long-term analysis

My guest today is David Einhorn. David is the President of Greenlight Capital, a long-short hedge fund that he co-founded in 1996. He is a prominent value investor with a reputation for rigorous security analysis. In 2002, he revealed a short position in Allied Capital, which was ultimately proven correct and similarly in early 2008, he told the Sohn Conference he was short Lehman Brothers. Over his near three decades managing money at Greenlight, he has delivered impressive returns but it has not been without challenge. Our conversation covers both the highs and lows, his views on the current banking issues, and how he has evolved as an investor. Please enjoy my great conversation with David Einhorn. The Sohn Conference 2023 Listen to Founders Podcast For the full show notes, transcript, and links to mentioned content, check out the episode page here.  ----- This episode is brought to you by Tegus. Tegus, the modern research platform for leading investors. I’m a longtime user and advocate of Tegus, a company that I’ve been so consistently impressed with that last fall my firm, Positive Sum, invested $20M to support Tegus’ mission to expand its product ecosystem. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick. ----- Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.  Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @patrick_oshag | @JoinColossus Show Notes (00:03:50) - (First question) - Why he is glad he started his fund in 1996 rather than today (00:05:58) - His view of how companies’ personnel and goals have changed since the 90’s (00:07:01) - His counter-momentum approach to markets and how he views current trends (00:11:17) - The jelly-donut theory of monetary policy (00:14:46) - His outlook on inflation and the Fed from a fiscal perspective (00:16:48) - The evolution of Greenlight’s portfolio and philosophy through history (00:20:11) - Periods in his career that stand out as the most challenging (00:25:58) - How tech advances have influenced his core concept of figuring out worth (00:28:17) - His three-step process to picking investment targets (00:29:10) - The companies he has learned the most from studying (00:30:52) - His experience with investing in Apple (00:33:33) - How he considers the notion of quality in a business (00:35:05) - His views on shorting, concentration, and holding periods (00:38:37) - What he learned from a deep dive on airline businesses (00:40:31) - His perspective on sports franchises as an asset (00:42:12) - His new interest in poker and how he got so good at it (00:45:22) - Applying traditional valuation styles to the modern market (00:47:13) - Cultivating relationships with his limited partner investors and his team (00:54:26) - His perspectives on the insurance space (00:57:33) - The health of the economy and financial infrastructure as he understands it (01:01:51) - How he thinks about housing and the construction industry (01:03:54) - How AI and other high-tech are affecting his investment decisions (01:05:28) - Other topics on his mind, from national politics to social psychology (01:08:22) - The kindest thing anyone has ever done for him

My guest this week are Matt Smith and Ian singer of Deep Basin Capital, a hedge fund specializing in the energy sector. I first met Matt almost 10 years and, in that time, I’ve grown to respect him as much as any investor that I’ve ever met. Now having spent time with Ian, who specializes in oil and gas field exploration companies and the rest of the Deep Basin team, I have similar respect and admiration for all of them. Deep Basin does almost the exact opposite of what us quants do. In fact, their entire goal is to build a portfolio of mostly idiosyncratic or stock specific risk, the very thing us quants mostly remove from portfolios. Deep Basin positions the portfolio to make a series of carefully constructed bets, long and short, without taking market risk, style-factor risk, or even commodity risk. They use a hybrid fundamental and quantitative process which we explore in detail.  This is definitely another good example of who we are all up against in public markets. What makes this story unique is that we are investors in Deep Basin’s management company and so have a clear interest in their ongoing success. Listeners know that I want to be as transparent as possible on this podcast so we event spend a little time telling the story about how it all came together a few years ago. I have learned a ton about investing from my countless hours with this team and hope that this conversation gives you a glimpse into what is happening at the cutting edge of investing in the world of hedge funds. Please enjoy my conversation with Deep Basin For more episodes go to InvestorFieldGuide.com/podcast. Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub. Follow Patrick on Twitter at @patrick_oshag   Books Referenced Expectations Investing: Reading Stock Prices for Better Returns   Show Notes 2:47 – (First Question) –  Looking at the universe of the energy space that they are focusing on 7:48 – Breaking down the important components and their labels in this space 10:27 – What makes energy companies distinct from the broader market. 12:52 – How the isolate unique value creation 14:58 – Ian’s take on the upstream part of the business where he has spent a lot of time 18:35 – How does Deep Basin use data and what edge do they derive from it. 21:31 – What insight are they looking for from updated well data 23:59 – How do they use combine the business value that they measure with the market price that is being forecasted             24:40 – Expectations Investing: Reading Stock Prices for Better Returns 29:34 – How do they build an actual portfolio 31:51 – Their systematic approach to energy investing 37:53 – What are their thoughts about using leverage when making investments in the energy space 40:53 – A look at the changes to the hedge fund industry over the entirety of their careers 45:46 – Defining the culture of Deep Basin 49:15 – The story of how OSAM and the O’Shaughnessy’s came to be investors in the Deep Basin 54:13 – Kindest thing anyone has done for each of them   Learn More For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag