. Repeat" Broken Markets

Tyler Durden's picture




 

Anyone wondering why FSLR just jumped, it is because as was just made known, David Einhorn's Greenlight has decided to close its FSLR position, after bleeding that particular corpse dry. "Our largest winner by far was our short of First Solar (FSLR) which fell from $130.14 to $33.76 paper share and was the worst performing stock in the S&P 500." Einhorn also announces that he was among the "evil" hedge funds who dared to provide market clearing transparency and buy CDS on insolvent European governments: "We also did well investing in various credit default swaps on European sovereign debt." As for losers, Einhorn and Kyle Bass can commiserate: "For the second year in a row, our biggest loss came from positions designed to capitalize on eventual weakening of the Yen." He summarizes the global economic environment as follows: "The global environment is very complicated. On the one hand the Federal Reserve has taken a much-needed break from quantitative easing (at least for the moment). Accordingly, inflation in oil and food has abated, providing relief to the US economy. Bearish forecasts that the US was headed back into recession proved wrong for the third time since the end of the last recession. On the other hand, Asia appears to be in much worse shape than it was at this time last year and could be a drag on the world economy going forward. Very few people trust any of the economic data coming out of China, making it difficult to gauge the situation there. Some of the smartest people we know have very dim views. The Chinese have been a leading growth engine for the last two decades and are largely credit with leading the world out of the recession in 2009. A change in their economic circumstances could really upend things." Yet the best thing is his summary of the current investing climate in our utterly and hopelessly reactionary broken markets.

Einhorn at his best:

 

The cycle looks like this: time passes and the crisis deepens. Markets, eternal creatures of habit, begin to reflect the ensuing fear. Then, just as things appear ready to unravel, there is a reprieve, as red headlines race across the screen: "Sarkozy and Merkel to Meet at Deauville", "Obama Phones Cameron", or "Christine Lagarde Waves from Bus". The market jumps. You'd think the media would quit falling for this charade, but having run out of clever headlines to describe the impending doom - "Eurogeddon" Really? - they herald every briefing, meeting, assembly, and conference call.

 

The market embraces these announcements as eagerly as the media, behaving as if any and all communication is equally constructive, and likely to yield a solution. The market continues to rise until the day of that summit, as all ears await a Grand Communique. Within minutes of any proclamation, the market may cheer with a final, celebratory spike. Upon evaluation of the actual statement, it becomes clear that either nothing has truly been agreed upon, or the plan is insufficient, impractical or just won't work. The market sells off and the crisis deepens some more. Lather. Rinse. Repeat.

Full letter below.

Greenlight

 

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Wed, 01/18/2012 - 12:23 | 2074493 SheepDog-One
SheepDog-One's picture

Thats the best flow chart ever.

Wed, 01/18/2012 - 12:25 | 2074510 Manthong
Manthong's picture

Yeah, but a bit too complicated for someone with only a journalism degree.

Wed, 01/18/2012 - 13:44 | 2074869 flacon
flacon's picture

Einhorn is only up +2% for the year 2011? Should have just bought gold and buried it, would have been up five times as much and not had to worry about it. 

Wed, 01/18/2012 - 14:42 | 2075167 Votewithabullet
Votewithabullet's picture

How many billions do you manage?

Wed, 01/18/2012 - 20:05 | 2076378 Luke 21
Luke 21's picture

Alot of things would have done better than 2%, but few things could surpass Einhorn's long-term track record. TLT outperformed GLD in 2011.

Wed, 01/18/2012 - 12:29 | 2074531 LawsofPhysics
LawsofPhysics's picture

Incomplete flowchart. The crisis can "deepen" only so many times.  Where is the "World War" bubble?

Wed, 01/18/2012 - 12:35 | 2074558 SheepDog-One
SheepDog-One's picture

I think thats on a different flow chart. Like 2 months ago Rosenburgs 'teeter totter' chart showing how we're all simply Euro/USD traders from here on out. Not so much today as that paradigm pair trade has been blown to tiny bits.

Wed, 01/18/2012 - 12:24 | 2074506 VanillAnalyst
VanillAnalyst's picture

This guy is my hero

Wed, 01/18/2012 - 12:28 | 2074527 falak pema
falak pema's picture

your idea of heroism is original, but anyways,  flying under all flags is an old game; hoist the jolly roger!

