David Einhorn’s father wanted to write a book by the time he was 40. At 39, with the deadline looming, he self-published a joke book.

His son tells this story at the start of his own book, which he also wrote at 39. This one has few laughs in it. Fooling Some of the People All of the Time: a Long Short Story is the six-year saga of Mr Einhorn’s battle with Allied Capital.

He has been running his own New York-based, $6bn hedge fund, Greenlight Capital, for 12 years with great success. It has returned an average of 25 per cent a year after fees since inception.

In 2002, he decided to sell short the shares of Allied, a business development company, because he thought it had misvalued some of the loans on its books. The Allied Capital investment was never the largest holding his fund had, but nevertheless it turned into a crusade for Mr Einhorn.

Avoiding the ponderous prose that deadens many business books, Fooling Some of the People details his persistent and meticulous pursuit of Allied’s alleged misdoings and his efforts to bring it to the attention of regulators.

It is a welcome antidote to the thousands of books written for investors that paint a sunny picture of companies, regulators and financial markets all working efficiently and in the interests of investors.

In this book, regulators are blind, professional investors are indifferent and company management responds to Mr Einhorn’s criticism by threatening legal action and hiring private investigators who steal his phone records.

It is hardly surprising that Allied failed to welcome him with open arms. Selling a company’s stock short puts the short-seller in a naturally adversarial position to company management. The short-seller is investing in the company’s decline, not its success and, as such, is often viewed with suspicion.

However, the book makes a point that is not unreasonable. Why should the view of a long-only investor, who buys hoping a company’s stock will go up, be inherently more credible and selfless than that of a short-seller, who buys believing the stock will go down?

Short-sellers are often more informed about the companies they invest in, since they generally spend more time researching and targeting a stock than long-only managers, who might have 100 stocks or more in their portfolio.

Mr Einhorn has received most publicity as a short-seller and has been in the news over his big short position in Lehman Brothers. Yet he is quick to point out that he is not primarily a short-seller. His fund is more long than short and most of its long positions have produced higher returns.

Certainly, the Allied investment has not paid off. Its share price is about the same as it was when Greenlight bought in, in spite of several regulatory investigations. Greenlight still has its short stake, although it is proportionately of less significance because the fund is much larger than it was six years ago.

As well as an exhaustive analysis of Allied’s loan portfolio and that of the company’s subsidiaries, Mr Einhorn’s book recounts behind-the-scenes details of the sort that are seldom made public, including his grilling by Securities and Exchange Commission lawyers who accused him of trying to manipulate the stock; his repeated (unsuccessful) attempts to get various journalists to write about Allied; and brokers being forced to withdraw an invitation for a company briefing because Allied management barred him.

Fooling Some of the People is an easy read in spite of a large amount of technical detail and, given the growth in short-selling, is an instructive guide for general investors, fellow short-sellers and also, dare I say, companies that have been targeted by them.

Mr Einhorn might be disappointed with this review because it fails to take a position on whether he is right about Allied Capital. For him, the issue is no longer about financial gain but about conviction.

To help defuse complaints that he stands to win from Allied’s decline, Mr Einhorn says he and his partners will donate to charity any personal profits they make from the fund’s investment. He is also donating the book profits to charity.

‘Fooling Some of the People All of the Time: A Long Short Story’ (Wiley, $29.95)