| NEW YORK
NEW YORK May 5 Hedge fund manager David Einhorn
on Monday lived up to his reputation for being able to send a
stock price spinning lower by just opening his mouth.
Shares of athenahealth Inc, the health information
technology company, tumbled 13 percent in extended trading soon
after Einhorn said his Greenlight Capital is shorting the stock.
As fears percolate that a new bubble is forming, a number of
prominent managers at the Sohn Investment Conference cited
favorite asset picks, not to buy but instead to sell short in
hopes of buying them back for less after they decline.
After rising more than 30 percent last year the Standard &
Poor's 500 index is barely positive and having trouble moving
Traditionally investors presenting their best ideas here
discuss stocks they hope will rise. There was plenty of that
here on Monday with William Ackman talking about mortgage
companies Fannie Mae and Freddie Mac, and
Larry Robbins touting health maintenance organizations Humana
Inc and WellPoint Inc.
But Einhorn, who unveiled his bet against Lehman Brothers at
this conference six years ago, unveiled another short instead,
saying athenahealth's share price could drop 80 percent from its
In his quarterly letter to investors Einhorn raised concerns
that another bubble was forming and to protect his investors he
created a "Bubble Basket" of momentum stocks.
At the Sohn Conference he teased the audience by saying he
would reveal one of those shorts but stay silent on the others.
Daniel Loeb, who was not presenting at Sohn on Monday, also
sounded a cautious note in his quarterly letter last week by
saying that the stock market was showing "bubblelicious
Like Einhorn, Jeffrey Gundlach, well known for his bond
investments, discussed a short bet that underscored his belief
that the housing market is more fragile than many economists
Gundlach, who co-founded $49 billion DoubleLine Capital,
suggested shorting the SPDR S&P Homebuilders ETF, saying
that he does not expect a rebound in single-family housing.
Expected rises in mortgage rates plus heavy student loan
debt will make it hard for young people to save for a down
payment and baby boomers are likely to flood the market with
existing homes when they sell out to help finance their
Similarly Chris Shumway, who runs a private investment firm
Shumway Capital, said investors should bet against the Chinese
currency, saying China has limited options to deal with slowing
The negative notes also extended to the commodities market
where Zach Schreiber, chief investment officer of hedge fund
PointState, said he is short U.S. crude oil. "We believe
crude oil is going lower, much lower," he noted.
"We don't think U.S. oil will slow production significantly
until we go below $80-85 dollars per barrel," he said.
Short sellers suffered last year as the market raced higher.
But one of last year's presenters at Sohn, Jon Jacobson who runs
Highfields Capital, scored a winner by going short Digital
Realty Trust. Over the last 12 months the position outperformed
the market by 41 percent.
(Reporting by Svea Herbst-Bayliss; Editing by Richard Chang)