David Einhorn Sees Upside for Gold and Inflation Amid Fiscal Policy Concerns

Hedge fund manager David Einhorn sees upside for gold and inflation, citing aggressive fiscal and monetary policies as a risk. He believes gold is not an inflation bet, but a defensive position that can continue to rise. Einhorn's hedge fund, Greenlight Capital, gained 8.2% in Q1, with gold and other defensive positions contributing to the success.

Greenlight Capital Re Ltd (GLRE) reported a net income of $29.6 million for the first quarter of 2025, marking a 5.1% increase in fully diluted book value per share. Despite challenges posed by California wildfires, the company's Solace Class portfolio delivered a robust 7.2% return, driven by strong investments in gold, Brighthouse Financial, and Lanxis [1].

The California wildfires resulted in a net loss of $23.6 million, contributing to an overall underwriting loss of $7.8 million and a combined ratio of 104.6%. Despite this, the company expects tariffs to have a limited impact on underwriting profitability in the near term [1].

The innovations segment reported a combined ratio of 94.3%, aligning with expectations, while the Solace fund's positive contributors included long investments in gold, Brighthouse Financial, and Lanxis, with gold appreciating 19% over the quarter. The company released $11 million of specialty and $8 million of property reserves, contributing positively to the financial results [1].

Greenlight Capital's hedge fund, managed by David Einhorn, gained 8.2% in Q1, with gold and other defensive positions contributing to the success. Einhorn believes gold is not an inflation bet but a defensive position that can continue to rise due to aggressive fiscal and monetary policies [2].

The company is shifting its focus to accessing casualty MGA business primarily through its innovations channel, which will lead to some contraction of its casualty book in the short term. The innovation segment's expense ratio increased to 8.2% from 4.3% due to growth in personnel and indirect costs, impacting profitability [1].

Overall, Greenlight Capital Re Ltd demonstrated resilience in navigating market volatility, with strong performance in its Solace Class portfolio and a focus on defensive investments.

References:
[1] https://www.gurufocus.com/news/2848128/greenlight-capital-re-ltd-glre-q1-2025-earnings-call-highlights-navigating-market-volatility-with-strong-investment-returns?mod=mw_quote_news&r=4bf001661e6fdd88d0cd7a5659ff9748
[2] https://www.gurufocus.com/news/2848128/greenlight-capital-re-ltd-glre-q1-2025-earnings-call-highlights-navigating-market-volatility-with-strong-investment-returns?mod=mw_quote_news&r=4bf001661e6fdd88d0cd7a5659ff9748