| BOSTON/NEW YORK, April 12
BOSTON/NEW YORK, April 12 This year's sell-off
in gold has been harmful for dedicated gold-bugs like hedge fund
manager John Paulson but it has also hit managers like David
Einhorn who is better known for his stock picks than his love of
the yellow metal.
During the first quarter, however, Einhorn's Greenlight
Capital Management demonstrated just how much he and his
investors have riding on gold as he recently listed it as the
fund's third largest position, an investor in the fund said.
Only bets on computer maker Apple, a long-time
favorite with Einhorn, and General Motors, which he
started talking about late last year, outranked his gold
position in size.
During the first quarter, Einhorn returned 6.1 percent,
keeping pace with many rivals including Pershing Square
Capital's William Ackman who was also up 6.1 percent. But they
both lagged behind the broad Standard & Poor's 500 index which
climbed 10 percent.
Gold selling has continued in the second quarter, its price
falling another 7 percent this month.
Einhorn, who is believed to largely own physical gold as
opposed to shares in the exchange-traded fund, disclosed his top
five holdings in a recent communication to investors.
Besides including gold in his main fund, Einhorn, like
Paulson also has a dedicated gold fund. Paulson's dedicated gold
fund, the smallest in his lineup of portfolios, lost 28 percent
during the first quarter.
A spokesman for Einhorn declined to comment.
While gold is often used as a hedge against inflation the
breadth of the recent sell sell-off will underline some
expectations that gold's meteoric rally may be coming to an end
after 12 years of gains.
The relentless selling sent gold below $1,500 an ounce for
the first time since July 2011, and put the market on track for
its worst weekly performance since December 2011.
Industry analysts have said that rising markets generally
make for tough conditions for hedge fund managers that
specialize in stock picking.
Einhorn also listed Marvel another long-time
favorite, and Vodafone as other big holdings.
At the end of the month Einhorn's fund was 48 percent net
long in its position. That means that long bets where a managers
expects the securities to rise represented 125 percent of the
fund's holdings while short position where a manager bets that a
security's price will was fall made up 77 percent.
During the first quarter, Einhorn made headlines in the
normally secretive hedge fund world for his loud campaign to get
Apple to give back some of its cash pile to investors.
Some investors have called the battle with Apple distracting
for the manager, particularly as other big Apple investors were
not on his side.
Einhorn like other managers is expected to soon send his
quarterly letter where he explains his holdings and thoughts in
Over the years, Einhorn's holdings of physical gold have
raised some eyebrows, in part because it is difficult to house
it. Einhorn has selected a secured facility in Queens, close to
his Manhattan office, to store the gold bullion he holds.
Einhorn's spokesman declined to comment on speculation about
the location of the hedge fund's so-called physical gold.
Greenlight began investing in gold bars in its main flagship
fund in 2009. A year later, Einhorn launched a dedicated
gold-only fund for investors wanting a more concentrated
exposure to the precious metal.