Thursday, November 13, 2014

Piraeus Bank: David Einhorn vs. ViennaCapitalist (cont'd)

"This is a very weak investment thesis. The quality of the analysis is disappointingly low. Both his (David Einhorn's) macro and his micro arguments are overly superficial, as he takes all figures at face value without trying to understand the drivers behind them. This makes him blindly trust the coverage ratios presented by management (or Piraeus Bank), or ignore the effect of known regulatory changes. He doesn’t touch the management topic at all, although there clearly are some issues such as a cosy relationship with regulators/politicians – in my experience not necessarily evidence of shareholder value driven ethics. Worst, however, is the fact that he does not demand a “margin-of-safety” from this investment, but prefers to speculate on how much people might be willing to pay in the future".

I have previously published Part I of ViennaCapitalist's analysis of Piraeus Bank and above is the conclusion of Part II.

I have written quite a bit about Piraeus Bank, particularly its relationship with the Marfin Investment Group. To me, Piraeus Bank is a classic example of the weaknesses in the Greek banking system. Under the pretext of wonderful headlines and with the help of creative accounting, crony business deals are pursued and falsely described as efforts to turn-around the Greek economy. 

"You can fool some of the people all of the time and you can fool all of the people some of the time, but you can't fool all of the people all of the time" (Abraham Lincoln). Whether this statement will also apply to some of the Greek business elite, such as Piraeus Bank, remains to be tested.

David Einhorn on Piraeus Bank: Now I know what he thinks (Part I)
David Einhorn on Piraeus Bank: Now I know what he thinks (Part II)

1 comment:

  1. In the long run Lincoln is correct about fooling.

    But I always wonder how it is possible to fool quite a number of people for much too long time spans - e.g. Hypo Adria and so on and so on...

    H. Trickler