In his latest letter to clients, billionaire hedge fund manager David Einhorn said that his fund at Greenlight Capital underperformed partly because of their short position on Tesla, which saw its share price surge by 29 percent last quarter.

But Einhorn is still holding on to the short position even though some investors have expressed doubts.

Tesla CEO Elon Musk taunted him over it.

Einhorn, who became famous for shorting Lehman Brothers in 2007 before they went bankrupt, has been holding a short position in Tesla (TSLA) for over a year now.

He said yesterday that Tesla was his second biggest loss last quarter yet he is holding on to the short position.

One of the reason why he thinks Tesla is still in trouble is Musk’s behavior which he sees as “erratic and desperate”.

In the letter, he listed some of the “most striking features of the quarter”:

  • Attacked an analyst for asking “boring bonehead questions” on the quarterly conference call.
  • Hung up on the of the National Transportation Safety Board.
  • Assailed the media for the audacity to report that Tesla’s customers crash while using “autopilot.”
  • Accused an internal whistleblow of “sabotage”
  • Appeared to paint the tape with trivial insider purchases and
  • Went on a tweetstorm calling for “the short burn of the century.”

Musk did warn people betting against Tesla of a ‘next level short burn of the century’ coming last month, but it never happened.

Furthermore, Greenlight Capital disclosed in the letter that Einhorn wasn’t renewing his own Model S lease in the section where they laid out their argument against Tesla:

“On a personal note, David is happy that his Model S lease ended (there were growing problems with the touchscreen and the power window) is excited to get the Jaguar I-Pace, which has gotten excellent reviews.”

The CEO didn’t seem too worried about it. He commented on Einhorn’s statement taunting him:

They continued in the letter:

“The Model S residual values are falling. Meanwhile, the Model 3 initially received lukewarm reviews, and the raft of bad publicity is probably having a negative impact on the brand.”

That’s a surprising statement as you would be hard pressed to find a negative review of the Model 3.

The short position against Tesla and the bear thesis are likely to come up today during the earnings call.

You can read our preview of the earnings to know what to expect: Tesla (TSLA) is about to release its second quarter 2018 results – here’s what to expect.

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