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Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story, Updated with New Epilogue
A revealing look at Wall Street, the financial media, and financial regulators by David Einhorn, the President of Greenlight CapitalCould 2008's credit crisis have been minimized or even avoided? In 2002, David Einhorn-one of the country's top investors-was asked at a charity investment conference to share his best investment advice. Short sell Allied Capital. At the time, Allied was a leader in the private financing industry. Einhorn claimed Allied was using questionable accounting practices to prop itself up. Sound familiar? At the time of the original version of "Fooling Some of the People All of the Time: A Long Short Story" the outcome of his advice was unknown. Now, the story is complete and we know Einhorn was right. In 2008, Einhorn advised the same conference to short sell Lehman Brothers. And had the market been more open to his warnings, yes, the market meltdown might have been avoided, or at least minimized.Details the gripping battle between Allied Capital and Einhorn's Greenlight CapitalIlluminates how questionable company practices are maintained and, at times, even protected by Wall StreetDescribes the failings of investment banks, analysts, journalists, and government regulatorsDescribes how many parts of the Allied Capital story were replayed in the debate over Lehman Brothers
"Fooling Some of the People All of the Time" is an important call for effective government regulation, free speech, and fair play.
"Fooling Some of the People All of the Time" is an important call for effective government regulation, free speech, and fair play.
448 pages, Paperback
First published May 27, 2007
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Displaying 1 - 30 of 194 reviews
January 5, 2016
This is either a very in-depth case study or a tedious recounting of someone's side of the argument in a years-long battle to expose a company's wrongdoing, depending on whether or not you are interested in the topic and very familiar with how businesses and investing work. It's the story of a battle between a hedge fund manager who short sold a company's stock and publicized it and that company's reaction. The author is extremely detail oriented, which means that every time the company fails to discount the value of debt it carries and continues to list the value of the debt at cost, you are going to hear the details, even if similar things happened earlier in the story and the similar events could be summarized.
This means that if you want to know exactly what happened, you'll get the details you're looking for. However, if you're looking for a compelling story that helps you to understand and evaluate what's going on then you're better off looking for a book by Michael Lewis (The Big Short, Liar's Poker). There's a good story here, but David Einhorn is not a professional author and it shows as the reader must gather the story arc from the mass of detail. So the three star rating is really a four star rating (if you're a student of business or investing) averaged with a two star rating (if you're a reader with a casual interest in the business world).
It's too bad the story is longer and more detailed than it needs to be to get its message out, because the information it contains is relevant and important. In a nutshell, the author short sold a companies' stock because he could tell from analyzing its reporting that it wasn't doing nearly as well as it claimed. After publicly announcing the problems he'd found with the company's reporting, Einhorn found himself a target of personal verbal attacks by the company and the company continues its fraud. During persistent efforts to get government regulatory agencies (the SEC and SBA) and the media involved since their job is to expose and punish fraud, the author encounters little or no interest and receives at least as much backlash as action. So this story is a large example of how individual investors, the media, and the government all take much less interest than they should in exposing corruption and punishing white collar criminals.
The main thing to take from this is: when you invest, pay close attention to what you invest in because you really can't count on anyone else to make sure your investments are safe and you're not being cheated by the companies you invest in.
This means that if you want to know exactly what happened, you'll get the details you're looking for. However, if you're looking for a compelling story that helps you to understand and evaluate what's going on then you're better off looking for a book by Michael Lewis (The Big Short, Liar's Poker). There's a good story here, but David Einhorn is not a professional author and it shows as the reader must gather the story arc from the mass of detail. So the three star rating is really a four star rating (if you're a student of business or investing) averaged with a two star rating (if you're a reader with a casual interest in the business world).
It's too bad the story is longer and more detailed than it needs to be to get its message out, because the information it contains is relevant and important. In a nutshell, the author short sold a companies' stock because he could tell from analyzing its reporting that it wasn't doing nearly as well as it claimed. After publicly announcing the problems he'd found with the company's reporting, Einhorn found himself a target of personal verbal attacks by the company and the company continues its fraud. During persistent efforts to get government regulatory agencies (the SEC and SBA) and the media involved since their job is to expose and punish fraud, the author encounters little or no interest and receives at least as much backlash as action. So this story is a large example of how individual investors, the media, and the government all take much less interest than they should in exposing corruption and punishing white collar criminals.
The main thing to take from this is: when you invest, pay close attention to what you invest in because you really can't count on anyone else to make sure your investments are safe and you're not being cheated by the companies you invest in.
December 16, 2015
David Einhorn manages a hedge fund whose strategy partly consists of pinning incompetent or fraudulent companies and betting against them. This book centers on his fight with Allied Capital, one of the fraudulent companies.
Fraudulent data turns Einhorn on like a full-fledged disco party turned on the Bee Gees. Seriously, you can feel his excitement about the numbers bubbling over on every page, and, to be honest, much of it is skim-worthy. Because it's just data data data.
And still, this book had me sitting upright the whole way through because Einhorn's fight with Allied gets pretty heated. From flat-out lying to journalists about their numbers, to breaking into Einhorn's private phone data, Allied pulls some crazy stunts to keep afloat.
Einhorn's argument in this book is twofold. One, it's that hedge funds are a private-sector solution for uncovering fraud in corrupt companies, and two, it's that government agencies like the SEC have the wrong incentives for catching fraudulent companies like Allied. Einhorn recounts document after document that he sent to the SEC, warning them about Allied's practices, but the SEC just bummed around.
If you're interested in what needs to change at the SEC, you might like this article written by Einhorn and Michael Lewis, published in the NY Times, 2009, a year after Einhorn's book was published:
http://www.nytimes.com/2009/01/04/opi....
It's one of the best articles I've read about the crisis.
Fraudulent data turns Einhorn on like a full-fledged disco party turned on the Bee Gees. Seriously, you can feel his excitement about the numbers bubbling over on every page, and, to be honest, much of it is skim-worthy. Because it's just data data data.
And still, this book had me sitting upright the whole way through because Einhorn's fight with Allied gets pretty heated. From flat-out lying to journalists about their numbers, to breaking into Einhorn's private phone data, Allied pulls some crazy stunts to keep afloat.
Einhorn's argument in this book is twofold. One, it's that hedge funds are a private-sector solution for uncovering fraud in corrupt companies, and two, it's that government agencies like the SEC have the wrong incentives for catching fraudulent companies like Allied. Einhorn recounts document after document that he sent to the SEC, warning them about Allied's practices, but the SEC just bummed around.
If you're interested in what needs to change at the SEC, you might like this article written by Einhorn and Michael Lewis, published in the NY Times, 2009, a year after Einhorn's book was published:
http://www.nytimes.com/2009/01/04/opi....
It's one of the best articles I've read about the crisis.
August 26, 2008
I'm a big fan of David Einhorn, both his investing skill and his integrity. And I'm sure he is somewhere between 90% and 100% right on his fight with Allied Capital. But in general, what is the purpose of reading an extremely detailed account of a years-long scuffle between two parties which is authored by one of the parties. A book like this just cries out to be written by a third party. It might say exactly the same things, but it would be different coming from someone not in the fight.
