The Stock Market is Almost 'Completely Broken' - Einhorn
- S&P 500, Dow end at record highs as weak jobs data eases rate worries
- U.S. Added Only 266,000 Jobs in April, Well Below Estimates
- Roku (ROKU) Surges After Crushing Profit Estimates to Prompt an Upgrade to 'Buy' at Loop Capital
- Dollar broadly weaker after U.S. jobs data disappoint
- Square (SQ) Tops Q1 EPS by 25c
News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.
Citing the GameStop (NYSE: GME) and Archegos situations, among others, famed hedge fund manager David Einhorn of Greenlight Capital said because there is no cop on the beat, the stock market is just about "completely" broken.
"It’s as if there are no financial fraud prosecutors; companies and managements that are emboldened enough to engage in malfeasance have little to fear," Einhorn commented in his quarterly letter to shareholders. "From a traditional perspective, the market is fractured and possibly in the process of breaking completely," he added.
In addition to GameStop and Archegos, Einhorn cited several examples, including:
- Last year, on one day in June, the stocks of about a dozen bankrupt companies roughly doubled on enormous volume.
- Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey. The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. "The pastrami must be amazing," Einhorn quiped.
- Tether is a cryptocurrency that is always worth a dollar... The OAG conducted a two-year probe and found that Tether deceived clients and the market by overstating reserves and hiding approximately $850 million of losses around the globe... Did the OAG shut down Tether? Did anyone get arrested or even lose their job? Was the regulatory infrastructure changed to make sure this doesn’t happen again? No, of course not.
Einhorn also criticized regulators handling of Tesla's (NASDAQ: TSLA) CEO Elon Musk, who he said helped add "jet fuel" to the GameStop short squeeze. "If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla’s shares in 2018. The laws don’t apply to him and he can do whatever he wants," Einhorn commented.
"If Congress wants to understand why GME did what it did, or more recently how the Arch-Egos fund cornered the market in a handful of stocks, it would be better to call to account the absentee regulators and their philosophical backers," he concluded.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Ark's Cathie Wood thinks Twitter (TWTR) tipping could be bigger deal than anticipated
- Take Five: Spring is (finally) in the air
- GameStop (GME) Upgraded to B from B- by S&P, Outlook Stable
Create E-mail Alert Related CategoriesAnalyst Comments, Hedge Funds, Trader Talk
Related EntitiesGreenlight Capital, David Einhorn, Tesla
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!