Wed, 01/18/2012 - 12:36 | 2074560 VanillAnalyst
VanillAnalyst's picture

Anyone else find it odd that the letter is actually signed "Greenlight Capital?" not an individual person? Finkle and Einhorn, Einhorn and Finkle, OH MY GOD

Wed, 01/18/2012 - 12:56 | 2074640 falak pema
falak pema's picture

Greenlight capital is the hidden investor, the know all, the ace of spades, the Nostradamus of HFs. His identity has to be kept under covers. Its reality too breathtaking, it could start a revolution. Never doubt that with a trump like that even a dumb dump like Donald would be Kyle's bigger, smarter, never-do-wrong brother, instead of being king of the chapter 11 house; where he loses his ventures like falling nine pins but never his own money. Its sweet to have so many suckers out there! Ask Bernie the Madoff snitch seeker, as he cools his heels in Sing Sing Resort. He seems to be enjoying his cigars as king of that barbed wire, human sad sack heap! 

Maybe there is a lesson to be meditated in that; for all those others; running loose-running wild, fattened geese ready for the straight jacketed henhouse of demembered oligarchs. 

Wed, 01/18/2012 - 14:44 | 2075189 Votewithabullet
Votewithabullet's picture

Fucking ?Que?

Wed, 01/18/2012 - 16:28 | 2075614 falak pema
falak pema's picture

you sound queued in. sucking what?

Wed, 01/18/2012 - 18:41 | 2076091 slewie the pi-rat
slewie the pi-rat's picture

mine has a note by stephen hawking!

and he signed it!

Wed, 01/18/2012 - 12:42 | 2074583 Alien Invader
Alien Invader's picture

Hey, I like Einhorn - but how many billions did this guy earn for making his investors a lousy 2%? The whole industry is quite pathetic:(

Wed, 01/18/2012 - 12:25 | 2074509 fonzannoon
fonzannoon's picture

Except the part where "stocks drop". That was replaced with "trillions announced" towards the end of last year.

Wed, 01/18/2012 - 12:25 | 2074512 Rainman
Rainman's picture

" Very few people trust the economic data coming from China...."

Who are these very few people...and do they breed ?

Wed, 01/18/2012 - 12:30 | 2074536 SheepDog-One
SheepDog-One's picture

The earlier Cashin article suggested EVERYONE was quite impressed by yesterdays China 8.9% GDP data dump. 

Wed, 01/18/2012 - 12:33 | 2074552 LawsofPhysics
LawsofPhysics's picture

better yet, do they have any financial positions of significance?  Otherwise, who gives a shit?

Wed, 01/18/2012 - 12:26 | 2074515 mirac
mirac's picture

Shorting the Yen and JCB's has got to be a great trade one of these decades...

Wed, 01/18/2012 - 12:27 | 2074518 falak pema
falak pema's picture

that is the worst flow chart ever...and I'm being sincere...hells bells; the best n the brightest running this world.

Wed, 01/18/2012 - 12:33 | 2074553 GeneMarchbanks
GeneMarchbanks's picture

These updates camouflage any real trades they have in fear of having numerous other HFs putting on same or similar trades. Especially when they have synthetic plays...

Wed, 01/18/2012 - 12:27 | 2074519 Cognitive Dissonance
Cognitive Dissonance's picture

"The Chinese have been a leading growth engine for the last two decades and are largely credit with leading the world out of the recession in 2009. A change in their economic circumstances could really upend things."

Umm.......so, if China is an economic mirage, what does that make the USA and Europe? Chopped liver?

Wed, 01/18/2012 - 12:29 | 2074528 SheepDog-One
SheepDog-One's picture

Thats an insult to tasty chopped liver and onions.

Wed, 01/18/2012 - 12:39 | 2074571 The Limerick King
The Limerick King's picture

 

 

The US is making me shiver

And Europe is making me quiver

With China growth shrinking

The whole world is stinking

Just like cooking onions with liver

Wed, 01/18/2012 - 12:58 | 2074576 Cognitive Dissonance
Cognitive Dissonance's picture

Whose chopped liver do you propose we eat? May I suggest our favorite central banker's?

