The Son of Finance of the Great Age

  Chapter 593 Greenlight Capital

   "These **** are really arrogant. After Bear Stearns finished playing, they still don't know what fear is. It's just speechless!"

   While Zhong Shi was "singing and dancing" in Germany, a group of people on the other side of the ocean were paying attention to market trends day and night, including the one who spoke.

  His name is David Einhorn, and he is the head of the hedge fund Greenlight Capital. Like Jim Chanos, he is also a well-known short seller on Wall Street. But unlike Jim Chanos, this hedge fund manager who is less than 40 years old and too handsome is extremely high-profile, and even his famous work-the experience of shorting United Capital has been written into a book. Climb to the top of the bestseller list.

  Greenlight Capital is a hedge fund established by Einhorn in 1996. It was less than US$1 million when it was established. It was a typical small hedge fund at the time. But no one thought that in this industry with a very fast pace of innovation, Greenlight Capital was not submerged in the monstrous waves of the capital market, but instead turned from a small sampan into a giant aircraft carrier and became one of the giants in the hedge fund industry. .

For 12 consecutive years, there has been no loss in one year, and the average annual rate of return has reached 22%. With these dazzling figures, David Einhorn has successfully turned a small fund with a capital scale of less than 1 million into a It has become a super hedge fund with a management scale of 5 billion US dollars. Although it is incomparable with those super-large hedge funds on Wall Street, Einhorn has announced that it has closed to the outside world and will no longer accept entrusted funds since its fund management scale reached 3.5 billion US dollars.

   In other words, it is Einhorn who is deliberately controlling the scale of funds under management, not that Greenlight Capital cannot compare with those funds that can easily cost tens of billions of dollars. To a certain extent, this reflects that David Einhorn is so confident in his investment skills that he doesn't even care about the management fee for expanding the scale of fund management.

At the beginning of the year, Greenlight Capital also got involved in the event of shorting Bear Stearns, but unlike Soros and others, he didn't have too many chips betting on Bear Stearns, so it didn't cause too much trouble. people's attention. At that time, Bear Stearns, in order to save the predicament at that time, once wanted to invite Jim Chanos to give a speech on TV. Bear Stearns had no problem, but Jim Chanos, who had made a big bet, ruthlessly denied it. Later, when Bear Stearns wanted to find David Einhorn, time ran out.

In his later memoirs about the financial crisis, Alan Schwartz once said: If Bear Stearns found Einhorn first, and the other party did not short Bear Stearns, maybe Bear Stearns might be able to come back to life . Time cannot be turned back, but it can still be seen from this that David Einhorn's influence in the market.

  And now, the furious David Einhorn roared out these words, obviously targeting another company, and this company is impressively—Lehman Brothers.

  Lehman Brothers, founded in 1850, is an ancient investment bank with a history of 156 years. As one of the most famous investment banks in the industry, they have the world's top research team, top financial consultants, and top bond and stock underwriting teams.

After the collapse of Bear Stearns, there is a consensus in the market that the next financial institution that may be finished is Lehman Brothers. After all, among the five giants, Leihman Brothers is only stronger than Bear Stearns, compared with the other three. Both the asset management scale and profitability are far from being comparable.

  The most important thing is that during the subprime mortgage crisis, Lehman Brothers had written off as much as 16 billion US dollars of bad debts, making their financial statements for the entire year of 2007 turn from profit to loss. And what's worse, in the first quarter report of 2008, investors still can't see the hope of turning losses into profits.

  Lehman Brothers has the reputation of "Phoenix" on Wall Street. After experiencing the American Civil War, two world wars, the Great Depression, the 9.11 terrorist attack and an acquisition, they all survived tenaciously in the end. And in the first quarter, although Leimen Brothers' report was extremely ugly, they successfully raised 4 billion US dollars from the market, allowing them to take a breather temporarily.

  In 2007, David Einhorn, like a handful of other savvy fund managers, had spotted a business opportunity in the market a few months earlier. But unlike others, he and his analysts start with the companies involved in the subprime mortgage crisis and analyze whether the stocks of these companies are overvalued or undervalued. In the end, he and his team settled on a big list of 25 companies, and Raymond Brothers was among them.

   And just at the beginning of the year, when David Einhorn participated in the Rayman Brothers conference call about the first quarter earnings report, he was completely irritated. On the phone, Leimen's executive, financial officer Christopher Meera, even said that they didn't have much plans for the second quarter, and now that it's May, the arrogance of Leimen's executives can be seen.

   Now, when looking at the first quarter report of Leimen Brothers, David Einhorn discovered a more important problem.

   "They're crazy, is that okay?"

  David Einhorn pointed to a series of numbers on the financial statement, and said to the subordinates sitting around him.

   "What's the situation?" Following the position of his finger, the analysts quickly found this number, the current bond income, 78.348 million US dollars and other words. However, the analysts looked over and over for a long time, but they still couldn't find what was wrong. They turned their puzzled eyes to Einhorn.

