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 Follow @AntoineGara
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