(Bloomberg) – Investor David Einhorn said technology stocks are in a “huge” bubble and he has added a number of short stakes to take advantage of it. “The question is, where are we in the psychology of this bubble?” The head of hedge fund Greenlight Capital wrote in an October 27 note that Bloomberg saw. “Our working hypothesis, which may be refuted, is that September 2nd, 2020 was the top and the bubble has already burst. In this case, investor sentiment is changing from greed to complacency. “Tech stocks drove the market rally this year. The Nasdaq 100 index is up 33% since Jan. 1, led by gains at Zoom Video Communications Inc. and Tesla Inc. In contrast, the S&P 500 is up 5.3%. As a sign of a bubble, Einhorn suggests an IPO mania, tremendous market concentration in a small group of stocks or a single sector, exceptional valuations, and “incredible” trading volumes in speculative instruments. As a result, Greenlight has adjusted the portfolio of companies it is betting against by adding a new so-called bubble basket of mostly “second-tier companies and recent IPOs trading at remarkable valuations,” he wrote. Einhorn has long held what is known as a bubble basket of short bets, which included tech giants like Amazon.com Inc. and Netflix Inc. A company spokesman declined to comment. This isn’t the first time unicorn features a tech bubble. In early 2016, “he identified ahead of time what we thought was a bubble,” he wrote in the letter. It’s been a tough road for Greenlight lately. The fund was down 16.1% through September and has been trying to make up for losses that started in 2015. As of January 1, the company had $ 2.6 billion under management, up from a high of $ 12 billion. Other highlights from the letter: The upcoming elections may “be some of the most dangerous non-war times in modern American history”. A “storm” of problems related to the Covid pandemic – including inequalities, violence and calls for social change – could explode after the elections, whichever side wins. The fund launched “medium-sized” long positions in information technology companies Synnex Corp., the Austrian sensor manufacturer AMS AG and the ATM manufacturer NCR Corp. While some Greenlight employees work in the company’s New York offices, which have been open since late summer, most employees continue to work from home, said. (Adds additional technology comments starting at the seventh paragraph.) For more articles like this, visit bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2020 Bloomberg LP
