As of midnight last night, billionaire hedge fund manager and co-founder of Greenlight Capital Inc., David Einhorn, had beaten me.
You see, Einhorn just publicly announced that he had opened a short position on Athenahealth (ATHN), saying the stock could plummet 80% from its present price of $126 per share. (The stock quickly cratered – dropping 13.86% on the news.)
At the Sohn Investment Conference in New York City, Einhorn further warned that the technology sector was witnessing its second bubble in 15 years.
Of course, I knew not to take Einhorn’s actions at face value.
Einhorn is somewhat of a media hound who loves attention.
He could also be shorting Athenahealth’s stock simply to boost another position in his portfolio, as this is done all the time on Wall Street.
So I dug into Athenahealth’s latest quarterly report.
Having authored such reports during my analyst days, I’m damn hard to trick.
As of 12:05 AM EST, though, I couldn’t find the reason Einhorn was warning of an 80% price implosion.
Athenahealth is still experiencing strong revenue growth – albeit at a lesser pace than analysts were expecting – and costs are nicely in line, too.
The company’s SEC filing also failed to reveal a white elephant. That is, some type of catastrophic lawsuit or copyright infringement.
Its cash position is strong, as well.
Frustrated, I picked up my phone and started asking my industry contacts what I might be missing.
What could possibly be causing a billionaire investor to bet against such an outwardly attractive stock?
That’s when I found it!
As it turns out, Athenahealth’s CFO, Tim Adams, just resigned on Friday.
Adams recently accepted the position of CFO at Demandware Inc. (DWRE), the Burlington-based e-commerce software firm, and will start on June 2.
Why would a CFO hit the exits if his company was on strong footing? Odds are, he wouldn’t!
So Einhorn is merely following one of the greatest stock influencers known to exist. A CFO’s resignation is an incredibly bearish signal, one that has just recently proved its worth again…
Nice try, Einhorn!
You may have fooled every media outlet on Earth on Monday, but you can’t fool me.
For those looking for yet another profit angle, you might be interested in knowing that Starwood Hotels and Resorts (HOT) just lost its CFO, Alan Schnaid, last week. So put your “shorts” on, ASAP!
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Onward and Upward,
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