Fooling Some of the People All of the Time
It is a surprisingly dark story, in which Mr. Einhorn's usual winning touch vanishes for most of the narrative.As he struggles to figure out why, he appears naïve at certain times, petulant at others. But he presses on anyway, confident that vindication will come. It never really does.
The story starts in 2002, with Mr. Einhorn rightly proud of his ability to spot companies with shoddy accounting practices. He sells their shares short, betting on a stock-price collapse.
Generally he wins big within months. Convinced that he has found another juicy target, he zeroes in on Allied Capital, a business- financing company that seems to dawdle when it comes to marking down the value of its troubled loans.
This book appears to be well worth reading, for its discussion of how the market for accounting fraud - short selling- doesn't work.
This might be bad news for Barry Minkow, who is currently shortselling Herbal Life arguing that their business model is based on a fraud.
The forward to the book is written by Joel Greenblatt - a noted investor who has his own fascinating no brainer or lounge chair investment strategy.
