David Einhorn of Greenlight Capital is speaking now at the 2017 Ira Sohn Investment Conference in New York City. What will Einhorn pitch? Lately, he has been talking more about shorts and in particular Tesla Inc (NASDAQ:TSLA) – will he expand on the battle ground stock or will he pitch a different short, long, or discuss macro? Only time will tell. Below is our live notes from Einhorn’s pitch at the Sohn Conference. Readers can find links to ALL of our Sohn coverage at this post so you do not need to search around the site (although feel free to do so)
David Einhorn comments below.
Introductory speaker notes Allied Capital and Lehman shorts were legendary. He also notes Apple long has went up from $500B or so to $800B today.
Einhorn pitches Core labs CLB which is an existing position – it is an oil firm
Tech leader in field and offshore
Other biz charges to frackers which is competitive market
Stock trades at 35x FY PE and trades at big premium to peers
Bulls like ROE
It is not a secular growth story like analysts think.
This mistake goes back to oil collapse.
Analysts need explanation for stability of CoreLabs during crisis.
All the projections of analysts were wrong – there was 47 percent decline in CLB earnings i 2 years but they never reconsidered.
CLB was always cyclical but was in right place at right time in 2008 crash but not now.
Drivers are end market and price of oil.
You would think CLB is steeped in hot markets based on bulls, but this is not the case.
CLB is involved in shale production and then changed its focus.
Einhorn believes the company hypes a lot and constantly changes its pitch of what it does based on what is hot – shale, or whatever
Core understates via GAAP because company says 70% of revenue is outside US – core is best positioned in most complex areas.
Prime customers are big and it is tied to capital spending outside America
CLB was always riding a CapEx story never secular. It gets money from SLB and HAL in deep-water.
Shale is only place where spending is growing where there is not much high revenue.
CLB knows sexy numbers so it trumpeted its 32% growth of only tiny % of revenue.
UBS analysts are confused on this, opines Einhorn.
Core was always cyclical and is exposed to least desirable sector. It needs much higher oil prices.
CoreLabs CEO knows this and says Oil could go over $150 then $100 then … said couldn’t go below $40
Made a lot of bad calls and now is technical analyst jokes Einhorn.
Einhorn notes the CEO has been calling for V shaped recovery since 2014 and is now calling for one.
Einhorn does not think oil prices will go up.
Einhorn thinks the stock could drop 45 percent or $62.
Peak earnings multiple on declining earnings should take the stock down a lot more.
Earnings are poised to disappoint.
Just like Kanye loves himself, CEO loves his stock at any price.
Core always buys back stock regardless of price. They drew revolver to buy stock until 2016 when they had to actually sell equity.
They bought stock at $144 a share and sold at $118. Company is paying out more than it earns because it refuses to cut dividend.
Shares dropped close to 3% on this presentation – we will post the slides when they become available.
