Einhorn\'s Words Still Potent, but Not All Powerful

David Einhorn doesn't even have to say the word “short” for investors to get nervous.

During a presentation on Tuesday at which he was expected to reveal his latest bearish thesis, Einhorn, a hedge fund manager, introduced a discussion of General Motors with an ambiguous line. Mr. Einhorn, the president of Greenlight Capital, pivoted on the ticker symbol of Green Mountain Coffee Roasters, a target of his criticism last year.

“If you take the CR away from GMCR, you get G.M.,” Mr. Einhorn said.

Shares of General Motors plunged, before investors realized that the assessment of the automaker was positive.

Mr. Einhorn emphasized the folly of taking his ideas on faith.

“It doesn't make sense to blindly follow me or anyone else into a stock,” he said as a preface to his presentation at the Value Investing Congress in Manhattan. “Do your own work. And when a successful investor shows you their work, check their work.”

Despite his cautionary note, Mr. Einhorn's words do hold sway. His primary target on Tuesday was Chipotle Mexican Grill, whose shares initially fell about 6.5 percent after he said that he was short-selling the company. The Mexican food chain is vulnerable to competition, especially from Taco Bell, Mr. Einhorn said.

But not everyone in the market subscribed to Mr. Einhorn's bearish view, and investors do seem to be not taking everything he says at face value anymore.

“I don't think his comments make any sense at all,” said Damon Vickers, managing director of a boutique wealth management firm in Seattle that has a long position in Chipotle.

Other investors seemed to share Mr. Vickers's sentiment. Chipotle's shares recovered slightly as the day wore on, and were down about 5 percent as of late afternoon on Tuesday.

Bullish investors also challenged the hedge fund manager's views on Green Mountain Coffee Roasters, which had lost about three-quarters of its mark et value since Mr. Einhorn criticized it last year.

Mr. Einhorn revisited the company on Tuesday, saying the expiration of patents had left it vulnerable. He questioned Green Mountain's accounting, reiterating previous concerns.

And yet, Green Mountain's stock experienced a burst of investor optimism during the day, with its shares rising more than 2 percent.

Still, Mr. Einhorn has also been known to also have a positive effect on shares.

In a 120-side presentation titled “Kicking the Tires,” Mr. Einhorn made arguments about four different companies, including positive opinions of General Motors and the health care company Cigna. Those stocks rose as Mr. Einhorn spoke.