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| Fooling Some of the People All of the Time: A Long Short Story | 
 enlarge | Author: David Einhorn
Creator: Joel Greenblatt
Publisher: Wiley
Category: Book
List Price: $29.95
Buy New: $16.24
You Save: $13.71 (46%)
New (43) Used (11) from $16.24
Avg. Customer Rating:  34 reviews
Sales Rank: 1868
Media: Hardcover
Number Of Items: 1
Pages: 380
Shipping Weight (lbs): 1.5
Dimensions (in): 9.2 x 6.2 x 1.4
ISBN: 0470073942
Dewey Decimal Number: 332.620973
EAN: 9780470073940
ASIN: 0470073942
Publication Date: May 2, 2008
Availability: Usually ships in 1-2 business days
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Product Description
Fooling Some of the People All of the Time is the gripping chronicle of the ongoing saga between author David Einhorn’s hedg fund, Greenlight Capital, and Allied Capital, a leader in the private finance industry. Page by page, it delves deep inside Wall Street, showing why the $6 billion hedge fund decided to short shares of Allied Capital and how Allied responded with a Washington, D.C.-style spin-job—attacking Einhorn and disseminating half-truths and outright lies.
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| Customer Reviews: Read 29 more reviews...
 Among the best investment books I've ever read April 25, 2008
53 out of 74 found this review helpful
David Einhorn's new book about his long-running battle with Allied Capital is an amazing book. More than just an investing book, it's an investing novel, with good guys and bad guys and clueless, gullible and conflicted investors, regulators, Wall St. "analysts" and media. I stayed up all night to read it.
The review by George Anders in the Wall St. Journal recently missed the point. Anders focused on Einhorn, highlighting his tremendous track record and saying he's gutty, tenacious, patient and disciplined, but that's not the story! The real story is what Allied Capital has done and the utter failure of regulators, investors and the media to do anything about it. I don't see how it's possible to read this book and not come to the conclusion that this company has done -- and continues to do -- all sorts of terrible things, but rather than expressing an opinion on this, Anders makes it seem like a he-said-she-said tempest in a teapot and, reading between the lines, seems to be saying that because the stock hasn't plunged, that Einhorn's investment thesis has been proven wrong. It hasn't -- but it can sometimes take many years.
(Full disclosure: Funds I manage are short the stock of Allied Capital and I'm mentioned briefly in the book.)
 Allied's Hefty Dividend Checks Have Cleared For Over 40 Years May 5, 2008
32 out of 92 found this review helpful
Einhorn is not alone in believing that financial statements are sometimes a form of creative writing. But dividends are not; when a dividend check successfully clears, there can be absolutely no doubt that the money really was in the bank. And given that Allied Capital not only pays a hefty dividend but has also defended and increased its hefty dividend for more than four decades, it is simply silly to mount the kind of bear raids that Einhorn has repeatedly mounted on Allied Capital during the last decade. All he has done has been to make it possible for savvy investors to get pieces of a very successful enterprise at bargain prices.
 David Einhorn isn't fooling anyone but himself July 7, 2008
26 out of 28 found this review helpful
Overview:
David Einhorn, founder of a successful Wall Street hedge fund, has written a book which describes the controversy surrounding David's hedge fund selling short Allied Capital. While David makes some very damning points about Allied's management, he does not prove his central thesis, namely that Allied engaged in fraud. Despite this flaw, the book is still a worthwhile read.
Background
David's conclusion about ALD were based on his previous experience shorting Sirrom, a company that *was* a fraud and subsequently went bankrupt. Sirrom was in the same industry as Allied, namely loans to small businesses. David concluded that ALD must be a fruad since they, like Sirrom, did not write down the value of troubled assets in a timely manner and management was less than truthful when confronted with this fact (pg. 52). Referring to ALD's managers, David writes "people who are willing to lie about small things have no problem lying about big things" (pg. 64). The rest of the book, almost 300 pages, is David's attempt, unsuccessful in my estimation, to substantiate this claim.
Why "Fooling..." is Worth Reading
Despite the fundamental flaw of stating a thesis that he then fails to substantiate, "Fooling..." is still a worthwhile read for four reasons:
1) David has made a lot of money, and his investment methodology is explained in detail. This is unique, and worthy of serious study.
2) The book documents the inability of regulatory authorities to protect investors from dishonest management practices. Very sobering. Allied did engage in a number of unauthorized accounting practices that victimized it's investors, and none of it's managers were ever punished. In fact, they got rich at their investors expense.
3) It shows that even superstar investors are human. On display is how a very rich man's obsession with proving he is right drove him to stick with a losing position, pouring time and resources into what became a personal crusade. I have made this mistake on a much smaller scale, and I imagine most investors have. Obviously, the book did not intend to teach this lesson, but there it is.
