Found via Santangel’s Review. The comments below are from David Einhorn.
As the market retreated over the past few months, we added to a few of our existing long positions, found a few new investment opportunities primarily in the technology and auto sectors, and covered several shorts. We also exited a long-standing position in Pfizer profitability as better opportunities presented themselves.
During the third quarter, we shifted a portion of our gold investment from physical gold into GDX and ETF gold mining companies. Throughout the course of this year, a substantial disconnect has developed between the price of gold and the mining companies. 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. Of course, since we believe gold will continue to rise, we expect gold stocks to do even better.
Late in the quarter, we increased our net long exposure to 35%. Although, we didn’t expect it, the strong market advance in October immediately rewarded us for a more positive view and the Greenlight reinvestment account reversed all year-to-date losses and generated a positive return of 6.9% in the month of October, with gains coming primarily from our long portfolio.
Despite the strong October, we believe that the environment remains challenging. Many equities, especially in large capitalization companies appear quite attractive. This is balanced by the continuing impact of dangerous macro policies. Most of our portfolio is assembled from the bottom up and we continue to see reasonable opportunities on both sides of the portfolio. As markets have quickly priced in a few positive recent data points in October, we have slightly reduced our net long portfolio exposure and ended October 33% net long.
