David Einhorn of Greenlight Capital is not a popular man
within the offices of Martin Marietta Materials (NYSE:
), after he slammed the company at the annual Ira Sohn Investment
Conference, causing it to instantly tank 10%. It is currently
trading down 8%.
"Recent earnings benefited from one time fiscal stimulus that
is about to wind down," Einhorn said at the conference, obviously
deciding that MLM is his new favorite company to short.
The rumor earlier in the day had been that Einhorn was going
to short Herbalife (NYSE:
), but that company's stock is surging 9% on Thursday.
The scary thing for MLM is that Einhorn is rarely wrong. He
famously shorted Lehman Brothers just prior to that bank's
demise, and more recently he shorted Green Mountain Coffee
Martin Marietta responded to the comments
directly to Benzinga
, telling us that, "Unlike companies targeted by shorts, Martin
Marietta has come through a challenging period for the industry
by carefully managing capital and making disciplined operational
"We are profitable and have a solid balance sheet, which will
allow us to capitalize on positive industry trends and positions
us well for the future."
If there is a bright side for MLM following Einhorn's
unfavorable comments, it is that the potential $6.7 billion
hostile takeover of Vulcan Materials (NYSE:
) which seemed all but dead earlier in May, may now be back
The takeover was on the ropes after a Delaware court ruling
and VMC;s insistence in staying independent, but Einhorn's
intervention has resulted in traders betting that the deal will
eventually go through.
Einhorn's comments, bad enough for MLM, will also reflect
badly on VMC, the other company at the top of the pile for
producing construction aggregates or crushed gravel and stone
that's used to build roads and other infrastructure.
Most analysts seem to agree that, while Einhorn has not really
done Martin Marietta any favors, he has hardly caused disastrous
results either and the only thing that has really changed is what
the company will have to offer to eventually acquire Vulcan
The end of Wednesday's trading saw a close-to-identical share
drop for Martin Marietta and Vulcan Matrials, plus an end-of-day
merger spread of under $1.
Still, the fact that remains that before MLM look to move
forward with any deal, it will need to address all concerns that
have been raised.
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