4) Allieds is a "Business Development Corporations" (BDC), and the book explains how BDCs operate and make their money. David opines that BDCs are similar to junk bond funds, but are riskier (pg. 48). BDCs in general are very lucrative and pay high distributions when the USA economy is doing well, and tend to lose a lot of money during a recession. There is a lot of info here that investors can put to work.
Synopsis of Events:
David Einhorn, who is about as successful as a man can be on Wall Street without being Warren Buffet, concluded that Allied Capital is a fraud. He invested almost 8% of his hedge fund selling ALD short (he profits if ALD goes down, loses if it goes up). He then proceeded to try to get regulatory authorities, including the SEC and Eliot Spitzer (at the time the NY Attorney General) to investigate improper practices at Allied. For his efforts, he got investigated himself by these authorities. He recently published "Fooling Some of the People All of the Time" to prove he is right, and the rest of the world (SEC, financial press, investors, the stock market) are all wrong. David calls ALD a "ponzi scheme" (pg. 330), continually raising new capital to pay the dividend. While this claim should be easy to substantiate, no evidence or proof of any kind is offered. David predicts that eventually, ALD's fraudulent practices will cause the demise of the company. When the book was published, despite 6 years of intense effort on David's part to expose ALD, he lost money on his position (when you factor in dividends which he had to pay having shorted the stock).
Epilogue
Today, 8 years after his accusation were first made, ALD is still in business. While it's stock price has under-performed the market, when you factor in the dividends (actually tax distributions) it has been a pretty decent investment. It is hard to imagine how a company that systematically defrauded it's investors could survive 8 years of constant hostile scrutiny from a smart and rich hedge fund, paying hefty dividends the whole time. If it was a ponzy scheme, it should have imploded years ago. As far as I am concerned, this fact, combined with David's lack of hard evidence, disproves his thesis.
 Detailed insight into both a hedge fund and a loan company's abuse of the system May 13, 2008
23 out of 27 found this review helpful
The book is really close to being 2 or 3 books in one. Initially heard about the book in the WSJ, I pre-ordered it on Amazon and took a few weeks to read.
In the first part Mr. Einhorn writes several chapters aimed at a non-professional investor to build the background of how a hedge fund invests, building the reader's knowledge from zero to fluent enough to understand the book. There's a glossary in the back of the book to refer to if you forget any of the terms. In fact, later on Mr. Einhorn's open and full disclosure of his investing philosophy, technique, and results contrast with those of Allied Capital and its collection of LLCs.
The second part of the book builds from a small trickle to a river of fraud, and frankly this is the hardest part to get through. You're directed to watch Mr. Einhorn's speech on the web in order to understand a dissection of reactions that follow, and I admit that I felt as if I was reading a story from somebody who was picked on too much in the schoolyard and is taking revenge by writing a book. As I kept reading the chapters the story suddenly took me by surprise (around P.200 or so).
It then becomes a story of how, if you were to implement a business poorly and needed to keep it going no matter what, you would do whatever it took to keep paying a dividend to keep your stock from tanking. You might start by fibbing on the health of the business one year, sell healthy companies to hide your true results a few years later, and start directing campaign donations to the right parties a few years later. In for a penny, in for a pound. Mr. Einhorn didn't mention, but in years past I have read, that Enron kept going for so long because they did a good job spreading their money around to both the politicians and the local community. Mr. Einhorn does mention how much many parts of the US (Wall Street, the various parts of government, and mom-and-pop investors) want to continue the company so as not to lose whatever interest they have vested into the company or system.
In the end I feel educated about his hedge fund, I feel in over my head on how to value a company's investments if the company is similar to Allied Capital, I feel a bit angry on how narrow the scope and small the punishment delivered (but not surprised - I've seen how narrow the scope of investigations of companies are before), and I feel that Mr. Einhorn has, for lack of a more subtle way of putting it, wasted enough of his life worrying about this company. You're not going to get back the years you've spent. You should go on to enjoy something else in life (but I appreciate the sacrifice you made so I could read about this in a book).
A great book and a must read for anyone interested in investing May 6, 2008
15 out of 18 found this review helpful
I was lucky enough to get a hold of an advance copy of the book from Amazon. Couldn't put it down. Finished it and went out and bought one for everyone at our company. Then went and bought more over the weekend to hand out to folks. It is an absolutely terrific book, and thank you, David Einhorn, for writing it. I loved the first few chapters on Greenlight and was absolutely mesmerized by the rest. One of my colleagues has gotten about half way through and said he did not realize that folks could "not get it" when faced with compelling evidence. I told him to read on, and that his disbelief will get much worse. I think that it is a stunning example of the concept of cognitive dissonance (at best, and probably being very kind with that). Writing this book took a great deal of courage and I know I am a better investor for having read it.
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