Greenlight Capital delivered a strong 8.2% return in Q1 2025, significantly outperforming the broader hedge fund universe and the S&P 500, driven largely by a concentrated bet on gold, according to a report by Reuters citing founder David Einhorn’s latest investor letter.

The hedge fund, long known for its contrarian views and sharp macro calls, said the rally in gold – its top-performing position – was a key driver of gains during the quarter. Greenlight holds both physical bullion and call options, as gold surged 19% over the three-month period. By contrast, the S&P 500 fell 4.3% and the average hedge fund lost 0.38%, per data from HFR.

Einhorn also revealed a shift in Greenlight’s macro outlook, stating the firm moved from a cautious stance to outright bearish in late February. “We suspect we are now in a bear market that is just starting,” he wrote, adding that current market conditions favour defensive strategies and hedges against volatility.

The letter paints a bleak picture of the policy direction under the Trump administration, describing it as “go fast and break things.” The firm expects a mix of aggressive tariffs, sweeping government job cuts, and inflationary policies to dampen consumer sentiment and slow economic growth – conditions Greenlight believes will further support its gold thesis.

In response, the fund has initiated several new short positions in consumer-facing companies, anticipating a pullback in discretionary spending. While the specific names were not disclosed, the firm sees weakening household balance sheets as a near-term risk to earnings across the sector.

Greenlight has also taken positions in SOFR futures, betting the Federal Reserve may be forced to cut rates more aggressively than markets currently forecast, and implemented tail-risk protection against potential dollar depreciation relative to the euro and yen.

Greenlight Capital declined to comment on the performance.