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David Einhorn’s Hedgefonds Greenlight Capital achieved a return of 8.2% in the first quarter.
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In a letter to investors, Greenlight said that gold was “by far the biggest winner” in his portfolio.
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The company warned that a bear market in shares is just starting.
A billionaire investor hit gold last quarter by investing in.
Greenlight Capital of David Einhorn won 8.2%in the first quarter, with a handy surpassing a loss of more than 4%in the S&P 500. In a letter to customers viewed by Business Insider, the company said that the precious metal “by the biggest winner” in his portfolio, 19%.
Greenlight, which said it has both gold bars and call options, also performed well against a benchmark of hedge funds. The average fund lost on average 0.4% in the first quarter, according to research group HFR.
The company said that inflation waps were an extra catalyst for outperformance. Between the swaps and gold – which are seen as an inflation hedge – the expectation of higher consumer prices is a theme in the Greenlight portfolio. Predictions for higher inflation have been a constant of the Trump presidency since a global trade war started.
“We believe that almost all current policy roads of the administration lead to higher inflation,” the company wrote.
Another highlight of the Greenlight letter was the claim that the US stock market is in the early innings of a Bear Market. The company was able to determine exactly when it decided to throw in the towel on shares.
“The feeling that the market was coming, at the end of February we turned out of conservative, but not bearish, to Bearish,” said the letter.
When predicting a bear market, Greenlight has reduced its net share exposure to isolate itself from sharp falls and twists against trends.
“Bear markets do not go straight down. They are interrupted by ‘rip-your-off-off’ rallies based on large headlines, extreme investor sentiment and experience that buying the dip usually pays off,” the letter said.
Here an overview of some other transactions Greenlight has been identified in his first quarter of a letter:
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Short positions on companies that “meet liberal flavors”: Greenlight expects democratic consumers to withdraw, given their disproportionate exposure to recent federal job reductions.
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Long position in Sofr Futures: These investments are positioned to make a profit if the FED reduces interest rates faster than the market thinks, what Greenlight expects.
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“Tail protection” for the dollar: Greenlight has added this position in the event that the Greenback falls considerably against the euro and yen. This has already happened.
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Long -term inflation Swaps: As mentioned above, the company predicts that the most policy of the Trump administration will lead to higher long-term inflation.
Read the original article about Business Insider
