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!
Onward and Upward,
Founder, Wall Street Daily
Breaking News From the Wall Street Daily Universe
Dividends & Income Daily
Welcome to the zombie economy. Growth is stagnating. High-paying jobs are harder to come by than ever. Yet the Federal Reserve is forcing savers to take on more risk. It’s a jungle out there, so be careful! There are opportunities for astute investors, however. That’s why you need a trusted guide in the Game of Yields. Whether your goal is to retire early, or you’re already in retirement and want high investment income and safety, sign up for Dividends & Income Daily today.
Capitol Hill Daily
It’s been a big week already in politics. First, an email acquired by Judicial Watch has re-ignited the firestorm surrounding the Benghazi, Libya terrorist attack that killed four Americans. Next, the FCC is about to vote on a proposal that could completely destroy the internet as we know it. And today, Floyd Brown asks whether it’s time for John McCain to retire from Washington. Don’t miss any of the latest reporting… Sign up for our free Capitol Hill Daily newsletter today.
Tech & Innovation Daily
Tech & Innovation Daily just covered two major new developments in driverless car technology from Google (GOOG) and Volvo (VOLVY). Plus, we continue to put tech stocks through our hugely popular C.H.A.O.S. System to evaluate their prospects and investment merit. Best of all… this comprehensive stock analysis is absolutely free. For all of our latest research, go to our tech hub and sign up for our free e-letter.
Oil & Energy Daily
You’ve heard of the insane profits investors have made from the Bakken. But did you know there’s a new oil discovery that’s actually three times bigger? We just covered it at our energy division, Oil & Energy Daily – along with the best way to invest.