I love chopped liver

"Would you care for some Mad Dog 20/20 with that chopped liver?"

Wed, 01/18/2012 - 12:59 | 2074658 falak pema
falak pema's picture

now I know what a HFunder looks like when he's ready for the kill! Hannibal!

Wed, 01/18/2012 - 14:18 | 2075052 DevilsPrinciple
DevilsPrinciple's picture

Ina Gartens chopped liver. She has a great recipe in ...oh nevermind...

Wed, 01/18/2012 - 12:28 | 2074524 Derpmonger
Derpmonger's picture

People keep expecting the markets to kick start into "growth" if we do this or that, but it's not their job to grow no more than a corporations job is to create jobs.  It is a system of wealth extraction.

Wed, 01/18/2012 - 12:31 | 2074546 LawsofPhysics
LawsofPhysics's picture

yes, follow the interest on all the debt (this where the real smart money and "owners" have always been).  Where is all that money going?  Better yet, get on the other side of that "trade".

Wed, 01/18/2012 - 12:34 | 2074533 GeneMarchbanks
GeneMarchbanks's picture

Yen play is overdone, as is Japan CDS. Strangely he mentions nothing about Au and is only continuing to hold the metal and miners. You'd think he at least bought the dip.

Wed, 01/18/2012 - 12:30 | 2074535 Stoploss
Stoploss's picture

It may be just me, but, seems like we skipped the (stocks fall) balloon this last go round.

Wed, 01/18/2012 - 12:31 | 2074549 SheepDog-One
SheepDog-One's picture

Thats true enough, the 'stocks fall' part of the flow chart is not really happening much. Maybe a -20 DOW day at most.

Wed, 01/18/2012 - 12:35 | 2074556 fonzannoon
fonzannoon's picture

He is a lot smarter than I am. He is a proponent of gold and large US based companies. He does not seem like a sky is falling kind of guy. Perhaps it's not that bad after all?

Wed, 01/18/2012 - 12:36 | 2074563 SheepDog-One
SheepDog-One's picture

Then again, maybe not so supersmart as his fund did 2% last year.

Wed, 01/18/2012 - 12:39 | 2074572 kralizec
kralizec's picture

No worries, there is an end to this chart, it's just hidden.

At some point the "Crisis Deepens" becomes the tarpit that dooms humanity and there will be no more announcements, no more summits, no more bullshit solutions and failure...there will only be ultimate catastrophic failure.

Wed, 01/18/2012 - 12:42 | 2074581 I should be working
I should be working's picture

Is that 2% before or after 2 and 20?  With that performance why not just read their report and buy DELL or XRX if you agree with them?  I mean jeez even I had a better year than that.

Wed, 01/18/2012 - 13:46 | 2074879 DevilsPrinciple
DevilsPrinciple's picture

Don't leave us hanging, fill us in on your genius....

Wed, 01/18/2012 - 12:47 | 2074617 monopoly
monopoly's picture

Every hedge fund and every large group own Apple. They better not make a mistake. But a great company with 0 debt and 80 billion+ in cash. Just a little more solvent than BAC.

Wed, 01/18/2012 - 12:50 | 2074625 adr
adr's picture

The only thing coming out of the market today is an endless stream of green tinted diarrhea. The retail investor can't even afford to get back in the market if he tried. What is he supposed to buy 3 shares of Chipoltle or two shares of Apple? Maybe one share of Google?

The only thing keeping this market reasonable is the few thousand publicly traded corporations on the verge of bankruptcy. A few more corporations go bust this market will go from a "reasonable" valuation to the most overvalued market in history in the blink of an eye. How may corps have a market cap that exceeds sales by 10X or more? How many have a market cap that exceeds sales by 100X? We are valuing corporations that sell $250 million worth of crap at $10 billion? We value a social media company that actually doesn't produce anything, whose business model is advertising banners nobody reads and selling personal information at $100 billion????

You could probably make a better case for a $10,000 tulip bulb than a share of Chipotle at $360.

