David Einhorn, President of Greenlight Capital, speaks at the 2019 Sohn Investment Conference in New York City, USA, on May 6, 2019. REUTERS / Brendan McDermid / File Photo
Investor David Einhorn said on Thursday that prominent venture capitalist Chamath Palihapitiya and businessman Elon Musk threw “aircraft fuel” at GameStop Corp. (GME.N) ‘s business frenzy in January, when shares of retailer video increased by 2,000% and subsequently sparked an audience in the US. Congress.
Einhorn, who runs the hedge fund Greenlight Capital (GLRE.O), also said U.S. lawmakers are looking for answers to how day traders could extract control over the price of GameStop shares from hedge funds. established coverage should probe regulators rather than investors.
Organized social media enthusiasts, such as Reddit, staged a stubborn buyout three months ago, earning Wall Street hedge funds that had reduced GameStop shares or bet the price would go down.
Wild price changes caused serious losses for the Melvin Capital hedge fund, among others. U.S. lawmakers reacted by organizing a U.S. House of Representatives hearing in February, where they examined hedge funds, a daily trader and the head of the online commerce application Robinhood. Read more
Einhorn on Thursday blamed Mali, CEO of Palihapitiya and Tesla Inc. (TSLA.O), for launching what he called “aircraft fuel” under GME pressure. His comments appeared in a quarterly letter to investors at Greenlight Capital, which was seen by Reuters.
Representatives of Palihapitiya and Musk did not immediately respond to requests for comment.
Einhorn said it was appropriate for investors to discuss the shares.
“Investors discussing why they believe GameStop (or any other action) should be encouraged,” he wrote. “There is no reason to drag anyone before Congress to make a selection of values.” Read more
Einhorn said Palihapitiya, who appeared on television in late January and dismissed criticism of the day’s traders, may have been trying to harm Robinhood because it competes with fintech startup SoFi, which was backed by Palihapitiya.
And Musk, who shares Tesla with whom Einhorn long ago bet, entered the drama by tweeting “Gamestonk !!” and add a link to the Reddit forum where day traders discussed GameStop.
“If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a slight slap on the wrist when they accused him of manipulating Tesla shares in 2018,” Einhorn wrote.
Einhorn said that if lawmakers wanted to understand “why GameStop did what it did … it would be better to hold accountable absentee regulators and their philosophical sponsors.”
He told investors that his Greenlight capital funds were basically flat in the first quarter, down 0.1%, while the S & P500 (.SPX) index gained 6.2%.
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