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Einhorn Bullish on Technology, Clarifies Bubble Call

David Einhorn
Greenlight Capital Founder David Einhorn. Photographer: Scott Eells/Bloomberg

David Einhorn, the hedge-fund manager who warned of a bubble in technology stocks two weeks ago, refined his stance by saying he’s bullish on the industry and that companies including Apple Inc. look underpriced.

“I’d like to clarify Greenlight’s remarks about a new technology bubble,” Einhorn said today in a conference call held by Greenlight Capital Re Ltd., the reinsurer where he is chairman and oversees investments. “In general, we are bullish on technology and technology stocks.”

The comments elaborate on an April 22 investor letter when he described an unjustified surge in technology stocks, reminiscent of the late 1990s, and said he was betting against a group of them. Einhorn’s holdings include investments in iPhone maker Apple, Micron Technology Inc. and Marvell Technology Group Ltd., which are “quite inexpensive,” he said on today’s call.

“However, we have identified a number of momentum technology stocks that have reached prices beyond any normal sense of valuation,” he said. “We believe that they are in a bubble and we have shorted a good number of them in what we call the ‘bubble basket.’”

There are dozens of companies in that group, he told Bloomberg Television’s Erik Schatzker and Stephanie Ruhle in an interview today, without providing specifics. The stocks are “completely out of control in terms of their valuation,” he said.

‘Massively Long’

Einhorn said yesterday at a charity event in New York that Athenahealth Inc., which provides Internet-based business services for physician practices, is among the companies he’s betting against. The software maker plummeted 13 percent to $110.70 at 11:57 a.m. in New York. Einhorn said yesterday that he thought it was worth about $50 a share.

His hedge-fund firm, Greenlight Capital Inc., is best known for wagering on a decline in Lehman Brothers Holdings Inc. before the bank collapsed in 2008. He told Ruhle and Schatzker that while Athenahealth shares are overpriced, it has a viable business and should’t be compared with Lehman, which he accused of misleading accounting. The technology bubble is smaller than the one more than a decade ago, he said.

“We are massively long tech,” Einhorn said.

The Cayman Islands-based reinsurer provides Einhorn with float, or premium dollars held before paying claims, to make wagers on stocks and other assets. The reinsurer slipped 2.1 percent to $32.06 after reporting a first-quarter loss late yesterday on investments.

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