David Einhorn calls out Elon Musk and Chamath Palihapitiya, defends GameStop champion Roaring Kitty, and blasts market regulators in a new letter. Here are the 11 best quotes.

david einhorn
David Einhorn.

  • David Einhorn slammed regulators for failing to protect investors.
  • The Greenlight Capital chief defended GameStop investor Keith Gill.
  • Elon Musk and Chamath Palihapitiya supercharged the GameStop short squeeze, he said.
  • See more stories on Insider’s business page.

Elite investor David Einhorn blasted market regulators, called out Elon Musk and Chamath Palihapitiya for juicing assets, and praised GameStop champion Keith Gill in a letter to Greenlight Capital investors this week.

The Greenlight president also highlighted “The Big Short” investor Michael Burry’s Twitter exit, and pushed for greater scrutiny of Archegos Capital, the family office that blew up in March. Einhorn’s latest letter was obtained by ValueWalk.

Here are Einhorn’s 11 best quotes, lightly edited and condensed for clarity:

1. “The Fed wants to be ahead of the curve on the downside to protect the stock market and corporate bondholders the economy. Behind the curve is fine on the way up no matter how frothy the stock market the recovery is.” – suggesting the Federal Reserve cares more about stock prices and corporate profits than the economy.

2. “If we swing a little less hard, we should hit more balls.” – on his decision to short fewer individual stocks after several of Greenlight’s positions were hit during the meme-stock frenzy.

3. “Investors discussing why they think GameStop (or any other stock) should go up or down ought to be encouraged. There is no reason to drag anyone before Congress for making a stock pick.” – defending Keith Gill, who goes by Roaring Kitty on YouTube, for his “great call” on GameStop.

4. “The real jet fuel on the GameStop squeeze came from Chamath Palihapitiya and Elon Musk, whose appearances on TV and Twitter, respectively, at a critical moment further destabilized the situation.” – Einhorn suggested Palihapitiya intentionally disrupted Robinhood because it competes with one of his investments, SoFi.

5. “If regulators wanted Elon Musk to stop manipulating stocks, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla’s shares in 2018. The laws don’t apply to him and he can do whatever he wants.”

6. “Quasi-anarchy appears to rule in markets. Sure, Dr. Michael Burry, famed for his role in ‘The Big Short,’ reportedly received a visit from the SEC after tweeting warnings about recent market trends – and decided to stop publicly speaking truth to power. But for the most part, there is no cop on the beat.” – complaining that regulators have been defanged, and corporate executives can break the rules with impunity.

7. “Hometown International owns a single deli in rural New Jersey, yet it reached a market cap of $113 million in February. The largest shareholder is also the CEO/CFO/treasurer and a director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing.” – underscoring the number of questionable companies that regulators are overlooking.

8. “From a traditional perspective, the market is fractured and possibly in the process of breaking completely.” – highlighting a dangerous lack of regulation and the risk of casual investors getting scammed.

9. “It was as if Bernie Madoff had been told to pay a small fine and stop ripping off New Yorkers, but to go ahead and have fun with the Palm Beach crowd.” – criticizing regulators for only slapping the Tether crypto exchange with a $19 million penalty and a New York ban.

10. “If Congress wants to understand why GameStop stock did what it did, or more recently how the ‘Arch-Egos’ fund cornered the market in a handful of stocks, it would be better to call to account the absentee regulators and their philosophical backers.”

11. “‘Arch-Egos’ was able to buy up most of the float of GSX Techedu, causing the stock to soar 400% in the face of unrefuted allegations of massive fraud. The SEC has an ongoing investigation of GSX but appears to not have noticed a single fund (or a small group of funds) essentially cornering the market. A traditionalist could say this was market manipulation and transparently illegal.”

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Famed Reddit trader Keith Gill has piled more money into his GameStop investment

Keith Gill Reddit Wall Street Bets Deep Effing Value Washington.JPG
Keith Gill, an individual online investor in GameStop, testifies during an entirely virtual hearing of the House of Representatives Committee on Financial Services entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide?”

