Einhorn sees Lehman's tints at Tesla and says Musk knows deception catches him

Reuters

David Einhorn, chairman of Greenlight Capital, who reported that Lehman Brothers was underfunded before its bankruptcy in 2008, said Tesla Inc. was following the same condemned path.

The hedge fund manager, known for his meticulous research and data analysis, explained that Tesla

TSLA, -7.14%

Wore some of the same attributes as the bad Wall Street bank in the way it avoids criticism and masks problems.

Lehman was the fourth largest investment bank in the United States before the collapse of September 15, 2008, when many believe the global financial crisis has taken off.

In a letter to customers, Einhorn wrote:

"There are a lot of parallels with TSLA," Einhorn said. "In 2013, TSLA was on the verge of failure: customers who had paid deposits were not taking up the Model S cash reserves. TSLA's cash reserves have fallen to a dangerously low level. . Rather than communicate the truth to the shareholders, Mr. Musk did everything to get through the crisis. The fact of not admitting the reality had no regulatory, legal or commercial consequences. The company survived and Mr. Musk was celebrated for his successful bluffing. "

This emboldened Musk, giving him a platform to be even more misleading, according to Einhorn.

Criticism of the hedge fund manager comes just after Musk publicly mocked the Securities and Exchange Commission less than a week after settling charges with the agency for misleading investors.

Einhorn thinks that "deception" will catch up with the electric car maker and says that Musk's emotional instability is due to his awareness that time is running out.

"His conduct suggests that he is doing his best to be relieved of his CEO position in order to avoid any liability. Quitting is not an option, as it prevents Mr. Musk from claiming that he could have solved the problem if he had stayed, "said Einhorn.

"But it's a Mexican stalemate: the council is too close to him to dismiss him and does not want to be blamed either. The same can be said for the SEC, which retreated from its threat to ban it as an officer. "

Einhorn said Tesla was Greenlight's most lucrative bet in the third quarter after Brighthouse Financial

BHF -0.65%

Tesla shares tumbled 7.6% on Friday and are down 16% in 2018.

He also announced that the hedge fund had sold the latest of its Apple Inc. products.

AAPL, -1.50%

$ 228 per share after the action has brought in more than $ 1 billion to Greenlight since it took a stake in the iPhone maker in 2010.

"We finally sold because our 2011 thesis has become a consensus, the valuation at 17 times future earnings is much less attractive and we are somewhat worried about China's retaliation against US trade policies," she said. he declared.

Apple stocks fell 2.4%, in line with the general weakness of the market.

At the same time, Greenlight funds fell 9.1% in the third quarter, bringing their 2018 loss to 25.7% in a year in which equities continued to grow with the S & P 500

SPX, -0.48%

more than 7%, according to Einhorn's customer letter.

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