Billionaire Tesla Short Seller’s Fund Drops 18% — Long Burned Shorting TSLA, Blames Everyone Else

August 1st, 2018 by Zachary Shahan

We’ve written about this guy a couple of times before. He’s a billionaire who proudly proclaimed back on August 1 of last year that he was continuing to short Tesla [TSLA], claiming back then that the company was “only capitalized for the next three quarters.”

On March 5, we reported that his hedge fund, Greenlight Capital, had lost 6% of its value in February and 11.9% January–February. In that piece, our own James Ayre wrote, “In addition to recent heavy losses as a result of bets against Tesla, Einhorn’s Greenlight Capital has experienced performance bumps as a result of bets against Amazon.com and Athenahealth — collectively part of his ‘bubble basket,’ stocks he’s shorting.” A bubble is an easy and fun concept to latch onto, but not always the right metaphor.

Yes, we’re talking about a fund manager named David Einhorn here. His latest update to investors indicates that his fund lost 18.3% of its value in the first half of the year. Much of that loss came from shorting TSLA. Despite an enormous amount of media criticism and claims of bankwuptcy, Tesla’s stock price rose 29% in the second quarter, which pummeled fat cats like Einhorn who had bet big against the company.

Apparently unwilling to acknowledge his own personal failures in betting against Tesla, he complained about the touchscreen and windows in the Model S he owned, and he said he would be switching to a Jaguar I-PACE instead. Ah, yes, that’s a great deflection after losing millions of dollars shorting Tesla. Why, again, did he own a car from a company he was shorting for so long?

Tesla CEO Elon Musk did not seem bothered by Einhorn’s decision to get rid of his Tesla, and he surely chuckled a little at the thought that Einhorn had lost fortune or two betting that the company would fail.

Tragic. Will send Einhorn a box of short shorts to comfort him through this difficult time. — Elon Musk (@elonmusk) August 1, 2018

But the change of his personal commuter car isn’t as relevant as other parts of Einhorn’s mangled apologies to the investors in his fund. He noted, “Right now the market is telling us we are wrong, wrong, wrong about nearly everything,” but instead of saying that’s because his position on companies like Tesla and Netflix (which he has also been shorting) has been wrong. Rather, he added, “Looking forward from today we think this portfolio makes a lot of sense.” Ah, yes, just like you said last year after losing a ton of investor cash!

Is Einhorn just a tech-challenged short seller? No, it’s reported that he made a bet on the brick-and-mortar retail company Dillard’s, but that appears to have followed the same trend of losing investors’ money. He reported that he sold the fund’s stake in Dillard’s at a loss.

Einhorn seems to think he has enough expertise on a range of different companies — Altice Europe, Elekta, Resona Holdings, Dillard’s, Netflix, Amazon, and Tesla, for example — to intelligently bet on or against them. Tesla bulls have long argued that his math is off, his assumptions are absurd, and he shouldn’t be messing around with companies he doesn’t understand. It seems some of the investors in his fund are coming around to the same conclusion. “His own investors have complained about Einhorn’s stubbornness and criticized his unwillingness to say how much he has lost on the bet and come up with specific ideas to improve the portfolio’s long-running underperformance,” Reuters reports.

Einhorn has long sat alongside Jim Chanos (figuratively if not literally) as a vocal TSLA short seller and critic. The question that arises as Tesla is on the verge of profitability (play with the numbers yourself) is whether the large portion of the market that has been following their lead will decide it’s time to cut losses, drop belief in nonsensical FUD (fear, uncertainty, and doubt), and either swing to a bet on Tesla or at least drop their interest in the company altogether. I mean, isn’t there a car startup that actually sells fewer cars than Porsche or Jaguar that they could bet against?

Not clear what a short seller is? Curious now? Curious how it relates to Tesla? See these pieces:

Image: Modified screenshot of Oxford Union video











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