Greenlight Capital has posted an 8.2% gain for this year’s first quarter thanks to a big bet the hedge fund made on gold.
In a letter to investors, Greenlight founder David Einhorn said that the firm managed to beat the return of the benchmark S&P 500 index that declined 4.3% during Q1 because of its early pivot from stocks into gold, which was the hedge funds top performing security between January and March of this year.
“In late February we pivoted from conservative, but not bearish, to bearish,” wrote Einhorn in the letter. “We suspect we are now in a bear market that is just starting.” The hedge fund manager added that the bet on gold should pay off further in coming months as U.S. President Donald Trump’s tariffs and trade policies continue roiling financial markets.
Record High
News of Einhorn’s move into gold comes on a day when bullion’s price is up nearly 4% and trading at an all-time high of $3,352.70 per ounce. Gold’s price has been hitting one record high after another this year as investors rush into the relative safety of the precious metal.
Einhorn noted in his letter to investors that privately held Greenlight Capital owns both gold bars and call options on the spot price of gold, adding that the price of the yellow metal rose 19% during this year’s first quarter. Einhorn’s Q1 performance was much better than most U.S.-based hedge funds, which lost 0.38% during the quarter, according to data from research group HFR.
Is the GLD ETF a Buy?
Most Wall Street analysts don’t offer ratings or price targets on the SPDR Gold Trust (GLD), so we’ll look at the ETFs three-month performance instead. As one can see in the chart below, the GLD ETF has risen 18.84% in the last 12 weeks.