  • Keith Gill has put his money where his mouth is and purchased more shares of GameStop, according to a screenshot posted to Reddit.
  • Gill bought 50,000 shares of the video-game retailer, bringing his total common stock stake to 100,000 shares.
  • Gill explained his bullish case for GameStop stock in his testimony to Congress last week.
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Famed Reddit trader Keith Gill has increased his stake in GameStop, according to a screenshot he posted to Reddit on Friday.

Gill, who goes by Roaring Kitty on YouTube and Twitter and DeepF—ingValue on Reddit, now owns 100,000 shares of the video-game retailer, representing a double of his previous common share stake of 50,000 shares. Gill also owns call options on the stock, worth about $1.5 million as of Friday. 

In total, Gill’s current stake in GameStop, between his stock and call options, is worth about $5.5 million. Gill has already realized profits in his GameStop investment of more than $10 million. 

Gill initially invested in GameStop in June 2019, when shares were trading below $10. Last month, the stock topped out at $483 after an epic short-squeeze was sparked by members of Reddit’s WallStreetBets forum. Gill’s initial $50,000 investment in GameStop was briefly worth $48 million amid the short-squeeze frenzy last month.

Gill testified to Congress last week and explained his bullish thesis on GameStop, which is predicated on a potential turnaround in the retailer, a shift to e-commerce sales, and the renewed video game console sales cycle from Sony and Microsoft.

Shares of GameStop traded up as much as 20% on Monday.

roaring kitty gamestop.JPG
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What happened last week? The House held its GameStop hearing, Texans lost power, NASA’s Mars Rover landed, and Ted Cruz went to Cancun.

Perseverance Rover
NASA’s Perseverance rover.

What happened last week?

NASA’s Perseverance rover landed safely on Mars last week. Mission control hosted a live broadcast during the landing. The rover started beaming back photos, and, in the coming days, it plans to launch a small helicopter to study the Red Planet. You can read all about the biggest space stories of the year here

Here’s what else happened last week.

Robinhood and Reddit went (virtually) to Washington

Keith Gill Reddit Wall Street Bets Deep Effing Value Washington.JPG
Keith Gill testifies during a House subcommittee virtual hearing.

The House Committee on Financial Services last week held its hearing on the GameStop saga, which included an appearance from investor Keith Gill, a.k.a. Roaring Kitty and u/DeepFuckingValue.

Gill told the committee: “I am not a cat. I am not an institutional investor. Nor am I a hedge fund.”

Robinhood CEO, Vlad Tenev, also appeared. He apologized to the family of a 20-year-old trader who died by suicide after the Robinhood app showed a negative balance of about $730,000. 

Texans lost power during a winter storm

texas freeze
Icicles hang off the State Highway 195 sign in Killeen, Texas.

A winter storm hit Texas, cutting power to millions, and causing as much as $50 billion in damage. The storm brought such unusual cold that it confused weather satellites

As the storm hit, António Guterres, UN secretary-general, said it was clear climate change was making storms worse.

“If you look at hurricanes, if you look at storms, but also if you look at heat waves and cold waves, they are becoming more extreme because of climate change,” Guterres said.

Senator Ted Cruz went to Mexico

cruz airport police
Sen. Ted Cruz checking into Cancun International Airport on Thursday.

As a winter storm knocked out power for millions of Texans, senator Ted Cruz boarded a plane headed to Cancun, the Mexican resort town.

The forecast called for low 80s and sun, according to The Weather Channel. But Cruz headed back to Texas a day after arriving, amid mounting criticism about the timing of his trip. 

“With school cancelled for the week, our girls asked to take a trip with friends,” Cruz said on Thursday in a statement.

Here’s a timeline of how senator political rivals Ted Cruz and Rep. Alexandria Ocasio-Cortez reacted to the disaster. 

ICYMI

Apple CEO Tim Cook
Tim Cook.

Although recent reports said Apple held brief talks with Nissan about developing electric cars together, Nissan repeatedly denied it had been in talks with the company.

The week before last, South Korean manufacturer Hyundai denied being in talks with Apple over the vehicle.

