The Einhorn Effect

David Einhorn, the famous hedge fund manager who foresaw the disaster that was Lehman Brothers, spoke at an investment conference today. When Einhorn talks, traders listen.

Today, he bashed the stock of Martin Marietta Materials($MLM). Einhorn called the CEO a “megalomaniac.” This coming from a hedge fund manager.

By looking at the chart below, can you guess when the news hit? Look closely. I bet you can.

It must be nice to talk your book and get rewarded for it. Many investors thought Einhorn was going to target the company Herbalife ($HLF). Two weeks ago, he had asked questions during the company’s conference call.

As to Martin Marietta Materials, I think Einhorn is correct. According to my patented “world’s simplest stock valuation method,” the fair value for MLM is $45.58. That means that it’s still 50% overpriced going by today’s close.

Posted by on May 16th, 2012 at 5:49 pm

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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