Stocks looked expensive to the retail investor when Chipolte was $150 a share. Sure there are people kicking themselves for not buying at that lofty valuation when they see the stock trading at $350, but they are looking in pure amazement at the lunacy of a $350 per share crappy fast food restaurant. Sure doubling you money is great but turning $10k into $20k isn't going to allow anyone to retire. With no dividend all this momo garbage is good for is wealth extraction to supply the 1%. Are we to expect Chipotle to go to $3000 a share over the next ten years? Perhaps enough stock splits to put out a few hundred million shares.

The stock market isn't for investing anymore. Long term you lose your pants because long term favors true valuation. Buying at $350 a share pretty much guarantees $50 a share long term. You lose everything and a 1% gets your small amount of cash. $10-20k doesn't mean anything to him but add up a few thousand small investors to extract wealth from and now you're talking. That's how the game is played.

Wed, 01/18/2012 - 13:01 | 2074665 ucsbcanuck
ucsbcanuck's picture

"The stock market isn't for investing anymore. Long term you lose your pants because long term favors true valuation. Buying at $350 a share pretty much guarantees $50 a share long term. You lose everything and a 1% gets your small amount of cash. $10-20k doesn't mean anything to him but add up a few thousand small investors to extract wealth from and now you're talking. That's how the game is played."

Agreed - it's all about finding the companies where things may not look good now but they have strong cash positions to sit out any downturns.

You're right - Chipotle at $350 a share does. Not. Compute.

The recent run up in SBUX also does. Not. Compute.

"Sure doubling you money is great but turning $10k into $20k isn't going to allow anyone to retire."

I'm convinced that the 90s were a blip. Retirement is going to be about being frugal, and saving from your income while you're working. Like - ze Germans!

Wed, 01/18/2012 - 13:41 | 2074857 ghostfaceinvestah
ghostfaceinvestah's picture

Purely a function of excess liquidity.  See: 1999

Wed, 01/18/2012 - 18:46 | 2076105 lotsoffun
lotsoffun's picture

correct.

 

Wed, 01/18/2012 - 13:18 | 2074729 FranSix
FranSix's picture

The lather, rinse, repeat part reminds me I desperately need a haircut. Its totally getting out of control.

Wed, 01/18/2012 - 13:36 | 2074827 punxsutawney phil
punxsutawney phil's picture

wow he could only muster plus 2%... is good ,,, i guess

 

Wed, 01/18/2012 - 13:39 | 2074848 ghostfaceinvestah
ghostfaceinvestah's picture

I particularly love the argument that "oil isn't rising anymore so the economy gets a reprieve".  LOL!  Yeah, if oil jumped to $200 and stayed there, it would only be a temporary disruption to the economy.  Right.

Wed, 01/18/2012 - 13:51 | 2074862 Mercury
Mercury's picture

 Einhorn also announces that he was among the "evil" hedge funds who dared to provide market clearing transparency and buy CDS on insolvent European governments: "We also did well investing in various credit default swaps on European sovereign debt."

Those days may be over if it come to pass that the sovereign(s) in question can get away with paying out 30c on the Euro without officially defaulting.

Wed, 01/18/2012 - 13:47 | 2074887 Mark123
Mark123's picture

Much like 1999 I sit back in amazement and watch the "markets" defy all common sense.  Sure get the sense the Einhorn is frustrated!

Why is the market up?  The Germans were getting all pissy about ANY increase in their commitment/exposure to ECB, and now they are talking about increasing LTRO by trillions???  And the market believes this is the cure????????????? 

Bottom line is that I have no idea how a system that allows unlimited debt to be created by central banks/governments means.  It makes no sense.

I like Ron Paul's thinking that no system will work (for the people) unless at its core is sound money.  We are so far from sound money now that it's not funny.

Wed, 01/18/2012 - 13:49 | 2074899 Shizzmoney
Shizzmoney's picture

Also helped his bid to buy the Mets was shot down.  Saves some money there...they are going to be AWFUL.

Wed, 01/18/2012 - 14:29 | 2075106 The trend is yo...
The trend is your friend's picture

i can't believe i beat einhorn again.  if only i could get away with 2 & 20

Wed, 01/18/2012 - 15:01 | 2075280 chump666
chump666's picture

kepping it real...

Wed, 01/18/2012 - 16:16 | 2075571 Catflappo
Catflappo's picture

Where do people get off criticising a guy who has made 20% a year for the past 15 years ??

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