Exclusive: Bear market in gold pummels Einhorn's Greenlight fund

Sun Jun 30, 2013 3:27pm EDT
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By Jennifer Ablan

NEW YORK (Reuters) - Investors in David Einhorn's Greenlight Capital Management's offshore gold fund were down 11.8 percent in June, bringing their year-to-date losses in the fund to 20 percent, two sources close to the matter said on Sunday.

Einhorn, one of the most widely followed hedge fund managers and known for warning about Lehman Brothers' precarious finances before it collapsed, has also seen his flagship $8 billion Greenlight Capital fund under recent pressure though it is still up for the year.

In June, Greenlight's flagship portfolio was down 1.1 percent but still up net 7.4 percent year to date, according to one of the sources.

Einhorn, largely known for going both long and short on stocks, formed the Greenlight gold fund to include the same investment strategy as the main fund but offers a share class backed by physical gold.

The gold fund, with a minimum investment of $1 million, had $929 million under management and 266 investors as of March, according to a recent regulatory filing.

The sources said the fund's dollar-denominated class represents a "majority" of the gold fund and is up 7.1 percent for the year. The remainder is in the gold-denominated class, which is down 11.8 percent in June alone and 20 percent so far this year. That's consistent with the sector's plunge this year.

The gold-denominated fund gives Greenlight investors exposure to gold through the fund's investments, then reprices them in gold as opposed to U.S. dollars.

Gold, which fell below $1,200 an ounce on Thursday for the first time in three years, posted its largest quarterly loss in at least 45 years amid fears the U.S. Federal Reserve may wind down its stimulus program.   Continued...

David Einhorn speaks at the Sohn Investment Conference in New York, May 8, 2013.REUTERS/Brendan