David Einhorn, founder and president of Greenlight Capital, is perhaps best known for shorting Lehman in 2007. He delivered the famous "short the mother fracker" call at last year's Sohn Conference. No matter what he says, investors pretty much respond in real time. Shares of Yelp Inc. (YELP) jumped 3% yesterday after Einhorn announced he had a stake in the company.
At this year's Sohn, he started by joshing fellow Sohn speaker Chamath Palihapitiya, Founder and CEO of Social Capital LLP, about his Amazon.com Inc. (AMZN) strong buy: "I've played poker with him; on this I call." Interspersing his talk with New Yorker cartoons and puns about cats, he noted that, contrary to popular belief, Caterpillar Inc. (CAT) is not at a trough and General Motors Co (GM) is not at a peak. Moreover, their multiples, 6 and 22 respectively, are "wrong."
"The reality is we're much closer to mid-cycle for both companies than to a peak or trough, and the investors are assigning the wrong multiple to both companies."
Caterpillar suffered when iron ore dropped, and "we believe that resource revenue will fall further," said Einhorn. He foresees problems with the energy and transport sector of the company, as their equipment sales fall idle.
GM, on the other hand, has shed its bad blood and is "now focused on four brands: Chevy, Cadillac, GMC, and Buick, and is financially healthy." Furthermore, Einhorn does not subscribe to the mainstream investing sentiment that the advent of ride sharing will have an impact on car sales.