How is Allied Capital still alive?
Great book.
Einhorn does an excellent job of laying out his bear case on ALD which, after having read the book, completely stuns me to know that this company is still a going concern. It's unfortunate to see just how biased our regulatory infrastructure is and the institutional bullishness that permeates every aspect of our capital markets is a sad development.
Fooling some of the people all of the time is a good book and a fascinating read. I was amazed at some of the things Mr. Einhorn had to endure just because he dare speak his mind and back up his assertions with cold hard facts. This book affirmed many things that I've known about our capital markets, and many of those things are not pretty.

The Einhorn v ALD saga
This is brief history of the dispute between David Einhorn, founder of Greenlight Capital, and Allied Capital (stock ticker ALD). Mr. Einhorn details his research into ALD that culminated in a speech he gave at a charity event. Since the speech ALD has been attacking not just Einhorn, but everyone and anyone who has said anything bad concerning their company.

Mr. Einhorn details the lack of inquisitiveness on the part of the financial reporters and stock analysts who gave, and most who continue to give, ALD passing grades without a serious look into the financials. He also tells of the lack of responsiveness from the federal government to stop BLX (Business Loan Express, a company owned by ALD) from bilking the taxpayers out of hundreds of millions of dollars in bad (fraudulent) loans. And for all of his effort Mr. Einhorn was repaid with personal attacks. Since I started reading this I have looked into this a bit and I have not been able to find a single credible source to discredit what Mr. Einhorn has said about ALD. Despite what some may believe blogs and online forums are not credible sources, they are just opinions thrown out for the masses to read.

I found this to be an excellent book. However, I would not suggest buying it for the explicit purpose of getting some investing insights into the market. That is not the intention of this book.

This Is Not Nigeria
This is a complex story of hedge fund manager, David Einhorn, vs Allied Capital. Mr Einhorn wants corporate accounting transparency; Allied wants good quarterly numbers. The rules keep changing. The SEC looks the other way. How well the company is doing depends on who you ask.
It takes a clear head to follow the details of Allied's accounting but you get the point. Reading about the Detroit area operations of one of Allied's investments, BLX (Business Loans Express), sounds like a Nigerian scam. The reader wonders why no stock analyst or government agency notices this or even cares when it is brought to their attention. This isn't Nigeria, this is happening in the USA. Luckily Mr. Einhorn is persistent and hopefully for investors he will keep it up.

You Gotta Be Kidding
This clown Einhorn is a self-serving Jackass. He gets his head handed to him and his investors and instead of crawling off into the weeds with the rest of the snakes he makes this thinly veiled attempt at vindication. Maybe after he's paid $100 bucks per share in dividends on this short position he'll move on. If you compare Einhorn's value to a robust economic environment to ALD's, you'll find it sadly lacking. The guy is a parasite with a guilded tongue.

A Compelling Story
First I read When Genius Failed which was about the rise and fall of Long-Term Capital Management - a hedge fund. Then I read a book about the scandalous rise and fall of Enron called The Smartest Guys in the Room. And now I have just finished this book about a business development company (BDC) call Allied Capital. This was just not any BDC, but the second largest in the country.

The things I have read in this book are truly incredible. Many times I just had to shake my head in disbelief. This is a book about a company that made, and continues to make it appears, unscrupulous loans to businesses, if that's what you can call some of the entities they loaned money to. This book details the corruption that took place in this business and its controlled company BLX. We also learn about the inaction at the Small Business Administration (SBA), and USDA loan program in the light of serious problems with the loans they backed. What is really sad about this is the hundreds of millions of dollars that these government organizations paid out, and when their reserves are exhausted, tax payer money foots the bill.

It appears that David Einhorn has spent considerable time, effort and money to bring this information to the appropriate authorities, but the result reminds me of the title of Part Three of the book: "Would Somebody, Anybody, Wake Up?" As the book's jacket cover stated, "This revealing book shows the failings of Wall Street: its investment banks, analysts, journalists, and especially our government regulators."

It was a very interesting read, and I would recommend the book.