Herbalife Inc. (NWSE:HLF) had an unwanted surprise in its quarterly earnings conference call last Monday. The call was dominated by questions from Greenlight Capital Re Ltd. (NASDAQ:GLRE) Chief David Einhorn. Einhorn pushed the company’s executives with questions that swayed investors. The company’s stock finished down 20% on Tuesday seemingly due to the pressures put on by Einhorn. Einhorn’s position on the stock is unclear but it his history as a short seller has caused many, including Herbalife, to question whether or not he was shorting the company.
Einhorn’s position was not clear though SEC filings showed that he did not hold a long position in the company. His public power has clearly made investors fear for the company’s future. If Einhorn appears to believe the company is overvalued that has a lot of pull with other investors.
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The company released a statement yesterday evening defending itself and its stock from the investor’s attack. The company claimed that Einhorn’s questions were elementary and usually of a kind asked by investors new to the industry. The company said it had its best quarter in 32 years and asserted that the firm’s fundamentals were strong. The firm responded to the fall in stock price calling it a buying opportunity. The statement hasn’t appeared to have had much sway today as the market seems undecided on the stock. The firm has been trading about half a percentage point up at time of writing.
If David Einhorn was holding the company short he surely sold yesterday as the stock value plummeted. The company will hope the problem is gone and that it can return to ordinary business away from concerns with predatory investors.
Einhorn has been busy recently. He came out earlier this week in opposition to the Fed’s ongoing low interest rate policy, blasting the central bank for tempting inflationary pressures in their policy. The Federal Reserve has maintained near zero interest rates since the financial crash in 2008 as part of their recovery plan. It was widely supported for much of that time but now as recovery seems to speed up many have come out against it. Einhorn is just one of several analysts who believe the strategy will lead to inflation and lessen economic growth capabilities.
David Einhorn’s Greenlight Capital purchased a large chunk of Oaktree Capital Group LLC, 1,679750 shares, toward the end of April. The firm, run by Howard Marks, had its IPO on the first of April and Einhorn has obviously been impressed by the firm’s performance since.
Einhorn’s Greenlight Capital Re Ltd. announced its earnings on Monday. The company earned $1.75 per share a marked increase on last years loss of $1.19 per share. The firm appears to be doing well in an environment many are having to struggle in.