"Didn't you see it?" David Einhorn shook his head helplessly, "There is a problem with this part of the income, and it is actually a loss. Because in theory they can repurchase the bonds they hold, Calculated according to the previous position, this part is the profit."

"Look carefully, this is only the income of BBB-rated bonds in the first three months, and there are other credit-grade bond incomes. Oh my god, these figures add up to at least more than 500 million US dollars in income, **** it, These are not gains, but real losses."

David Einhorn was shocked. Although this method of deceiving the sky and sea happened from time to time, such a huge number of accounts had never appeared. He trembled from being too excited. He realized that he had discovered a major question.

   "Based on this calculation, the day when they face bankruptcy will be the day with the highest profit in the financial statements!" The analysts reacted and were equally shocked.

   "Quiet, I need to ask each other!"

   While many analysts were having heated discussions, David Einhorn waved his hand abruptly to stop the commotion, and then dialed the number of the new CFO of Rayman Brothers, Irene Cullen.

  In order to better grasp the data, many companies provide communication services for internal senior personnel to large investors. In other words, people like institutional investors and billionaires can contact the heads of relevant departments as long as they want to inquire about certain data that is not illegal.

"Irene, I'm David, Greenlight Capital." Einhorn first reported his family background, and then went straight to the point without even saying a word of greeting, "I have a few questions for you about the financial statements for the first quarter. Inquiry, about bond yields."

   "Debt proceeds?" Irene Karen's reaction was very alert, and she immediately asked, "What's wrong with the debt proceeds? Isn't it written clearly in the financial statements?"

For this David Einhorn, Irene Cullen is extremely troublesome. The well-known Wall Street fund manager has called several times to inquire about the internal financial situation of Raymond Brothers. Karen prevaricated, but every question asked by the other party was beyond her ability to parry, and in this case, she could only procrastinate as long as she could.

  Irene Cullen has only been in office for less than three months, and she doesn't even have a clear understanding of the current complicated financial situation within Raymond Brothers. How can she be qualified to answer David Einhorn's question. However, as Einhorn's problems deepened, she also began to discover that the actual financial situation of Raymond Brothers was not satisfactory. But she never thought that the situation was already quite bad.

  What she now knows is that Greenlight Capital may be shorting Leimen Brothers. For the sake of her salary and bonus dividends, she does not want to tell the other party too much information. Of course, some information is not very clear to her herself.

"Of course, I have seen the statement." David Einhorn will naturally not be perfunctory by her rhetoric, "I want to know how the profits of these transactions are generated? Or in other words, these bonds that generate income Is the counterparty to the transaction yourselves?"

   "What?" Irene Cullen couldn't help screaming, "David, are you crazy? Are you questioning whether our data is falsified? If this is the case, I welcome you to file a lawsuit at any time!"

However, her tone soon softened, "I am not responsible for these things. You should ask the trading department about the transaction. You will not believe so simply that the rumors that Pacific Investment Management Corporation and we stopped trading Bar."

Recently, there have been a lot of rumors surrounding Lehman Brothers. First, Pacific Investment Management Corporation, the world's largest bond fund, cut off all transactions with Lehman Brothers. Later, it was reported that hedge funds began to withdraw from Lehman Brothers on a large scale. funds. It's almost the same trick as shorting Bear Stearns, but so far, Raymond Brothers is still standing.

"Of course not, I won't believe these unfounded rumors." David Einhorn already knew that he couldn't get any dry goods from this moody woman, at least in terms of bond yields. Having no other choice, he changed the subject and asked another question that he had asked a long time ago, "Irene, when are you going to do it about asset appraisal and re-registration?"

   It must be explained that when a bank or an investment bank holds an asset, especially an asset suitable for long-term holding, it is very cumbersome to implement a mark-to-market system. Because firstly, the position is too large, and secondly, because the market price fluctuates every day, this mark-to-market system just increases the workload in vain in many cases. So much so that the consortium later greatly simplified these transactions, only calculating the price at the time of buying and the price at the time of selling. If there is a positive return between the two, it is a profit; if there is a negative return, it is a loss.

  However, after 2007, the United States promulgated new accounting standards, and listed companies need to re-register or evaluate the value of assets held within a certain period of time. This time can be daily, weekly, quarterly or even yearly, depending on the holding time. Different from the original evaluation method, the current asset evaluation must be dynamic and multi-data.

"When I organize the manpower, I will conduct a daily mark-to-market system for all current assets. Yes, every trading day, there will be special people to evaluate the prices of these assets. If necessary, these data will reflect In the balance sheet." Irene Cullen couldn't help complaining, "We will act in accordance with accounting standards. Yes, I swear in the name of God."

  …

   "She's lying!"

  David Einhorn, who hung up the phone, said to the long-awaited trader.

   Thanks to the book friend Shengshi Bianguan for the generous reward! I hope you will vote more, continue to pay attention to and support this book, everyone’s support is the motivation of the author, the author will continue to be enthusiastic, thank you~!

  (end of this chapter)