Einhorn Is Beaten to the Punch

Just days before David Einhorn was to present his latest investment idea, another hedge fund manager stole his thunder.

David Einhorn, founder and president of Greenlight Capital. Carlo Allegri/ReutersDavid Einhorn, founder and president of Greenlight Capital.

But that did not stop Mr. Einhorn, president of Greenlight Capital, from making his presentation on Wednesday at the Sohn Investment Conference in Manhattan, where he outlined an optimistic argument on Oil States International, a company that provides services to oil and gas companies.

Jana Partners, an activist hedge fund, disclosed a 9.1 percent stake in the company last week.

The market, Mr. Einhorn said, was not properly valuing the company’s varied mix of businesses, which include well-site services, tubular services and accommodations.

Oil States is trading at a multiple of 6.9 times earnings before interest, taxes, depreciation and amortization, or Ebitda, Mr. Einhorn said. He argued that it should be trading at a multiple of 8.6 times Ebitda, and estimated a target price for the stock of $118.

Shares of Oil States, which closed at $95.47, rose nearly 5 percent in trading after hours.

The company’s accommodations business, Mr. Einhorn said, is like the “Club Med of remote exploration facilities.” If the company were to spin off that business, as Jana is advocating, the stock could be worth $155 a share, Mr. Einhorn said.

Mr. Einhorn acknowledged that the investment idea might sound familiar, but he said he had completed the “fifth or sixth draft of this presentation” when he learned that Jana, which is run by Barry Rosenstein, had filed a form disclosing its stake in Oil States.

“Someone in our office said, ‘Please tell me Barry Rosenstein isn’t speaking at Ira Sohn.’” Mr. Einhorn recalled.

Luckily for Greenlight, Mr. Rosenstein was not on the agenda.

“It sounds like the Jana folks may be on to something,” Mr. Einhorn said. “We wish them luck in making this happen, and we will sit back and enjoy the ride.”