David Einhorn (Trades, Portfolio) was born in Demarest, New Jersey. His family relocated to Milwaukee in 1976 after his mother convinced his father that she wanted to live in the place where she grew up and where her family still resided. Einhorn and his family moved to Fox Point, a village in Milwaukee that had a population of approximately 7,600 people, in 1976, the year Einhorn and his family relocated there.
Einhorn spent a lot of his time in school working on the debate team, which affected his grades, although he gained critical thinking, organization and logic from his experiences on the debate team. All of these traits are quality characteristics of an intelligent investor. Upon graduation from high school, Einhorn went on to Cornell University where he majored in government, but he later became more interested in economics. Einhorn began to search for jobs that were on campus, and he found one working for Donaldson, Lufkin and Jenrette (DLJ). It offered the lowest paying salary, but Einhorn accepted the position because he liked the people who were involved in the recruiting process.
Over the course of the next two years Einhorn worked 100-plus hour weeks, often through the night, and his wife Cheryl would have to drop off a clean shirt for the next business day.
Einhorn then caught a break through some serendipity when Siegler, Collery & Company approached him to ask if he would like to work for a hedge fund. Gary Siegler and Peter Collery managed the SC Fundamental Value Fund, a mid-sized hedge fund with about $150 million under management. Einhorn stayed there until the company grew to about $500 million. It was a great place for Einhorn to gain knowledge and wisdom.
Einhorn went off on his own in 1996, founding Greenlight Capital with an SC colleague, Jeff Keswin. The firm was named by Einhorn's wife who gave him the “green light” to go ahead with his idea to found his own hedge fund.
In the first quarter of 2016 Einhorn added 8,546,203 shares this his holding of SunEdison Inc.
SunEdison, the largest global renewable energy company, manufactures advanced solar technology and develops, finances, installs and operates distributed solar power systems, delivering cost-effective electricity and services to its residential, commercial, utility and government customers.
SunEdison Inc. has a market cap of $563.78 million, an enterprise value of $12.94 billion, a P/B ratio of 0.42 and a quick ratio of 1.13.
The company’s CEO is Ahmad R. Chatila, who began working for the company in 2009. Prior to SunEdison, Chatila served as executive vice president of the memory and imaging division and head of global manufacturing for cypress semiconductor. In these roles he was responsible for strategy, financial performance and revenue growth for the memory and imaging division as well as global manufacturing for all divisions of Cypress.
Chatila holds a bachelor's degree in electrical engineering from Arizona State University, a master's degree in electrical engineering from Cornell University, and has completed the Stanford Executive program at Stanford University.
On Oct. 20, 2014, Einhorn wrote "Here Comes the Sun-E," where he described some of his reasons for investing in SunEdison.
- Einhorn believes that SunEdison is a well”run, financially savvy company, benefiting from an open ended growth opportunity trading at a bargain price.
- He likes the fact that the company focuses on smaller commercial or industrial customers like Home Depot or airports that otherwise buy electricity from utilities at retail prices.
- The price of solar module ASPs per watt has fallen from $5.70 per watt to 62 cents in 2014 and according to the video on SunEdison's homepage, ASPs per watt price range from 55 cents to 65 cents.
- Einhorn expects solar prices to fall an addition 20% by 2017 from 62 cents in 2014.
- He believes the core business is worth $15 per share, the Terraform stake is worth $4.50, the IDRs are worth around $9 and a few other assets are worth another $3. He has calculated the company’s intrinsic value to be worth $32 per share, which in his mind is a good distance from where the stock was trading at $18.55 on Oct. 20 2014, the time that Einhorn wrote the article.
I recently read Einhorn's book "Fooling Some of the People All of the Time: A Long Short Story." In the book he describes how he has spent weeks at a time researching companies' SEC filings and talking to their managers. He is relentless and has had some outstanding results throughout his career. However, 2015 was not a profitable year for Einhorn as his firm lost 20%. It was only the second losing year in Greenlight Capital's near 20-year history. The only other losing year that Einhorn had came in 2008, when the fund fell 23%. Einhorn has proved that he is an outstanding investor throughout his career and now he using his critical thinking, organization and logic to bet big on SunEdison's future.
