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Is David Einhorn's Secret 'Fiscal Cliff' Bet Blowing Up?

Some analysts immediately took aversion to Einhorn's presentation and the valuation metrics he highlighted as supporting his short.

"We don't believe Mr. Einhorn's comments regarding valuation as measured by a P/E basis represent anything new," wrote Wells Fargo analyst Adam Rudiger in a May note to clients. While Einhorn focused on Martin Marietta's share valuation at a price of 35 times forward earnings as a key to his short position, Rudiger argued it was the wrong metric.

"[Investors] more frequently look at EV/EBITDA multiples when valuing aggregates companies and on that metric, Martin Marietta shares are not as richly valued."

In the fourth quarter, Einhorn's Greenlight Capital portfolio fell over 3%, damping returns for 2012 to just 3.4%, underperforming the S&P 500 and Dow Jones Industrial Average.

Notably, stocks in Greenlight's short portfolio rose roughly 10% in the fourth quarter, significantly outperforming index gains and hitting the fund's overall performance.

"The losses in the short portfolio were broad-based; while the S&P 500 was down modestly in the quarter, our average short rose about 10%. Green Mountain Coffee Roasters was the worst offender, with a 74% advance that wiped out our 2012 profits on the position," Einhorn wrote in a Jan. 23 investor letter. He made no mention of short positions in Martin Marietta or Moody's, which Einhorn disclosed in 2012.

Still, as Einhorn hits airwaves and investor conferences to promote a long bet on Apple and other highly watched trades like a seemingly well-timed short position on Chipotle Mexican Grill (CMG), it might be time for him to address recent trades like Martin Marietta.

Meanwhile, Einhorn may yet play a role in the debate over whether ratings agencies can be held liable for wrongheaded pre-crisis opinions.

Jonathan Gasthalter, a media spokesperson for Einhorn at public-relations firm Sard Verbinnen, declined to comment on whether Greenlight Capital continues to hold a short position in Martin Marietta.

-- Written by Antoine Gara in New York

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