Also it was basically just boring at times as it spend hundreds of pages on the details which he presumably felt mattered to present his case to the reading public, but which didn't add to my knowledge of investing, which is really the reason I was reading the book (that might be my fault, of course; I really wouldn't have improved my gardening ability by reading the book either but that is presumably not the authors fault).
I feel bad giving the book such a low rating given my great respect for the author.
Also it was basically just boring at times as it spend hundreds of pages on the details which he presumably felt mattered to present his case to the reading public, but which didn't add to my knowledge of investing, which is really the reason I was reading the book (that might be my fault, of course; I really wouldn't have improved my gardening ability by reading the book either but that is presumably not the authors fault).
I feel bad giving the book such a low rating given my great respect for the author.
May 25, 2025
This book was a passionate and detailed account of the author's long and drawn out fight to correct a perceived market inefficiency. As a lover of fights, financial markets, efficiency, details and most importantly, trying to correct others there was a lot in this book that I enjoyed.
The author was clearly heavily invested, both financially and emotionally in the subject matter. This made the book compelling to read, though at times it came off as quite one sided and subjective. Relatedly, there were times when I think the author became too sarcastic in a way that diminished the persuasiveness of his argument. Nonetheless, there was still a large focus on facts and data. Einhorn was very explicit and comprehensive in providing the play by play and information that supported his decisions at different points throughout this saga. These details were also helpful in assessing my level of agreement with Einhorn and trying to determine how I might have acted differently in the circumstances. It also provided a useful case study on the intersecting worlds of business, economics and accounting, interactions that I have been thinking about a lot recently.
Though perhaps disheartening, I found the critiques that Einhorn levied against the government and the regulators of the financial system have continued to ring true since publication of this book in 2008. This was another area where the first-hand account was critical to expose the immense time and effort, by Einhorn as well as others to try to get the government to pay attention. Another surprising aspect was the plethora of conflicts that existed between political operatives and Allied and the way that Allied was able to leverage this influence to avoid scrutiny and attack their own rivals. Einhorn's experience also highlighted the power of single decision makers within the government to determine what course of action would be pursued and shape outcomes.
Overall, I learned a lot about Einhorn, long short investing, the failings of financial regulation and the power of spin, packaged into what I found to be quite a page turner.
The author was clearly heavily invested, both financially and emotionally in the subject matter. This made the book compelling to read, though at times it came off as quite one sided and subjective. Relatedly, there were times when I think the author became too sarcastic in a way that diminished the persuasiveness of his argument. Nonetheless, there was still a large focus on facts and data. Einhorn was very explicit and comprehensive in providing the play by play and information that supported his decisions at different points throughout this saga. These details were also helpful in assessing my level of agreement with Einhorn and trying to determine how I might have acted differently in the circumstances. It also provided a useful case study on the intersecting worlds of business, economics and accounting, interactions that I have been thinking about a lot recently.
Though perhaps disheartening, I found the critiques that Einhorn levied against the government and the regulators of the financial system have continued to ring true since publication of this book in 2008. This was another area where the first-hand account was critical to expose the immense time and effort, by Einhorn as well as others to try to get the government to pay attention. Another surprising aspect was the plethora of conflicts that existed between political operatives and Allied and the way that Allied was able to leverage this influence to avoid scrutiny and attack their own rivals. Einhorn's experience also highlighted the power of single decision makers within the government to determine what course of action would be pursued and shape outcomes.
Overall, I learned a lot about Einhorn, long short investing, the failings of financial regulation and the power of spin, packaged into what I found to be quite a page turner.
March 18, 2019
Jesus Christ.
This book is so good. Who knew David Einhorn was such a beast at writing? This is investing at its best. Unfortunately the outcome wasn't a quicker/cleaner one.
This is a must-read if you are interested in:
- hedge funds
- short selling
- investing in BDCs and specialty finance companies
- what a shithole various US government agencies are
My version of the book was old and didn't have the epilogue... but the TLDR is basically: Allied Capital went BK and was acquired by Ares. BLX is still an operating entity, under a different name.
This book is so good. Who knew David Einhorn was such a beast at writing? This is investing at its best. Unfortunately the outcome wasn't a quicker/cleaner one.
This is a must-read if you are interested in:
- hedge funds
- short selling
- investing in BDCs and specialty finance companies
- what a shithole various US government agencies are
My version of the book was old and didn't have the epilogue... but the TLDR is basically: Allied Capital went BK and was acquired by Ares. BLX is still an operating entity, under a different name.
February 8, 2012
This book is really two disparate parts welded together.
The first, quite enjoyable, section of the book describes Einhorn's start in the hedge fund business. If you have an interest in fund management, you'll get a lot out of how he put his first fund together and quickly rose to prominence with spectacular performance out of the gates. The book provides a detailed behind-the-scenes narrative on his early investment decisions and how each investment unfolded in the context of the overall fund. The main takeaway for me was the importance of gauging roughly where in the cycle the overall market is (based primarily on valuation and confidence levels) and positioning one's long/short ratio accordingly. Note that doesn't imply taking an all-or-nothing stand on the direction of the market (which can easily become more irrational in the short term) but it does imply overweighting the part of your portfolio which is most attractive (i.e. the longs during times of panic and the shorts during times of exuberance). By keeping both long and short exposures, the investor is still able to profit if the market moves against him. This thinking helped Einhorn do well during the dot.com bubble years and the subsequent crash (one of only a few investors to achieve this). Virtually all his returns in the crash years came from his shorts - a strong reminder of their value during tough times.
I liked his point that a successful short position needs to be based on both overvaluation and a flawed business model (or fraud). Just one of these conditions is not sufficient. Plenty of overvalued businesses continue to walk on air for long periods of time (like that cartoon character running off a cliff but not realizing it until he looks down) and in the interim a company may actually grow into its valuation (Amazon.com for instance). On the other hand if a business model is flawed but the market realizes it there is obviously little to be gained - only variant opinions are rewarded.
I did not, however, like Einhorn's point that 2x overvalued is effectively the same as 20x overvalued (i.e. both are irrational in the same way that 2x infinity is the same as 20x infinity). Personally, I would much rather be betting against a company at the 20x level as the hype and expectation are that much greater, creating a scenario where the smallest slip-up can bring collapse, and of course the maximum profit potential is larger. Recognizing this can help one increase a short position as it goes against you (in much the same way that value investors double down on battered stocks.)
While I really admire Einhorn as an investor it was highly discouraging to see how the short term orientation of his investors affected his decision making - including covering losing shorts that eventually would have paid off handsomely. It is a great pity that the hedge fund industry works on monthly and not annual or even longer-term performance. It can only be a detriment to eventual returns.
The second section of the book (comprising 2/3rds of its volume) consisted of a very detailed account of fraud at Allied Capital (a BDC investment company) in which Greenlight has held a very public short position (now vindicated with Allied's bankruptcy during the credit crisis). While I sided with Einhorn and was amazed at the extent of the cover-up, I found it much too detailed and convoluted to be enjoyable reading.
I enjoyed Buffet's comment to Einhorn that the problem with shorting crooks is that they'll play a lot dirtier than you will. It's interesting that Buffet has executed several shorts over his career and has no theoretical problem with the strategy but prefers to have a "long persona". After reading of Einhorn's constant battle with the media it is easy to see why.
