David Einhorn Thinks Gold Companies Will Outperform Bullion

David Einhorn, Greenlight Capital has noticed a “substantial disconnect” in the market according to Bloomberg and he is investing accordingly.

David Einhorn Prefers Gold Mining Stocks to Gold Commodities

David Einhorn said Tuesday in a conference call that there is “a substantial disconnect has developed between the price of gold and the mining companies,” reports Bloomberg. “With gold at today’s price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further,” said Einhorn. “Since we believe gold will continue to rise, we expect gold stocks to do even better.” And, he is putting his money where is mouth is, cutting his gold commodity holdings in the third quarter and moving those funds into the Market Vectors Gold Miners ETF.

David Einhorn

David Einhorn’s Greenlight Capital Re Made it Official

David Einhorn’s reinsurance fund, Greenlight Capital Re (GLRE), reported in a regulatory filing on October 31, “Given the challenging macroeconomic environment, we intend, for the foreseeable future, to continue holding a significant position in gold and other macro hedges in the form of options on higher interest rates and foreign exchange rates, short positions in sovereign debt and sovereign credit-default swaps.” Bloomberg reports, “Einhorn has found new opportunities in the technology and automobile industries, and the reinsurer ended a bet on Pfizer Inc., the world’s largest drugmaker, he said today.”