Investors seeking inspiration from the pros would do well to cast a wider net beyond the usual suspects. While it’s essential to do your own research, institutional investors, or “smart money,” have the training, experience, and track record to back up their investment decisions. One billionaire investor worth paying attention to is David Einhorn, founder of Greenlight Capital.
Einhorn’s rise to prominence began in 2002 when he short-sold Allied Capital, questioning its accounting practices. The SEC later validated his thesis, finding the company had indeed broken securities laws. He also shorted Lehman Brothers in 2007, anticipating its collapse. However, Einhorn is also known for his value investing approach, seeking out undervalued stocks.
In recent years, Einhorn has adapted his strategy to account for the shift towards passive investing and algorithmic trading. He now focuses on companies that offer strong value and return capital to shareholders through dividends or repurchases. This approach has generated impressive long-term returns for Greenlight Capital, with average annual returns of 13.1% since its launch in 1996, outperforming the S&P 500.
One of Einhorn’s most significant holdings is Green Brick Partners, a homebuilding company he co-founded in 2006. The company’s unique strategy of acquiring land and lending to distressed builders has paid off handsomely, with the stock nearly doubling in the past year and rising over 670% in the past five years.
Einhorn’s willingness to adapt to changing market dynamics and his focus on value investing make him an interesting investor to follow. At 55, he still has a long runway ahead, and individual investors would do well to study his approach and learn from his experiences.
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