The first, quite enjoyable, section of the book describes Einhorn's start in the hedge fund business. If you have an interest in fund management, you'll get a lot out of how he put his first fund together and quickly rose to prominence with spectacular performance out of the gates. The book provides a detailed behind-the-scenes narrative on his early investment decisions and how each investment unfolded in the context of the overall fund. The main takeaway for me was the importance of gauging roughly where in the cycle the overall market is (based primarily on valuation and confidence levels) and positioning one's long/short ratio accordingly. Note that doesn't imply taking an all-or-nothing stand on the direction of the market (which can easily become more irrational in the short term) but it does imply overweighting the part of your portfolio which is most attractive (i.e. the longs during times of panic and the shorts during times of exuberance). By keeping both long and short exposures, the investor is still able to profit if the market moves against him. This thinking helped Einhorn do well during the dot.com bubble years and the subsequent crash (one of only a few investors to achieve this). Virtually all his returns in the crash years came from his shorts - a strong reminder of their value during tough times.
I liked his point that a successful short position needs to be based on both overvaluation and a flawed business model (or fraud). Just one of these conditions is not sufficient. Plenty of overvalued businesses continue to walk on air for long periods of time (like that cartoon character running off a cliff but not realizing it until he looks down) and in the interim a company may actually grow into its valuation (Amazon.com for instance). On the other hand if a business model is flawed but the market realizes it there is obviously little to be gained - only variant opinions are rewarded.
I did not, however, like Einhorn's point that 2x overvalued is effectively the same as 20x overvalued (i.e. both are irrational in the same way that 2x infinity is the same as 20x infinity). Personally, I would much rather be betting against a company at the 20x level as the hype and expectation are that much greater, creating a scenario where the smallest slip-up can bring collapse, and of course the maximum profit potential is larger. Recognizing this can help one increase a short position as it goes against you (in much the same way that value investors double down on battered stocks.)
While I really admire Einhorn as an investor it was highly discouraging to see how the short term orientation of his investors affected his decision making - including covering losing shorts that eventually would have paid off handsomely. It is a great pity that the hedge fund industry works on monthly and not annual or even longer-term performance. It can only be a detriment to eventual returns.
The second section of the book (comprising 2/3rds of its volume) consisted of a very detailed account of fraud at Allied Capital (a BDC investment company) in which Greenlight has held a very public short position (now vindicated with Allied's bankruptcy during the credit crisis). While I sided with Einhorn and was amazed at the extent of the cover-up, I found it much too detailed and convoluted to be enjoyable reading.
I enjoyed Buffet's comment to Einhorn that the problem with shorting crooks is that they'll play a lot dirtier than you will. It's interesting that Buffet has executed several shorts over his career and has no theoretical problem with the strategy but prefers to have a "long persona". After reading of Einhorn's constant battle with the media it is easy to see why.
November 6, 2012
I get a lot of books handed or recommended to me, most of which seem to miss what I actually enjoy in books. This one seemed one of the most egregious examples; a book about details behind short selling positions and market failure. Queue the confetti. While I had enjoyed Einhorn's takedown of GMC, this didn't seem like it would do anything for me.
I was wrong.
Halfway through, I had to stop and thank my friend for the recommendation. This is an interesting inside view of corporate (dys)function and the business environment. While at times it gets a bit esoteric or bogged down in details, the author always did an excellent job making sure that the reader could grasp the enormity of what he and his confederates had found.
Like many people, I found the initial discussion of his past, the fund, and their first positions to be surprisingly engaging. He's pretty upfront about the successes, as well as the failures, and that honesty humanizes what might otherwise seem to be a dry, financial story. When the story shifts to his investment and engagement with Allied Capital, at first it seems a bit overdramatic. And then he starts to unfold the mystery. More and more. Until what you get a chance to see is a surprising and disturbing look at how a perverse set of incentives can distort the free function of a market. How the economic incentives of a bank change how their analysts evaluate investments. How the career prospects of reporters affect what they choose to write. How the politicians, in the service of a noble goal, can help feed a system that defrauds the public. Towards the end, I found myself reading passages out loud to my girl-friend because I was just dumbfounded by the things he found.
The book's not for everyone. It takes patience and willingness to think through some complicated stories. You have to put up with, what seems at times, to be petulant anger of the author. But it's fascinating and I recommend it.
I was wrong.
Halfway through, I had to stop and thank my friend for the recommendation. This is an interesting inside view of corporate (dys)function and the business environment. While at times it gets a bit esoteric or bogged down in details, the author always did an excellent job making sure that the reader could grasp the enormity of what he and his confederates had found.
Like many people, I found the initial discussion of his past, the fund, and their first positions to be surprisingly engaging. He's pretty upfront about the successes, as well as the failures, and that honesty humanizes what might otherwise seem to be a dry, financial story. When the story shifts to his investment and engagement with Allied Capital, at first it seems a bit overdramatic. And then he starts to unfold the mystery. More and more. Until what you get a chance to see is a surprising and disturbing look at how a perverse set of incentives can distort the free function of a market. How the economic incentives of a bank change how their analysts evaluate investments. How the career prospects of reporters affect what they choose to write. How the politicians, in the service of a noble goal, can help feed a system that defrauds the public. Towards the end, I found myself reading passages out loud to my girl-friend because I was just dumbfounded by the things he found.
The book's not for everyone. It takes patience and willingness to think through some complicated stories. You have to put up with, what seems at times, to be petulant anger of the author. But it's fascinating and I recommend it.
March 4, 2012
It started out so promising... The first 50 or 60 pages are really great. They lay out a classic David v Goliath tale of an investor who is challenging a large and successful company with the belief that the company is engaging in accounting fraud. The challenge, raised by the author as CEO of hedge fund Greenlight Capital is one of the classic tales in hedge fund lore where a company goes out of its way to attack and discredit an individual. Einhorn, who was betting against the company, spent the next 6+ years in an on-and-off battle trying to prove to everyone - the SEC, the department of justice, other investors, the public - that the company was a fraud. Nobody, it seemed, would listen. Sounds interesting, right? Well, it is, to a point. But Einhorn, seemingly trying to make his case to the reader, goes into excruciating detail into what he considered the fraudulent activity. The book gets lost in these weeds. Furthermore, Einhorn's conviction in 2012 (well after the book was published) for market abuse (insider trading like activities) undermines the saintly tone he takes in the book. I think the first few chapters are great for understanding the world of hedge funds and the work that hedge fund professionals put into their investment ideas, but in the end the book is a bit of a drag.
September 25, 2008
Just finished this the other night. Unless you are interested in finance and investing, it may bore you.
However, I really enjoyed it. I respect Einhorn a lot and have read the excerpts from other speeches he has given.
This book further fuels my anger towards the management of large companies, who recognize fraud or stretching numbers, or at the very least improperly accounting for valuation and revenues, as merely a hurdle to increased profits. It also made me angry that he basically gift-wrapped the evidence for the SEC and other brances of government to prosecute Allied and BLX and yet they did NOTHING.
After the recent calamity in the financial sector, it shows us why integrity and proper accounting really do matter. And also shows why hedge funds and short selling act as an essential counterbalance to some crooked CEOs.
