By Svea Herbst-Bayliss
BOSTON (Reuters) – Investor David Einhorn said on Thursday that leading venture capitalist Chamath Palihapitiya and entrepreneur Elon Musk were pouring ‘jet fuel’ into the GameStop Corps trading spirit as the video retailer’s shares rose 2,000% and later to ‘ led a trial in the US. Congress.
Einhorn, which manages hedge fund Greenlight Capital, also said U.S. lawmakers who want answers on how traders are able to gain control of GameStop’s share price from established hedge funds should investigate regulators instead of investors.
Amateur investors organized on social media sites like Reddit offered a stubborn buy-in three months ago and won the Wall Street hedge funds that shorted GameStop shares or pointed out that the price would fall.
The wild price fluctuations caused, among others, the hedge fund Melvin Capital. U.S. lawmakers responded in February by arranging a hearing in the U.S. House of Representatives where they are investigating hedge funds, a day trader and head of the online trading app Robinhood.
Einhorn on Thursday blamed Palihapitiya and Tesla Inc. CEO Musk for throwing what he calls “jet fuel at GME pressure”. His comments appear in a quarterly letter to Greenlight Capital investors seen by Reuters.
Representatives of Palihapitiya and Musk did not immediately respond to requests for comment.
Einhorn said it was appropriate for investors to discuss shares.
“Investors discussing why they think GameStop (or any other stock) should go ahead should be encouraged,” he wrote. “There is no reason to drag someone before Congress because he chooses a share.”
Einhorn said Palihapitiya, who appeared on TV in late January and dismissed criticism of day traders, may have tried to harm Robinhood by competing with fintech startup SoFi, which is supported by Palihapitiya.
And Musk, whose Tesla shares Einhorn had been betting on for a long time, entered the drama through ‘Gamestonk !!’ to tweet. and add a link to the Reddit forum where day traders discuss GameStop.
“If regulators wanted Elon Musk to stop manipulating shares, they should have done so with more than a light slap on the wrist when they accused him of manipulating Tesla’s shares in 2018,” Einhorn wrote.
Einhorn said if lawmakers want to understand “why GameStop does what it does … it would be better to hold absent regulators and their philosophical supporters accountable.”
He told investors that his Greenlight Capital funds were essentially up 0.1% in the first quarter, while the S & P500 index rose 6.2%.
(Reported by Svea Herbst-Bayliss in Boston; edited by Matthew Lewis)