David Einhorn Speech - "Accounting Ingenuity"

Ira W. Sohn Investment Research Conference
David Einhorn, Greenlight Capital, “Accounting Ingenuity”
May 21, 2008

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I appeared at this conference six years ago and joked that my wife, while trying to help me prepare my presentation of the Allied Capital analysis, had a hard time staying awake. This is pretty ironic, since the ensuing fallout from that speech has cost us a substantial amount of sleep. Over the past six years I have learned a lot and grown a little, and formed some strong views about Wall Street regulation and the muzzle it often places on free speech.

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I think that research conferences like these are important. Of course, this one is particularly worthy because it supports a great cause: The Tomorrows Children’s Fund. Further, it is important for investors to discuss market information and analysis to help sort the good companies from the bad. But, there is a structural impediment in our financial markets that creates a massive disincentive to share research about companies doing bad things.

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I can fully understand why other investors might decline to appear in this forum or to share a critical analysis. Who could blame them? The cost is high (think lawyers here), it extracts an enormous personal toll, and there are better ways to raise money for a good charity. I have decided to persist because I believe it is important and the right thing to do.

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Book: Fooling Some of the People All of the Time: A Long Short Story