However, I really enjoyed it. I respect Einhorn a lot and have read the excerpts from other speeches he has given.
This book further fuels my anger towards the management of large companies, who recognize fraud or stretching numbers, or at the very least improperly accounting for valuation and revenues, as merely a hurdle to increased profits. It also made me angry that he basically gift-wrapped the evidence for the SEC and other brances of government to prosecute Allied and BLX and yet they did NOTHING.
After the recent calamity in the financial sector, it shows us why integrity and proper accounting really do matter. And also shows why hedge funds and short selling act as an essential counterbalance to some crooked CEOs.
March 30, 2018
David Einhorn is not only a hedge fund manager with an impressive track record, he is also an incredibly clear writer. Fooling Some of the People All of the Time is a book that reveals much about both his investing process in general and his experience shorting Allied Capital in particular. Despite his ultimate success in shorting Allied Capital, Einhorn's story strengthens my conviction that investors should stay away from short selling.
Greenlight's investment process could be described as similar to value investing. From a high level, Einhorn focuses on many of the same things as other value investors:
1. "There were three basic questions to resolve: First, what are the true economics of the business? Second, how do the economics compare to the reported earnings? Third, how are the interests of the decision makers aligned with the investors?"
2. "The trick is to avoid losers. Losers are terrible because it takes a success to offset them just to get back to even."
There are a few things that Einhorn does believe Greenlight does differently, however:
1. "Greenlight takes the opposite approach. We start by asking why a security is likely to be misvalued in the market. Once we have a theory, we analyze the security to determine if it is, in fact, cheap or overvalued. In order to invest, we need to understand why the opportunity exists and believe we have a sizable analytical edge over the person on the other side of the trade."
2. "Some investors believe they have an advantage trafficking in stocks that have minimal Wall Street analyst coverage. We believe it doesn’t matter if a stock is “underfollowed” because the person we are buying from probably has followed the stock and we need to have a better grasp on the situation than he does. Given who that may be, our burden is high."
Furthermore, many value investors stay away from short selling because of the leverage and the theoretically infinite risk. Keeping those limitations in mind, Einhorn has a few structural principles about short selling, including the principle that he does NOT use shorts to hedge:
1. "If one ranked investments on a scale from one to ten, with one being a perfect long idea and ten being a perfect short idea, a portfolio of pair trades will have a lot of threes and fours paired against sixes and sevens from the same industry. Greenlight generally does not engage in pairs trading. We accept more industry risk, but assemble a portfolio where we believe our longs are ones and twos and our shorts are nines and tens. We do not short to hedge. If we are uncomfortable with the risk in a position, we simply reduce or eliminate it."
2. "We would size the shorts half as large as we would longs of the same quality, because when shorts move against us, they become a bigger portion of the portfolio and to give us the ability to endure initial losses and maintain or even increase the investment. In most successful short sales, we lose money gradually for a period of time until we suddenly make a large gain—often in a single day."
3. "We reasoned that twice a silly valuation is not twice as silly. It is still just silly. Kind of like twice infinity is still infinity. Instead, we concentrated on selling short companies with high valuations combined with misunderstood fundamentals and deteriorating prospects. As always, frauds were preferred."
After some discussion of his early investment career and his general investing principles, Einhorn delves into the story of Allied. Einhorn is largely famous today because of the speech he gave at the Ira Sohn Conference in 2002 explaining his short thesis in Allied Capital. He was attacked by the company, regulators, prosecutors, and the media as a result of this speech. Einhorn is exceptionally sharp analytically and noticed the inconsistencies within Allied's accounting. However, despite his repeated warnings to the company's board, regulatory agencies, and media outlets in the period from 2002 to 2007, his words were largely unheeded. His frustration can be felt in experience after experience. Below are a few examples of the problems short sellers face: 1. Government oversight is slow while investors and markets are impatient 2. Even if a company is fraudulent, the fraud can persist for a long time. As Keynes once observed, "The market can stay irrational longer than you can stay solvent." 3. Even fraudulent companies are often led by charismatic, articulate, and seemingly competent executives. 4. The media is reluctant to explain complex frauds in stories 5. Management is incentivized to continue lying because they are much larger stakeholders (i.e. the company is their livelihood while the short position is merely one of multiple positions in Greenlight's portfolio).
1. "A key problem for investors who short a company that is subject to government oversight is that the government, even when it acts, does not move at the same speed as the stock market. Two years might make a prompt government investigation, but it is an eternity for investors such as Greenlight reporting monthly results, even in a long-term strategy."
2. "Fraud can persist for a long time, and investors, analysts, and the SEC miss things. But, sooner or later, the truth wins. If you know you are right, all you need is patience, persistence, and discipline to stay the course."
3. "Some of my favorite movies, including The Sting and Dirty Rotten Scoundrels, feature well-spoken, attractive, confidence men and women. Perhaps the same can be said for some of the CEOs behind real-life scandals I had experienced, including Gary Wendt (Conseco), Al Dunlap (Sunbeam), and Donal Geaney (Elan), not to mention Bernie Ebbers (WorldCom) and Ken Lay (Enron)."
4. "Certainly, one of the biggest things I have learned from the Allied experience is the surprising reluctance of the media to dig into complicated financial stories. Even if the story is served up on a silver platter, there is not much interest."
5. "I asked Buffett what he thought of the Allied Capital saga. Though he said he didn’t know about the company, he observed that it was tough to win being short something like that. As he saw it, for Greenlight, Allied is just one position in our portfolio. But, for the company and its management, it is the whole ballgame, so they will say and do things we wouldn’t consider doing in order to win."
Perhaps the most discouraging aspect of this book was that although Einhorn's story was ultimately a story of redemption, it's unclear that the amount of time he had to devote to the position over 6 years was worth the effort. Despite the fact that Einhorn's analysis was exhaustive and that Allied's fraud was widespread, the institutions in place seemed uninterested in intervening with its business. Einhorn had amassed thousands of pages of documents and analysis on Allied. Yet it took the turn of the 2008 credit cycle to finally catalyze the downfall of Allied's shares, despite the fraud that the company was conducting the entire time. This story, along with Bill Ackman's recent failure in shorting Herbalife, have demonstrated to me that correct analysis and even successful short positions may not be worth the effort. It's better to make money being long.
Greenlight's investment process could be described as similar to value investing. From a high level, Einhorn focuses on many of the same things as other value investors:
1. "There were three basic questions to resolve: First, what are the true economics of the business? Second, how do the economics compare to the reported earnings? Third, how are the interests of the decision makers aligned with the investors?"
2. "The trick is to avoid losers. Losers are terrible because it takes a success to offset them just to get back to even."
There are a few things that Einhorn does believe Greenlight does differently, however:
1. "Greenlight takes the opposite approach. We start by asking why a security is likely to be misvalued in the market. Once we have a theory, we analyze the security to determine if it is, in fact, cheap or overvalued. In order to invest, we need to understand why the opportunity exists and believe we have a sizable analytical edge over the person on the other side of the trade."
2. "Some investors believe they have an advantage trafficking in stocks that have minimal Wall Street analyst coverage. We believe it doesn’t matter if a stock is “underfollowed” because the person we are buying from probably has followed the stock and we need to have a better grasp on the situation than he does. Given who that may be, our burden is high."
