The gold bloodbath that hit the market over the past two trading sessions has definitely caused a dent in the portfolio of billionaire hedge fund managers. John Paulson and David Einhorn suffered combined losses of more than $640 million since Friday, according to their latest SEC filings, with the bulk concentrated in the former’s massive position in the SPDR Gold ETF. Einhorn’s Greenlight took a big hit on its holdings of the gold miners ETF.
An implosion that appears to have started in the gold market last Friday spread throughout the commodities complex on Monday, with everything from crude oil to soybeans falling. Physical gold lost more than $200 per ounce, sliding nearly 15% over the past two trading sessions.
Players in the gold market got hurt, and among those are some of the world’s most high-profile investors. John Paulson, of the eponymous hedge fund with approximately $20 billion under management, took a big hit. Just with his positions in gold miners Paulson lost more than $171 million over the past two trading sessions, if his latest disclosed holdings remained unchanged. Add an additional $430 million in losses from his 21.8 million stake in the SPDR Gold Trust, and total paper losses climb to $601 million.
Among his individual gold equity positions, Paulson took the biggest hits in AngloGold Ashanti, Freeport McMoran (which has exposure to several other metals including copper and silver), and Novagold. Paulson & Co. is AngloGold’s largest shareholder, with more than 7% of the shares, and lost $93 million on that stake. Novagold, where the hedge fund titan owns 11.36% of shares outstanding, delivered losses worth $13.3 million, while Freeport McMoran’s losses added to $31.7 million.
Fellow hedgie billionaire David Einhorn also suffered heavy losses, even though they were nowhere near Paulson’s. Einhorn’s Greenlight Capital, which had nearly $8 billion under management as of our latest count, had major positions in the Market Vectors Gold Miner ETF andBarrick Gold. With the later, which Paulson also owns, Einhorn’s hedge fund lost $9.7 million. On his position in the former, of which Greenlight owns about 3%, Einhorn lost $31 million, for a combined hit of $40.7 million.
It remains unclear what caused the violent selloff. As I wrote previously, rumors of a forced sale of gold by the Cypriot government, along with calls by Goldman Sachs and other banks to short the yellow metal, and a weak GDP print from China, seem to have exacerbated the declines. Nervous margin call and stop-loss selling seem to have fueled a self perpetuating cycle, RBC Wealth Management’s George Gero told Forbes on Monday.