Einhorn's Greenlight Capital: Large S&P500 Puts Position (13F)

MarketFolly.com reports, according to 13F filings, David Einhorn's $6-billion hedge fund Greenlight Capital (no relationship to us) has loaded up on S&P500 (SPY) PUTS, building a 24.25% position, most likely portfolio insurance, betting the market is due for a big blow-off. Previously, Einhorn reportedly built up large positions in gold, both physical and paper. Now it appears he has opted for physical gold because its cheaper to store and is using GLD (SPDR Gold Trust) PUTS as downside insurance on his physical (long-term) gold.

Hedge Fund managers are worth watching because their directional votes (positions) often constitute stringently researched decisions, that are beyond the grasp and willingness of most investors.

Here is an excerpt:

The following were their long equity, note, and options holdings as of June 30th, 2009 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
SPDR Gold Trust (GLD) Puts
Cardinal Health (CAH)
General Electric (GE) Puts
Transatlantic Holdings (TRH)
ATP Oil & Gas (ATPG) - position is less than 0.45% of their overall portfolio
Endurance Specialty Holdings (ENH) - position is less than 0.30% of their overall portfolio
US Natural Gas Fund (UNG) - position is less than 0.02% of their overall portfolio

Some Increased Positions (A few positions they already owned but added shares to)
Everest Re (RE): Increased position by 598%
IPC Holdings (IPCR): Increased position by 132%
Pfizer (PFE): Increased position by 102%
Wyeth (WYE): Increased position by 100%
Aspen Insurance (AHL): Increased position by 74%

Some Reduced Positions (Some positions they sold some shares of)
MEMC Electronics (WFR): Reduced by 50%
EMC (EMC): Reduced by 44%
Echostar Corporation (SATS): Reduced by 37%
Helix Energy (HLX): Reduced by 34%
Harman International (HAR): Reduced by 31%
URS (URS): Reduced by 28%

Removed Positions (Positions they sold out of completely)
SPDR Gold Trust (GLD)* (there is a big asterisk next to this one, so read our summary below to find out why). Target (TGT), Hess (HES), Commscope (CTV), Dow Chemical (DOW), Conway (CNW), Rohm & Haas (ROH), Discover Financial (DFS), Jones Apparel (JNY), Western Digital (WDC), American Eagle Outfitters (AEO), Patriot Coal (PCX), Cadence Design (CDNS), Williams Sonoma (WSM), JA Solar (JASO), Focus Media (FMCN), Carpenter (CRS), Corning (GLW), Supervalu (SVU), Sunstone Hotel (SHO), Bradywine Realty Trust (BDN)

Top 15 Holdings (by % of portfolio)

1. SPDR S&P500 (SPY) Puts: 24.25% of portfolio
2. Pfizer (PFE): 6.32% of portfolio
3. URS (URS): 5.56% of portfolio
4. Teradata (TDC): 5.11% of portfolio
5. Wyeth (WYE): 4.56% of portfolio
6. Cardinal Health (CAH): 4.27% of portfolio
7. Market Vectors Gold Miners (GDX): 4.25% of portfolio
8. Allegheny Energy (AYE): 3.75% of portfolio
9. EMC (EMC): 3.34% of portfolio
10. Einstein Noah (BAGL): 3.27% of portfolio
11. Aspen Insurance (AHL): 3.25% of portfolio
12. Health Management Associates (HMA): 2.49% of portfolio
13. McDermott (MDR): 2.33% of portfolio
14. MEMC Electronic (WFR): 2.29% of portfolio
15. IPC Holdings (IPCR): 1.77% of portfolio

We've got a lot of technicalities to cover here so let's dive right in. Firstly, Einhorn did not get out of gold. Last go-round, we saw Greenlight had amassed a large gold position via the SPDR Gold Trust (GLD). Although GLD no longer is being reported on his 13F filing (they sold out of it), they still own a large gold position. They have started storing physical gold due to cost savings as noted when we looked at Greenlight's recent investor letter. This is the perfect example of why you can't blindly follow SEC filings.