Furthermore, many value investors stay away from short selling because of the leverage and the theoretically infinite risk. Keeping those limitations in mind, Einhorn has a few structural principles about short selling, including the principle that he does NOT use shorts to hedge:
1. "If one ranked investments on a scale from one to ten, with one being a perfect long idea and ten being a perfect short idea, a portfolio of pair trades will have a lot of threes and fours paired against sixes and sevens from the same industry. Greenlight generally does not engage in pairs trading. We accept more industry risk, but assemble a portfolio where we believe our longs are ones and twos and our shorts are nines and tens. We do not short to hedge. If we are uncomfortable with the risk in a position, we simply reduce or eliminate it."
2. "We would size the shorts half as large as we would longs of the same quality, because when shorts move against us, they become a bigger portion of the portfolio and to give us the ability to endure initial losses and maintain or even increase the investment. In most successful short sales, we lose money gradually for a period of time until we suddenly make a large gain—often in a single day."
3. "We reasoned that twice a silly valuation is not twice as silly. It is still just silly. Kind of like twice infinity is still infinity. Instead, we concentrated on selling short companies with high valuations combined with misunderstood fundamentals and deteriorating prospects. As always, frauds were preferred."
After some discussion of his early investment career and his general investing principles, Einhorn delves into the story of Allied. Einhorn is largely famous today because of the speech he gave at the Ira Sohn Conference in 2002 explaining his short thesis in Allied Capital. He was attacked by the company, regulators, prosecutors, and the media as a result of this speech. Einhorn is exceptionally sharp analytically and noticed the inconsistencies within Allied's accounting. However, despite his repeated warnings to the company's board, regulatory agencies, and media outlets in the period from 2002 to 2007, his words were largely unheeded. His frustration can be felt in experience after experience. Below are a few examples of the problems short sellers face: 1. Government oversight is slow while investors and markets are impatient 2. Even if a company is fraudulent, the fraud can persist for a long time. As Keynes once observed, "The market can stay irrational longer than you can stay solvent." 3. Even fraudulent companies are often led by charismatic, articulate, and seemingly competent executives. 4. The media is reluctant to explain complex frauds in stories 5. Management is incentivized to continue lying because they are much larger stakeholders (i.e. the company is their livelihood while the short position is merely one of multiple positions in Greenlight's portfolio).
1. "A key problem for investors who short a company that is subject to government oversight is that the government, even when it acts, does not move at the same speed as the stock market. Two years might make a prompt government investigation, but it is an eternity for investors such as Greenlight reporting monthly results, even in a long-term strategy."
2. "Fraud can persist for a long time, and investors, analysts, and the SEC miss things. But, sooner or later, the truth wins. If you know you are right, all you need is patience, persistence, and discipline to stay the course."
3. "Some of my favorite movies, including The Sting and Dirty Rotten Scoundrels, feature well-spoken, attractive, confidence men and women. Perhaps the same can be said for some of the CEOs behind real-life scandals I had experienced, including Gary Wendt (Conseco), Al Dunlap (Sunbeam), and Donal Geaney (Elan), not to mention Bernie Ebbers (WorldCom) and Ken Lay (Enron)."
4. "Certainly, one of the biggest things I have learned from the Allied experience is the surprising reluctance of the media to dig into complicated financial stories. Even if the story is served up on a silver platter, there is not much interest."
5. "I asked Buffett what he thought of the Allied Capital saga. Though he said he didn’t know about the company, he observed that it was tough to win being short something like that. As he saw it, for Greenlight, Allied is just one position in our portfolio. But, for the company and its management, it is the whole ballgame, so they will say and do things we wouldn’t consider doing in order to win."
Perhaps the most discouraging aspect of this book was that although Einhorn's story was ultimately a story of redemption, it's unclear that the amount of time he had to devote to the position over 6 years was worth the effort. Despite the fact that Einhorn's analysis was exhaustive and that Allied's fraud was widespread, the institutions in place seemed uninterested in intervening with its business. Einhorn had amassed thousands of pages of documents and analysis on Allied. Yet it took the turn of the 2008 credit cycle to finally catalyze the downfall of Allied's shares, despite the fraud that the company was conducting the entire time. This story, along with Bill Ackman's recent failure in shorting Herbalife, have demonstrated to me that correct analysis and even successful short positions may not be worth the effort. It's better to make money being long.
October 12, 2020
1 man's multi-year short-sell crusade against Allied Capital. I get it, short sellers are a necessary part of the system. I guess this woulda been more interesting if I was US-based as the intricacies involved were eye opening but US-centric.
January 19, 2021
eye-opening
January 5, 2012
A rather dry book, the author is right about the accounting games at Allied,
but he uses most of the book repeating particular ideas.
The book was written before the story ended.
See wiki http://en.wikipedia.org/wiki/Allied_C...
For the last word.
Allied wasn't a total fraud like Enron or global crossing,
but the people in charge goosed the accounting to make their pay and bonuses bigger.
In the end the company was sold for $5 a share in 2010,
down from the $26 when the author started battle with management.
The thing that always amazes me about stories like this,
is how many people don't want to believe a tight, logical, presentation of facts.
They want to believe whats comfortable for them,
and frauds can last for years, instead of days.
And of course, the SEC and other government agencies
are totally useless.
Madoff and sons is an even better example.
170 years ago Extraordinary delusions and the madness of crowds was written,
people are still as gullible as then,
and long before then.
Here's a link to Andrew Left's website:
http://www.citronresearch.com/index.p...
He does the same thing Einhorn does, looks for shady companies,
shorts the stock and writes about it.
Look thru the archives,
there's dozen's of companies that are fleecing stockholders.
In 5 or 10 years and it will be plain to everyone,
but why are people so gullible in the present?
but he uses most of the book repeating particular ideas.
The book was written before the story ended.
See wiki http://en.wikipedia.org/wiki/Allied_C...
For the last word.
Allied wasn't a total fraud like Enron or global crossing,
but the people in charge goosed the accounting to make their pay and bonuses bigger.
In the end the company was sold for $5 a share in 2010,
down from the $26 when the author started battle with management.
The thing that always amazes me about stories like this,
is how many people don't want to believe a tight, logical, presentation of facts.
They want to believe whats comfortable for them,
and frauds can last for years, instead of days.
And of course, the SEC and other government agencies
are totally useless.
Madoff and sons is an even better example.
170 years ago Extraordinary delusions and the madness of crowds was written,
people are still as gullible as then,
and long before then.
Here's a link to Andrew Left's website:
http://www.citronresearch.com/index.p...
He does the same thing Einhorn does, looks for shady companies,
shorts the stock and writes about it.
Look thru the archives,
there's dozen's of companies that are fleecing stockholders.
In 5 or 10 years and it will be plain to everyone,
but why are people so gullible in the present?
August 9, 2022
I enjoyed this one — a long form of a short thesis / case that talks about the struggles and frustrations w/ the target company and regulators. Gave me a deeper appreciation for the softer / emotional aspect behind shorting a stock.
For me at least, the following quote keeps coming up in my mind — “The market can stay irrational longer than you can remain solvent.”
Three major learning points:
- how to think numbers ie why some numbers just doesn’t make sense and how him and his team went about verifying.
- how to read between the lines. The company will tell you what they want, and we are all incentivized by our own motivations. Mgmt is no different. Read between the lines — while interpretation may be subjective, marrying with the above “numbers” usually bridge you towards the truth.
- how to question mgmt / stakeholders. I enjoy the questions he asked to various stakeholders. They were target yet not company specific when needed. There are trade offs of course but nonetheless helpful when it comes to more sensitive matters. The questions were asked w/ a hypothesis in mind but non-judgmental / not leading questions.
We are again in the period of the cycle where reading footnotes might be helpful? Who knows? Good skill to have.
Breadth 3/5
Depth 4/5
Applicability 5/5
For me at least, the following quote keeps coming up in my mind — “The market can stay irrational longer than you can remain solvent.”
Three major learning points:
- how to think numbers ie why some numbers just doesn’t make sense and how him and his team went about verifying.
- how to read between the lines. The company will tell you what they want, and we are all incentivized by our own motivations. Mgmt is no different. Read between the lines — while interpretation may be subjective, marrying with the above “numbers” usually bridge you towards the truth.
- how to question mgmt / stakeholders. I enjoy the questions he asked to various stakeholders. They were target yet not company specific when needed. There are trade offs of course but nonetheless helpful when it comes to more sensitive matters. The questions were asked w/ a hypothesis in mind but non-judgmental / not leading questions.
We are again in the period of the cycle where reading footnotes might be helpful? Who knows? Good skill to have.
Breadth 3/5
Depth 4/5
Applicability 5/5
November 29, 2011
The version I read of this was published in 2008, just as the financial crisis took off, and while I very much enjoyed the story, I wasn't happy with where Einhorn chose to stop writing. Being a trader, I was vaguely aware of how the Allied story ended, and if ever there was a book that needed an epilogue it was this one. But how the story unfolded was fascinating - you could almost call this an "accounting thriller". I'm shocked that it took six years for the regulators, media, and investment industry to listen to what Einhorn had been saying all along: Allied was a house of cards run by crooks. I guess, to Einhorn this book was more a cathartic release - it's a little heavy on detail - than an interesting trading war story. But I understand where he's coming from: if you are going to hang on to a losing position for six years, and receive mountains of abuse along the way, you are probably entitled to do what you can to derive a sense of satisfaction from the situation. His exasperation was palpable. And I am inspired to find my own Allied Capital.
June 26, 2008
Great Book! This story demonstrates primary research in an investment setting at its best.
Also, this is a great example of what happens in big government (the Small Business Administration in this story). “Let’s give career Washington-types billions of dollars and measure them on how well they are able to spend it! Let’s not hold them accountable for how well the loans ultimately perform.”
Also, for the company in questions, they should “bribe,” I mean give campaign contributions to, the politicians that oversee their business’s key activity as soon as there is some real scrutiny of their below the table dealings.
Thanks you Mr. Einhorn for sticking to your principles and convictions w/r/t Allied Capital. It just sickens me how many times you took damning facts to the authorities (SEC, DOJ, US Attorney, and SBA) and they didn’t (and possibly still don’t) care.
Also, this is a great example of what happens in big government (the Small Business Administration in this story). “Let’s give career Washington-types billions of dollars and measure them on how well they are able to spend it! Let’s not hold them accountable for how well the loans ultimately perform.”
Also, for the company in questions, they should “bribe,” I mean give campaign contributions to, the politicians that oversee their business’s key activity as soon as there is some real scrutiny of their below the table dealings.
Thanks you Mr. Einhorn for sticking to your principles and convictions w/r/t Allied Capital. It just sickens me how many times you took damning facts to the authorities (SEC, DOJ, US Attorney, and SBA) and they didn’t (and possibly still don’t) care.
July 2, 2019
While the big message in this book is good, it's delivered much like someone who's been wronged and takes it personally by documenting every single transgression against him. This leads to a very accurate book with much documentation - transcripts, letters and news articles. Put another way: good for facts - bad for storytelling. The story would have benefited from setting a larger context of fraud. I think it would have been stronger from someone not so close to the subject. Or a stronger editor might have also done the trick. David uses some personal information - but I found the personal stuff to be a distraction - and not moving the story forward.
December 23, 2020
I struggled to finish this book. David Einhorn is among the investors I admire and I thought his book would provide interesting insights into his different investments with Greenlight Capital. Instead, practically the entire book describes the battle between Allied Capital and Einhorn to a level of detail that might be interesting for some, but it was not for me. Furthermore, I felt his narrative was highly biased to the point that it irritated me. Perhaps I should have glanced better at the chapters before starting the book, because the title certainly misled me.
April 8, 2021
Starts off pretty interesting, setting the landscape for how the business models work etc and how the fraud is enabled to happen.
But then proceeding to spend 100+ pages describing asset/investment write ups and write offs/downs is not particularly interesting, not that useful and not much of a learning point.
All boils down to ... “when loans are unrecoverable, the prudent thing to do is write them off”
But then proceeding to spend 100+ pages describing asset/investment write ups and write offs/downs is not particularly interesting, not that useful and not much of a learning point.
All boils down to ... “when loans are unrecoverable, the prudent thing to do is write them off”
June 23, 2016
The book's essence, and the unfavourable economics of short-selling in general, can be summarised by the following quote:
"...Allied is just one position in our portfolio. But, for the company and its management, it is the whole ballgame, so they will say and do things we wouldn't consider doing in order to win."
"...Allied is just one position in our portfolio. But, for the company and its management, it is the whole ballgame, so they will say and do things we wouldn't consider doing in order to win."
September 12, 2014
Indispensable for people wishing to experience dishonest corporate culture.
March 31, 2018
Absolute must read - especially for anyone considering a career in business and politics.
In short, basically a book about a dispute between a short-seller (Einhorn)* who shorted a company that he believed was fraudulently misrepresenting the numbers to mislead the public (Allied Express.)
Einhorn lobbied using evidence and tenacity but his viewpoint was shot down repeatedly by the media and the government (without obvious transparent reasonable inquiry into Einhorn's claims.)
* I hesitate to simply characterise Einhorn as a 'short-seller'- but do so for brevity. It was quite clear that Einhorn was not solely motivated by profit and I truly wonder if the hidden costs of Einhorn's time, stress, and uncertainty are properly accounted for in any assessment of a short outcome.
WHY IS THIS A MUST READ
-----------------------
The book is superbly well written; driving you forward through the story. I did find the numbers/complexity/details hard to follow at some points but this is a GREAT insight into the reality of the situation.
THAT is why this book is a must - read. It is written to be REAL and not just written to be read. A post mortem case study makes everything seem too easy and simple. Yet this book takes you on the journey. Eingorn does not share any doubts he had about his position but this story shows that being 'right' about the facts/accounting is sometimes not enough.
Einhorn supports his convictions and puts his reputation on the line for YEARS - whilst bureaucrats obfuscate the issues. Basically hiding behind size and connections so that people either are afraid to uncover the truth or lack the immense resources required to do so (especially human traits like temperament and persistence.)
Only suggestions (for readers or authors) to maximise benefits from reading the book.
