Why hedge fund manager David Einhorn cares about a N.J. deli

It's not quite the GameStop trade, but the value of a company that owns a single asset — a deli in New Jersey — is catching the eye of famed hedge fund manager (and Jersey-born) David Einhorn.

Catch up quick: In a letter to his clients on Thursday, Greenlight Capital’s Einhorn wrote about Hometown International as an example of a company that regulators should be paying attention to but appear to be ignoring.

• The market cap of Hometown, whose shares trades over the counter, reached $113 million in February, Einhorn noted, despite the fact that the deli it owns rang up sales of less than $14,000 last year and less than $22,000 in 2019. 
• The largest shareholder, who is the CEO, CFO, Treasurer and a Director, is also the wrestling coach of the high school half a mile away.
• “The pastrami must be amazing,” Einhorn wrote. 

Why it matters: The deli investing anecdote is reminiscent of this year’s meme stock frenzy — and offers yet another warning from institutional investors that retail investors will get hurt in the long run.

What he's saying: “Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators — who are supposed to be protecting investors — appear to be neither present nor curious,” Einhorn wrote, referring to Hometown International.

• “Quasi-anarchy appears to rule in markets … there is no cop on the beat. [C]ompanies and managements that are embolden enough to engage in malfeasance have little to fear,” he wrote, after criticizing the SEC for doing too little to stop Tesla CEO Elon Musk from “manipulating stocks” in 2018.

• "If Congress wants to understand why GME did what it did, or more recently how the Arch-Egos fund cornered the market in a handful of stocks, it would be better to call to account the absentee regulators and their philosophical backers.”