FILE PHOTO: David Einhorn, President of Greenlight Capital, speaks during the 2019 Son Investment Conference in New York City, the United States, on May 6, 2019. REUTERS / Brendan McDermid / File Photo
April 16, 2021
By Svea Herbst-Bayliss
BOSTON (Reuters) – Investor David Einhorn said Thursday that well-known venture capitalist Chamath Palihapitiya and entrepreneur Elon Musk threw “jet fuel” on GameStop Corp’s trading frenzy in January when the video trader’s shares rose 2,000% and later one Hearing in the US triggered Congress.
Einhorn, who runs hedge fund Greenlight Capital, also said U.S. lawmakers seeking answers on how daytraders could get established hedge funds out of control of GameStop’s stock price should investigate regulators instead of investors.
Amateur investors organized on social media sites like Reddit got on a persistent buying spree three months ago, winning Wall Street hedge funds that slashed GameStop’s shares or betting that the price would fall.
The wild price fluctuations caused heavy losses for the Melvin Capital hedge fund, among others. The US legislature responded by organizing a hearing for the US House of Representatives in February to interview hedge funds, a day trader and the head of the online trading app Robinhood.
Einhorn on Thursday accused Palihapitiya and Tesla Inc CEO Musk of throwing what he called “jet fuel” at the GME squeeze. His comments appeared in a quarterly letter to Greenlight Capital investors that was seen by Reuters.
Palihapitiya and Musk officials did not immediately respond to requests for comment.
Einhorn said it was appropriate for investors to discuss stocks.
“Investors discussing why they think GameStop (or any other stock) should go up or down should be encouraged,” he wrote. “There’s no need to pull someone out of Congress to make a stock pick.”
Einhorn said Palihapitiya, who appeared on television in late January and dismissed criticism of day traders, may have tried to harm Robinhood for competing with fintech startup SoFi, which was backed by Palihapitiya.
And Musk, whose Tesla shares Einhorn has long bet against, plunged into the drama by tweeting “Gamestonk !!” and adding a link to the Reddit forum where day traders discussed GameStop.
“If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a flick of the wrist when they accused him of manipulating Tesla’s stocks in 2018,” wrote Einhorn.
Einhorn said that if lawmakers wanted to understand “why GameStop did what it did … it would be better to hold absent regulators and their philosophical supporters accountable.”
He advised investors that his Greenlight Capital Funds were essentially flat in the first quarter, down 0.1%, while the S&P500 index rose 6.2%.
(Reporting by Svea Herbst-Bayliss in Boston; Editing by Matthew Lewis)
This article originally appeared on www.oann.com