- create a high level timeline to understand the story
- think of Allied's viewpoint too
- think em-pathetically of Einhorn's situation. What toll would this experience have had on existing and future relationships and behaviours?
In short, basically a book about a dispute between a short-seller (Einhorn)* who shorted a company that he believed was fraudulently misrepresenting the numbers to mislead the public (Allied Express.)
Einhorn lobbied using evidence and tenacity but his viewpoint was shot down repeatedly by the media and the government (without obvious transparent reasonable inquiry into Einhorn's claims.)
* I hesitate to simply characterise Einhorn as a 'short-seller'- but do so for brevity. It was quite clear that Einhorn was not solely motivated by profit and I truly wonder if the hidden costs of Einhorn's time, stress, and uncertainty are properly accounted for in any assessment of a short outcome.
WHY IS THIS A MUST READ
-----------------------
The book is superbly well written; driving you forward through the story. I did find the numbers/complexity/details hard to follow at some points but this is a GREAT insight into the reality of the situation.
THAT is why this book is a must - read. It is written to be REAL and not just written to be read. A post mortem case study makes everything seem too easy and simple. Yet this book takes you on the journey. Eingorn does not share any doubts he had about his position but this story shows that being 'right' about the facts/accounting is sometimes not enough.
Einhorn supports his convictions and puts his reputation on the line for YEARS - whilst bureaucrats obfuscate the issues. Basically hiding behind size and connections so that people either are afraid to uncover the truth or lack the immense resources required to do so (especially human traits like temperament and persistence.)
Only suggestions (for readers or authors) to maximise benefits from reading the book.
- create a high level timeline to understand the story
- think of Allied's viewpoint too
- think em-pathetically of Einhorn's situation. What toll would this experience have had on existing and future relationships and behaviours?
January 4, 2022
For me, Fooling Some of the People All of the Time was a title I'd heard thrown around a lot in the finance world. I'm not in public markets, but I was still engrossed in the story. David Einhorn's real-life-is-stranger-than-fiction tale borders on the absurd. He recounts the five-year saga of Greenlight Capital, his hedge fund, and their coverage of Allied Capital, whose business model can be simplistically described as a public private equity fund. Ripples of misdoing coalesce into tidal waves of outright fraud as investors and taxpayers are taken for a ride.
This book began fascinating (loved the detail on the early days of Greenlight), turned shocking (how did they getting away with this), and landed in legitimate anger over the taxpayer consequences for Allied's misdeeds and the government's negligence (is it too strong to call it a cover up?). The last 150 pages dragged on as the absurdity of inaction by the SEC, SBA, and reporters mounts.
Overall, an enjoyable read. Narrative plot makes the nearly 400 pages move more quickly. Some requisite finance familiarity required to appreciate some of the finer (and more galling) misdeeds of Allied. On the whole, the book makes me more skeptical of SEC reporting and the integrity of management teams. In the (paraphrased) words of Warren Buffet: "The incentives for management teams to be dishonest is high--this is their only game." If you're in the finance world, it is a true must-read.
4.3/5.0.
This book began fascinating (loved the detail on the early days of Greenlight), turned shocking (how did they getting away with this), and landed in legitimate anger over the taxpayer consequences for Allied's misdeeds and the government's negligence (is it too strong to call it a cover up?). The last 150 pages dragged on as the absurdity of inaction by the SEC, SBA, and reporters mounts.
Overall, an enjoyable read. Narrative plot makes the nearly 400 pages move more quickly. Some requisite finance familiarity required to appreciate some of the finer (and more galling) misdeeds of Allied. On the whole, the book makes me more skeptical of SEC reporting and the integrity of management teams. In the (paraphrased) words of Warren Buffet: "The incentives for management teams to be dishonest is high--this is their only game." If you're in the finance world, it is a true must-read.
4.3/5.0.
July 15, 2021
4-stars in comparison to books of the same genre.
Let's start with the reason why I picked up this book. So I took an introductory accounting class at university and the lecturer captured my interest in the act of investigating the financial statements to identify problems. After a quick search on Google, this book and Financial Shenanigans came up.
'Fooling Some of the People All of the Time' follows Einhorn in his quest to uncover the blatant but deliberately ignored fraud at Allied Capital. The narrative follows a pattern of Einhorn (or one of his friends) spotting evidence of fraud, raising the issue to investors and watchdogs, getting ignored (or counterattacked) and try again with more evidence. In the first quarter or so, this narrative is intriguing but it gets less so later (I'll have to confess, I only finished ~90% of this book).
It gives me great satisfaction after (nearly) completing the book since I can now understand what the title means. It encapsulates the idea that fraud is actually not that hard to uncover, the main issue is that after uncovering, some people will actively choose to ignore it. Hence, a group of people will always be fooled, just because they wanted to.
Did I sometimes fall asleep reading this book? Yes.
Did I choose to major in Finance and Accounting to become better at scrutinising financial statements because of this book? Yes.
Let's start with the reason why I picked up this book. So I took an introductory accounting class at university and the lecturer captured my interest in the act of investigating the financial statements to identify problems. After a quick search on Google, this book and Financial Shenanigans came up.
'Fooling Some of the People All of the Time' follows Einhorn in his quest to uncover the blatant but deliberately ignored fraud at Allied Capital. The narrative follows a pattern of Einhorn (or one of his friends) spotting evidence of fraud, raising the issue to investors and watchdogs, getting ignored (or counterattacked) and try again with more evidence. In the first quarter or so, this narrative is intriguing but it gets less so later (I'll have to confess, I only finished ~90% of this book).
It gives me great satisfaction after (nearly) completing the book since I can now understand what the title means. It encapsulates the idea that fraud is actually not that hard to uncover, the main issue is that after uncovering, some people will actively choose to ignore it. Hence, a group of people will always be fooled, just because they wanted to.
Did I sometimes fall asleep reading this book? Yes.
Did I choose to major in Finance and Accounting to become better at scrutinising financial statements because of this book? Yes.
July 16, 2020
I read this book when first published and think it was one of the best publications covering short-selling while delivering an entertaining tale. The book is a first-person description of the first years of David Heinhorn's Greenlight capital hedge fund following a long-short strategy with a dedicated value style. It covers several chapters, being Allied Capital and Lehman brothers among the ones that really occupy more pages.
Some good ideas that allow me to develop my shorting style were to watch the industry momentum when shorting, fraudster companies can persist for a long time until discovered or authorities take action, discovering accounting gimmicks is not enough as bad business economics must exist to bury the stock, among some others.
If you are looking for a straight-forward and ordered manual on short-selling, this is not the right book for you. If you are looking for a hedge fund manager's diaries book with tips on short-selling and experiences that can help you to start or mature as short-seller, this is a great book.
Some good ideas that allow me to develop my shorting style were to watch the industry momentum when shorting, fraudster companies can persist for a long time until discovered or authorities take action, discovering accounting gimmicks is not enough as bad business economics must exist to bury the stock, among some others.
If you are looking for a straight-forward and ordered manual on short-selling, this is not the right book for you. If you are looking for a hedge fund manager's diaries book with tips on short-selling and experiences that can help you to start or mature as short-seller, this is a great book.
October 1, 2020
Einhorn has written a facinating, detailed and well-evidenced summary of the events that led up to the final collapse of Allied Capital, an investment company. It reads like a detective story, and Einhorn has done well in explaining all topics covered in an easy-to-grasp way, so that anyone can read the book.
In the book's summary Einhorn elevates the lessons learned from the Allied story to valuable lessons for business management, politicians, regulators, retail and institutional investors, accounting firms, rating agencies and journalists in order to prevent future financial crises.
The story makes the case for businesses to have an honest and transparent relationship with their investors to promote the long term sustainability. Hiding or delaying bad news through creative accounting, even if the intention is to protect the company in the short term, will in most cases only spur further and more desperate measures until reality catches up. As the story shows it can take many years and help from events outside of a company's control to reveal the untruths told.
In the book's summary Einhorn elevates the lessons learned from the Allied story to valuable lessons for business management, politicians, regulators, retail and institutional investors, accounting firms, rating agencies and journalists in order to prevent future financial crises.
The story makes the case for businesses to have an honest and transparent relationship with their investors to promote the long term sustainability. Hiding or delaying bad news through creative accounting, even if the intention is to protect the company in the short term, will in most cases only spur further and more desperate measures until reality catches up. As the story shows it can take many years and help from events outside of a company's control to reveal the untruths told.
January 23, 2018
De entrada creo que el unico pero que le pongo a este libro es la cantidad de paginas. Pero no me logro decidir si es una critica o un piropo.
Todo el libro me tuvo en la orilla de mi asiento esperando ver el final que parecia venirse encima de Allied.
Muy bien escrito que pese a que ciertos datos no los entendi al cien, el libro describe muy bien el largo y doloroso proceso que duro tanto tiempo.
Al final esperaba algo peliculezco con un final feliz donde por fin destapan la verdad y vencen.
Pero es mas crudo que eso, limitandose a hacer notar las deficiencias en el sistema y de los gobernantes.
Al mismo tiempo interesante que parece ser que se acaba la historia justo antes de la crisis hipotecaria de 2008.
Muero de ganas de saber que paso despues!
Aun asi, una muy buena obra casi novelezca que me da un poco mas de entendimiento de historia, valuaciones, cortos y demas temas bursatiles.
Muy entretenido!!!
Todo el libro me tuvo en la orilla de mi asiento esperando ver el final que parecia venirse encima de Allied.
Muy bien escrito que pese a que ciertos datos no los entendi al cien, el libro describe muy bien el largo y doloroso proceso que duro tanto tiempo.
Al final esperaba algo peliculezco con un final feliz donde por fin destapan la verdad y vencen.
Pero es mas crudo que eso, limitandose a hacer notar las deficiencias en el sistema y de los gobernantes.
Al mismo tiempo interesante que parece ser que se acaba la historia justo antes de la crisis hipotecaria de 2008.
Muero de ganas de saber que paso despues!
Aun asi, una muy buena obra casi novelezca que me da un poco mas de entendimiento de historia, valuaciones, cortos y demas temas bursatiles.
Muy entretenido!!!
May 31, 2020
How would you like a corporate fraud saga presented to you? As a Hollywood drama, Netflix a documentary, a journalist-written novel-style book, or the a details-rich diary of the main actor.
This book falls in the last category - an in-depth review of a fraud story (that most of us never heard of) told by the investor who raised the red flags on Lehman brothers.
Be prepared for the book to get technical, in a very non-best-seller manner. You would almost not expect anything else from someone who investigated this for years and pleaded the case countless times to regulators, journalists and politicians in search of some decency on the Street.
Why is the book relevant today? Although Allied's story is about a relatively unknown lender covering its obscure accounting for over 5 years, in early 2008 Einhorn had a deja vu with Lehman Brothers and today he is probably seeing lots of them. Time will show if "value investing" is dead for good or not.
This book falls in the last category - an in-depth review of a fraud story (that most of us never heard of) told by the investor who raised the red flags on Lehman brothers.
Be prepared for the book to get technical, in a very non-best-seller manner. You would almost not expect anything else from someone who investigated this for years and pleaded the case countless times to regulators, journalists and politicians in search of some decency on the Street.
Why is the book relevant today? Although Allied's story is about a relatively unknown lender covering its obscure accounting for over 5 years, in early 2008 Einhorn had a deja vu with Lehman Brothers and today he is probably seeing lots of them. Time will show if "value investing" is dead for good or not.
September 24, 2021
“Got your book on a Friday, finished it Sunday. To me, like reading porn” - a quote from the back cover
Rings true to me. I never thought I’d finish a 400 page saga about finance in <24 hours. A very quick read as it is a fascinating account, but it gets tiring about 1/2-3/4 through.
It gets tiring only because you realize how it will end - The Govt sweeping a massive fraud under the rug. I can only imagine how PPP loans have fared…
This book will challenge your faith in government regulation of financial markets (and probably other industries) and is a must read.
A strong 4.5 stars and a 5 for me because 1) I am a CPA and have audited firms that originate SBA loans and 2) I personally know one of the main ‘characters’ in the story.
Accessible and captivating enough that I would recommend to anyone, including those uninterested in finance
P.S. Why doesn’t Goodreads allow half star ratings?
Rings true to me. I never thought I’d finish a 400 page saga about finance in <24 hours. A very quick read as it is a fascinating account, but it gets tiring about 1/2-3/4 through.
It gets tiring only because you realize how it will end - The Govt sweeping a massive fraud under the rug. I can only imagine how PPP loans have fared…
This book will challenge your faith in government regulation of financial markets (and probably other industries) and is a must read.
A strong 4.5 stars and a 5 for me because 1) I am a CPA and have audited firms that originate SBA loans and 2) I personally know one of the main ‘characters’ in the story.
Accessible and captivating enough that I would recommend to anyone, including those uninterested in finance
P.S. Why doesn’t Goodreads allow half star ratings?
June 17, 2022
Gripping tale, if you're into stock-picking / finance in general. Else, best to move along.
The depths to which Einhorn went to prove his point are admirable. However - at some point, not too many pages in, one does understand that "yup, Allied is a bad company, Einhorn's thesis sounds good enough, let's move on already", and yet he went ahead and invested a disproportionate percentage of his time and mental resources over ~6 years into a position that he himself acknowledged was not as big a driver of the portfolio. Wonder if his LPs pushed back on this point, while the saga was still playing out.
One important takeaway for me personally was on his distinction between how long the Allied and Lehman stories went on [6 and 1 year(s), respectively]; it is telling how crucial the contemporaneous macro/credit environments turned out to be, especially when involved in timing-sensitive short positions.
Highly recommended!
The depths to which Einhorn went to prove his point are admirable. However - at some point, not too many pages in, one does understand that "yup, Allied is a bad company, Einhorn's thesis sounds good enough, let's move on already", and yet he went ahead and invested a disproportionate percentage of his time and mental resources over ~6 years into a position that he himself acknowledged was not as big a driver of the portfolio. Wonder if his LPs pushed back on this point, while the saga was still playing out.
One important takeaway for me personally was on his distinction between how long the Allied and Lehman stories went on [6 and 1 year(s), respectively]; it is telling how crucial the contemporaneous macro/credit environments turned out to be, especially when involved in timing-sensitive short positions.
Highly recommended!
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