Hedge-fund manager David Einhorn’s Greenlight Capital Inc. asked a court to order the website Seeking Alpha to identify a contributor who allegedly disclosed the fund’s stake in Micron Technology Inc. (MU:US) before it was made public.
Greenlight said in a Nov. 25 filing with the U.S. Securities and Exchange Commission that it purchased 23 million shares of Boise, Idaho-based Micron, a maker of memory chips, in the third quarter. Eleven days earlier, Greenlight had disclosed the stake to the SEC and asked that the agency not publicly identify Micron as the investment in question.
A frequent contributor to the site, identified only as “Valuable Insights,” revealed the investment in a post on Nov. 14, before Greenlight disclosed its position to the SEC, the investment manager said in a petition filed yesterday in New York State Supreme Court in Manhattan. The hedge fund said in the petition that the website post drove up its costs.
“Upon information and belief, Valuable Insights owned shares in Micron at the time of the postings,” Greenlight said in the petition. “The trading price for Micron’s shares rose immediately after Valuable Insight’s posting. Because this was the very time frame in which Greenlight was in the process of building its Micron position, it was forced to pay higher prices for its Micron securities.”
Seeking Alpha didn’t immediately respond to e-mail and telephone messages seeking comment on the petition. The website, which describes itself as a “platform for investment research,” was founded in 2004 by former Morgan Stanley (MS:US) analyst David Jackson.
Greenlight filed a Form 13F with the SEC on Nov. 14 disclosing its third-quarter holdings, according to the petition. It didn’t reveal its Micron position, instead requesting confidentiality in order to continue to increase its stake.
Einhorn said at an investor conference later that month that Greenlight had established a long position in Micron, and the company filed an amended 13F for the third quarter revealing the stake to the public, according to the petition.
Greenlight said it disclosed its position in Micron to people who had a duty to keep it confidential, including employees, lawyers, brokers and fund administrators, and that “Valuable Insights” had to be one of those people or obtained the information from one of them.
Greenlight said in a regulatory filing today with the SEC that it had 47.7 million Micron shares with a total market value of about $1.04 billion as of Dec. 31.
Greenlight said in the petition it intends to sue “Valuable Insights,” identified on the site as a fund manager with more than 20 years of experience in the securities industry.
Seeking Alpha declined to identify the contributor in a letter dated Nov. 26, saying that submissions are made at the “sole responsibility” of the posting user, according to filings in the case.
Seeking Alpha said in the letter that it doesn’t pre-screen comments on its site and can’t guarantee their accuracy, integrity or quality, and that it’s not in a position to reveal its users’ identities without “clear and substantial grounds,” according to the filings.
The case is In the Matter of the Application of Greenlight Capital Inc., 151327/2014, New York State Supreme Court, New York County (Manhattan).
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