David Einhorn was born into a family with extensive experience in finance and investing. His father, Stephen, founded two businesses: Capital Midwest Fund and Einhorn & Associates. Einhorn’s brother works at the hedge fund his father started.
After completing his education at Cornell, David entered the investment world. With a few years of experience under his belt, he co-founded Greenlight Capital. His hedge fund had a good record of beating the market, making it a very attractive option for high net-worth investors.
During the Great Recession, Einhorn made waves by shorting popular companies once considered untouchable. The strategy hasn’t always worked, but it has earned him millions of dollars and contributed to his fame. He’s also known as an amateur poker player and non-fiction writer.
What Is David Einhorn Famous For?
David Einhorn’s success with short-selling strategies has created plenty of attention-grabbing controversy. Two events, however, stand out as reasons people outside of the finance industry know his name.
Short-selling Lehman Brothers
David Einhorn is best known for shorting Lehman Brothers in 2007. Einhorn believed that Lehman Brothers held excessive real estate investments that jeopardized the investment bank. He also believed the company relied on dubious financial reporting practices to appear more successful than it was.
Perhaps even more importantly, he shared his conclusions at the 2007 Value Investing Congress. His argument encouraged many investors to sell Lehman shares or bet against the bank’s success.
Lehman Brothers had experienced considerable success in the years leading up to the Global Financial Crisis. Its share price had increased for four years in a row, resulting in its highest level ever. In 2007, it lost 16.23% of its value. In 2008, Lehman Brothers shares lost 99.96% of its value, putting it at a decade-long low point. The firm filed for bankruptcy in September 2008.
Einhorn wrote a book (Fooling Some of the People All of the Time) about his experiences shorting Lehman Brothers and thoughts for avoiding future financial crises.
UK Insider Trading Accusations and Fine
Einhorn made headlines again in 2012. This time for a less impressive feat. The UK Financial Services Authority had accused him of insider trading and fined him the equivalent of $11.2 million.
Einhorn denies the accusations, but FSA says he took advantage of information he received from a broker representing Punch Taverns Pic.
Four days before the information went public, Einhorn started selling Greenlight Capital’s shares in the company. He dumped over 11 million shares, which protected him from losing about $7.3 million when the stock price tumbled nearly 30%.
Einhorn says he didn’t engage in insider trading, but he agreed to pay the fine to avoid a long lawsuit. FSA says Einhorn didn’t know he was using insider knowledge, but that someone with his level of experience should have known his actions were illegal.
The FSA fine is the second-largest Britain has ever leveled against an individual.
David Einhorn Greenlight Capital
David Einhorn founded Greenlight Capital shortly after graduating from Cornell University in 1996. The fund relied on an initial $900,000 investment, half of which came from Einhorn’s parents.
Greenlight Capital attracted a lot of attention by growing its value rapidly. Using short-selling and long-term investment strategies, Greenlight Capital managed $12 billion of assets by 2014.
Although Greenlight Capital has suffered several losses – especially during turbulent times like the dot-com crash and 2020 market panic – it remains an important hedge fund with a history of success.
Einhorn uses a combination of long-term and short-term investments to beat the market. Third-quarter filings from the company show that its largest investments include shares in:
Einhorn and Greenlight Capital have taken a firm stance against the fracking industry. Einhorn says hydraulic fracking uses a lot of money but doesn’t generate much value. Following this logic, he has short positions on major fracking companies like Concho Resources and Pioneer Natural Resources.
Where Did David Einhorn Go to College?
David Einhorn earned a bachelor’s degree in government from Cornell University.
He graduated summa cum laude in 1996, which means he was one of the year’s top students.
While studying at Cornell, Einhorn became a member of the Sigma Alpha Epsilon fraternity.
How Did David Einhorn Make His Money?
David Einhorn made his money by managing hedge funds. Immediately after graduating from Cornell, he took a job with Siegler, Collery & Co. He worked there from 1993 to 1996, when he started his own hedge fund, Greenlight Capital.
Einhorn had already earned a large sum from his early years as an investor. He had enough to contribute $450,000 to Greenlight Capital. His parents covered the other half of the funding.
With $900,000 to invest, he began building a portfolio that consistently beat market growth. As his reputation grew, more people wanted to benefit from his expertise.
David Einhorn’s Net Worth
A recent profile from Forbes says that David Einhorn has a net worth of about $1.4 billion. Other sources put his net worth slightly under $1 billion. When you consider all of his assets, including real estate, his worth is probably at least $1 billion.
David Einhorn has been generous with his wealth. As an amateur player, he frequently participates in real-money poker championships.
He often donates any money he wins to charities. For example, he gave $650,000 in poker winnings to the Michael J. Fox Foundation in 2006.
He has also contributed to Robin Hood Foundation and Tomorrows Children’s Fund.
David Einhorn Investments
Records from Greenlight Capital offer insight into David Einhorn’s approach to choosing investments. Green Brick Partners Inc makes up about 29% of Einhorn’s portfolio.
Consol Energy stands out as another significant investment that accounts for about 14% of his investments.
Other companies David Einhorn owns shares in include Brighthouse Financial, Teck Resources Ltd, and Kyndryl Holdings.
It’s important to note that Einhorn uses a combination of strategies to maximize his ROI. The companies listed above are long-term investments Einhorn believes will increase in value or pay dividends. Einhorn also uses short-sell strategies to bet against companies he doesn’t believe can succeed.
When the strategy works, the share values will decline, making it possible for the borrower to purchase shares and sell them at a profit. It’s a risky move, but people like Einhorn have used it to make millions of dollars.
Is David Einhorn a Billionaire?
Most sources report that David Einhorn’s net worth exceeds a billion dollars. It’s important to note, however, that his fortune can change quickly because it’s so closely tied to the stock market.
If he bets on the wrong company – or against the wrong company – he could lose millions of dollars within hours. A sudden decline in the overall stock market could also damage his net worth.
While Einhorn’s wealth fluctuates frequently, he remains a very wealthy person with incredible influence over the stock market.
Many investors want to reach his level of success, so they take his recommendations seriously. Because of that influence, David Einhorn’s words can change a stock’s direction.
Of course, he doesn’t always convince people to follow his perspective. When he bet against Apple, most investors saw his mistake and continued to back the world’s most profitable corporation.
Who Is David Einhorn Married To?
David Einhorn is single, but he was previously married to Cheryl Strauss from 1993 to 2017. Strauss works as a media consultant and business journalist.
Einhorn and Strauss have three children.
Is David Einhorn a Republican?
David Einhorn is a registered Democrat. The website OpenSecrets shows that he has donated thousands of dollars to Democratic candidates. He has also contributed to the campaigns of independent politicians, including Neal Simon and Joe Lieberman.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.