The book is being marketed as a gripping John Grisham-style tale of Wall Street.It is true that it takes place on Wall Street, but it could only be gripping for the most wonkish of investors. And it lacks the decisive ending of even the most rudimentary thriller, financial or otherwise. But Fooling Some of the People All of the Time (Wiley) is nonfiction -- and all active investors should read it. The book's author, hedge fund manager David Einhorn, is emerging as the public face of an industry that is, by regulation and tradition, freakishly private. Writing this book -- about a years-long investment that hasn't worked out -- just might be the most bumptious thing I've ever seen a hedge fund manager do.
Hedge Fund Legend Writes Must-Read
Immediately after the speech, all hell broke loose. The company pushed back hard, and Einhorn embarked on a mission to interest regulators and journalists in what he saw as fraud. He first wrote his opinions for a public audience on TheStreet.com. Alliance did eventually come to an agreement with the SEC, but it was toothless and quite disappointing to Einhorn. This is part of my fascination with the book and Einhorn's decision to write it. Six years have elapsed since Einhorn started working on Allied, and he ends the book where he began: claiming that the accounting was flawed. Hedge fund managers are not generally public creatures, so to go this public and about an idea that has not worked is somewhat remarkable. In fact, remarkable might be a kind word for it. But you, the savvy investor, can benefit greatly from this book, even if you have to occasionally wade through tedious detail. There are many legends about shorts and how they try to interest journalists and regulators in their positions. The truth is, of course, that just as many investors try to interest journalists in writing about longs. There is nothing wrong with either, provided the investor is aboveboard in his or her opinions and isn't obviously looking for a quick profit by selling at publication. But this is nothing if not a fly's-eye view of how this back-and-forth can work -- in all its glory and messiness -- at the highest levels. Journalists sometimes bite on the idea, sometimes disappear after professing interest and sometimes betray Einhorn. Few have time for investigative reporting, anyhow. Regulators move slowly, and they sometimes move against Einhorn. (He was called on the carpet by the Securities and Exchange Commission.) Like many shorts, especially the vulnerable ones, Allied also fights back -- and sometimes fights dirty. Anyhow, it's all there. And Einhorn is still there, too. Not with a Grisham-like hit, but still waiting for the world to catch on to his opinion on Allied and for the stock to crack. In the meantime, he's written an important guide for investors.