Market Overview

Gold ETFs Have Some Famous Hedge Fund Supporters


One of the more telling statistics about gold's recent retrenchment was news out last Friday that hedge funds are net short gold for the first time since 2006, the first year the Commodities Futures Trading Commission began collecting such data.

Abandoning or shorting gold has been the way to go. The SPDR Gold Trust (ETF) (NYSE: GLD), the world's largest exchange traded fund backed by physical holdings of the yellow metal, has plunged 9 percent over the past 90 days. Gold miners have been worse as highlighted by a three-month decline of almost 34 percent for the Market Vectors Gold Miners ETF (NYSE: GDX).

Still, some titans of the hedge fund world remain stubbornly long gold, including John Paulson and David Einhorn, according to the New York Post.

Related Link: This Is Why Nobody Loves Gold ETFs

At the end of the first quarter, Paulson's eponymous Paulson & Co. allocated over 5.9 percent of its equity portfolio to GLD, making the ETF the hedge fund's fourth-largest position, according to Whale Wisdom. The gold hits don't end there for Paulson.

Paulson & Co. also held stakes in NovaGold (NYSE: NG), Agnico-Eagle Miners (NYSE: AEM), Randgold Resources (NASDAQ: GOLD) and Iamgold (NYSE: IAG) at the end of March, according to Whale Wisdom. Randgold, Agnico-Eagle, and Iamgold combine for nearly 12 percent of GDX's weight. That ETF has plunged 28.7 percent since the start of the second quarter.

For his part, Einhorn's Greenlight Capital held 8,517,196 shares of GDX worth $155.8 million at the end of the first quarter, according to Whale Wisdom. That stake is now worth just over $116.5 million. That is not even scratching the surface of the bad news regarding Greenlight's GDX stake. Greenlight's GDX position, assuming it still exists, is nearing three years old. Over that time, the largest gold miners ETF has lost almost two-thirds of its value.

To be fair, Einhorn's hedge fund once held as many as 6 million GDX shares. And to continue on the theme of fairness, second-quarter 13F filings are not due out for another several weeks, so it is possible that Einhorn and Paulson have trimmed their gold exposure.

Again adding to fairness theme, Einhorn and Paulson are far from the only hedge fund managers with gold exposure. In fact, the number of hedge funds adding to or starting new positions in GDX in the first quarter outpaced those eliminating or paring positions in the ETF, notes WhaleWisdom. As for GLD, 64 13F filers in the first quarter featured the ETF among their top 10 holdings and 750 filers overall had a position in the ETF.


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