Einhorn Shorts Sovereigns, Affirms Gold on Trump Uncertainty

Updated on
  • Greenlight Re added to bullish wagers on stocks, he says
  • Trump’s focus on stimulating growth seen as stoking inflation

Hedge fund manager David Einhorn is betting on declines in government debt and a rebound in gold to guard against the risk of inflation under President Donald Trump.

“We made several changes to the macro portfolio in response to the election,” Einhorn said Thursday in a conference call discussing results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman. “It was various long positions in sovereign fixed income that we eliminated. We added some additional shorts in sovereign fixed income, and we added to our long equity exposure.” He didn’t specify which nations’ debt he was betting against.

Einhorn is seeking to extend a rally in the investment portfolio of Greenlight Re, which said late Wednesday that it posted back-to-back quarterly profit for the first time since 2013. The portfolio was helped in the last three months of 2016 by bets on General Motors Co. and Japanese bank Resona Holdings Inc., while gold was a weak spot.

Still, “our long-term outlook remains bullish,” for the metal, Einhorn said. “The new administration comes with a high degree of uncertainty, and its policy initiatives appear to be focused on stimulating growth and, with it, inflation.”

General Motors shares jumped almost 10 percent in the fourth quarter and rallied further this year. He said the stock is still undervalued, citing misplaced concerns about the eventual shift to driverless cars.

The stock will continue to climb, “especially if employment strengthens and translates into higher wages,” he said.

Einhorn said the reinsurer’s investment portfolio slipped by about half a percent in January. Greenlight Re climbed 5 cents to $23.35 at 4 p.m. in New York, extending its advance to 2.4 percent since Dec. 31.

The company is seeking to improve insurance underwriting results and is looking for a new chief executive officer after saying in December that Bart Hedges will step down this year.

— With assistance by Katherine Chiglinsky, and Lisa Du

(Updates shares in the second-to-last paragraph.)
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