My friend Kiley Austin-Young gave me a copy of an incredible book which I devoured over the course of my Colorado trip (read about 80% of the book on the flight there/back.) The book is called Fooling Some of the People All of the Time and it’s written by star hedge fund manager David Einhorn (Greenlight Capital). David Einhorn recently rose to more fame with his public short of Lehman Brothers back in Spring of ‘08, which led to Lehman’s CFO being fired.
The book chronicles David Einhorn’s drawn out battle against Allied Capital, a company that David Einhorn publicly shorted. What starts out as small balance sheet discrepancies turns into a drawn out investigation which results in mountains of evidence of fraud in Allied Capital subsidiaries, government (SEC) incompetency, and an alarming vilification of short sellers. The book is really one mans journey for truth and fairness. In fact, he donates all of the book profits and all proceeds from the short sale of Allied Capital to charity.
It’s truly scary to read about how failure riddled the SEC is, how Allied Capital was able to lure away government lawyers to work for them as lobbyists, how Allied Capital management consistently showed a disregard for the truth and refused to own up to mistakes/problems. Allied Capital even wire tapped David Einhorn’s phones! The sell-side analysts show a complete disregard for mounting evidence against Allied Capital and constantly shove their “buy ratings” to anyone who will listen. I think the part that really got me was the lack of serious investigations at the SEC and the rampant bureaucracy at other government branches involved in the book. He also writes about the financial media’s lack of concern for the truth. Basically, he shows the world the true dark side to the financial world.
This book reads like a detective mystery book. Only it’s all real and backed up with loads of publicly available documentation. It’s a fantastic insight into the hedge fund world, Wall Street, and the government. And best of all the book proceeds and the killing that he made from shorting this fraud of a company are going to fund some great causes.
I can’t recommend this book enough.