Here’s what happened the week before last. See you next week. 

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Former SEC Chair Jay Clayton says GameStop trading was not a pump-and-dump scheme and praises transparency from ‘Mr. Kitty’

GameStop millionaire Roaring Kitty
GameStop millionaire Roaring Kitty


Former SEC chairman Jay Clayton told CNBC on Friday that trading activity during the GameStop market frenzy was not a “pump and dump scheme,” and Thursday’s hearing demonstrated transparency from social media investors.

Clayton says the SEC will likely take a look at whether there was coordinated behavior to manipulate GameStop’s stock price that soared 1,022% during the January rally,  but “the quick answer is that “no pump and dump scheme was present. 

“The overall participation in this, it was fairly transparent what was going on here,” Clayton said. “I must admit to being entertained by Mr. Kitty. You saw that people were very transparent about what they were doing and why they were doing it, which was fairly interesting.” 

During Thursday’s hearing, Keith Gill, also known as “Roaring Kitty”, emphasized that his reasoning for buying GameStop stock and sharing his position was purely based on his belief that the company was dramatically undervalued, and he was clear explaining his fundamental case for buying GameStop to his social media followers. 

Gill told the House Financial Services Committee that he still likes GameStop’s stock and he would buy it at its current price of roughly $43. 

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Michael Burry compared GameStop to ‘The Big Short’ – and said he would cash out if he won big on the stock

Michael Burry

  • Michael Burry compared the GameStop squeeze to “The Big Short” as a unique opportunity.
  • The investor highlighted the stock’s huge short interest, small market cap, and how unloved it was.
  • Burry said that if he had made life-changing money on GameStop, he would cash out.
  • Visit Business Insider’s homepage for more stories.

Michael Burry compared the GameStop saga to “The Big Short” and suggested big winners should cash out in tweets on Friday and Saturday that have now been deleted.

“There really can’t be another GME,” the investor said. “Nothing else is/was even close to as shorted (100+% of float), so small (microcap), and so hated/ignored/dismissed prior to the #thebigshortsqueeze.”

“It was a uniquely perfect setup,” the Scion Asset Management boss continued. “There won’t be another like it. Much like #thebigshort.”

Read more: Bank of America warns of 3 looming catalysts that could send the bull market crashing in 2021 – and shares how to position for the ‘big change’ as the WallStreetBets crowd fights against the system

Burry is best known for his billion-dollar bet on a US housing-market crash in the mid-2000s, which was chronicled in Michael Lewis’ book “The Big Short.”

The investor laid the groundwork for GameStop’s astronomical rally this month when he disclosed a 3% stake in the video-game retailer in August 2019, and began pushing for changes at the company.

Chewy cofounder Ryan Cohen followed his lead by taking a 13% stake in the retailer last year, and parlaying it into three board seats earlier this month.

Hordes of amateur investors, buoyed by Burry and Cohen’s votes of confidence, have seized the chance to squeeze short-sellers and make fast money by driving GameStop’s stock price up as much as 2,500% this month.

Read more: A veteran options trader breaks down the intricate strategy that Reddit traders used to outsmart Wall Street’s bet against GameStop – and shares 2 ways the parabolic rally could permanently alter the stock market

Burry highlighted the story of Keith Gill, the casual investor who goes by “Roaring Kitty” on YouTube and u/DeepFuckingValue on Reddit, in another tweet.

Gill plowed $54,000 into GameStop call options in June 2019 after determining the retailer’s stock was undervalued. He boasted $32 million in GameStop calls and shares and $14 million in cash as of Saturday, according to an unverified screenshot he posted on Reddit.

“Hey, $GME is now a $stonk and may go >$1000, but if I made a life-altering amount in this stock, I’d punch out,” Burry tweeted.

Read more: GameStop has surged more than 600% in the past week. 3 experts break down where the stock could go from here as Reddit’s army of traders take profits and search for their next targets.

“Main Street has Wall Street by the cojones. Great story/LOVE it. Tee it: bulls make money, bears make money, #pigsgetslaughtered,” he added.

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