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Investor Einhorn says Palihapitia, Musk spilled GameStop “jet fuel”

David Einhorn, President of Greenlight Capital, speaks at the Sohn Investment Conference 2019 in New York, USA, May 6, 2019. REUTERS / Brendan McDermid / File Photo

Investor David Einhorn said on Thursday that well-known venture capitalist Chamat Palihapitiya and entrepreneur Elon Musk had thrown “jet fuel” at GameStop Corp’s (GME.N) hectic trading in January, when the video trader’s shares rose 2,000 percent and more. were later heard in the United States Congress.

Einhorn, who manages the hedge fund Greenlight Capital (GLRE.O), also said US lawmakers are looking for answers on how day traders have managed to gain control of GameStop’s stock price from established hedge funds should seek regulators instead of investors.

Amateur investors on social media sites such as Reddit staged a hard buyout three months ago, winning Wall Street hedge funds that had cut GameStop shares or bet the price would fall.

Wild price fluctuations have caused large losses for the hedge fund Melvin Capital, among others. U.S. lawmakers responded by holding a hearing in the US House of Representatives in February, where they tested hedge funds, a trader of the day and the head of the online trading application Robinhood. Read more

On Thursday, Einhorn accused Palihapitiya and Tesla Inc. (TSLA.O) Musk of throwing what he called “GME jet fuel.” His comments appeared in a quarterly letter to Greenlight Capital investors, which was 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 the shares.

“Investors discussing why they think GameStop (or other stocks) should go up or down should be encouraged,” he wrote. “There’s no reason to drag someone in front of Congress to choose stocks.” Read more

Einhorn said Palihapitiya, which appeared on television in late January and dismissed criticism of daily traders, may have been trying to harm Robinhood because it was competing with fintech-launched SoFi, which was backed by Palihapitiya.

And Musk, whose shares of Tesla Einhorn have long pledged, joined the drama by writing “Gamestonk !!” on Twitter and adding a link to the Reddit forum where daily traders discussed GameStop.

“If regulators wanted Elon Musk to stop manipulating shares, they had to do so with more than a light slap on the wrist when they accused him of manipulating Tesla shares in 2018,” Einhorn wrote.

Einhorn said that if lawmakers want to understand “why GameStop did what it did … it would be better to address the absent regulators and their philosophical supporters.”

He told investors that his Greenlight equity funds were essentially equal in the first quarter, down 0.1%, while the S & P500 (.SPX) index gained 6.2%.

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