David Einhorn, President of Greenlight Capital, speaks at the Sohn 2019 Investment Conference in New York City, USA, May 6, 2019. REUTERS / Brendan McDermid / Photo file
Investor David Einhorn said on Thursday that prominent venture capitalist Chamath Palihapitiya and entrepreneur Elon Musk threw “jet fuel” at the GameStop Corp (GME.N) commercial frenzy in January, when the video retailer’s shares rose 2,000% and subsequently led to a hearing in the United States. Congress.
Einhorn, who heads the Greenlight Capital Hedge Fund (GLRE.O), also said that U.S. lawmakers looking for answers to how day traders have managed to snatch control of GameStop stock prices from established hedge funds should investigate regulators in the place of investors.
Amateur investors organized on social networking sites such as Reddit staged a stubborn purchase three months ago, earning Wall Street hedge funds that shortened GameStop shares or bet the price would fall.
Wild price fluctuations have caused large losses for the Melvin Capital hedge fund, among others. US lawmakers reacted by holding a US House of Representatives hearing in February in which they questioned hedge funds, a daily trader and the head of the online trading app Robinhood. Read more
On Thursday, Einhorn blamed Palihapitiya and the chief executive of Tesla Inc. (TSLA.O), Musk, for dumping what he called “jet fuel on the GME tightening.” His comments came in a quarterly letter to investors from Greenlight Capital, seen by Reuters.
Representatives for Palihapitiya and Musk did not immediately respond to requests for comment.
Einhorn said it was appropriate for investors to discuss the shares.
“Investors discussing why they think GameStop (or any other stock) should be encouraged,” he wrote. “There is no reason to shoot someone in front of Congress to make a selection of actions.” Read more
Einhorn said Palihapitiya, which appeared on TV in late January and rejected criticism from day traders, could have tried to hurt Robinhood by competing with fintech startup SoFi, which was backed by Palihapitiya.
And Musk, whose Tesla shares have been betting for a long time that Einhorn bet, got into the drama by tweeting “Gamestonk !!” and adding a link to the Reddit forum where day traders talked about GameStop.
“If regulators wanted Elon Musk to stop manipulating shares, they should have done so with more than a light slap on the wrist, when they accused him of manipulating Tesla shares in 2018,” Einhorn wrote. .
Einhorn said that if lawmakers want to understand “why GameStop did what it did … it would be better to account to the absent regulators and their philosophical supporters.”
He told investors that his Greenlight capital funds were essentially flat in the first quarter, down 0.1%, while the S & P500 index (.SPX) gained 6.2%
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