How David Einhorn Is Positioning His Hedge Fund Ahead Of Continued Inflation

Inflation is poised to continue to worsen and it's not nearly as transitory as the Fed seems to think it is, according to Greenlight Capital's David Einhorn. 

"The Fed is committed to a position that just has to hope that inflation goes away," Einhorn said Wednesday on CNBC.

Monetary and fiscal policies are causing inflation but shortages are impacting inflation as well, he said, adding that companies that "actually make things don't get a lot of investment in the market."

The hedge fund manager said the Fed is afraid to do anything about inflation because it's afraid of negatively impacting the stock market and inflicting a recession. 

The Fed's current plan is to gradually eliminate quantitative easing and gradually raise rates, but Einhorn doesn't think that will be enough to fight current levels of inflation, therefore he is positioned for continued inflation.

"We believe that whether the Fed acts or doesn't act there's going to be quite a lot of inflation."

See Also: 28 Stocks To Benefit From Inflation, According To Jim Cramer

Positioning For Rising Inflation: Einhorn told CNBC Green Brick Partners Inc GRBK is his largest position. 

Green Brick Partners is a home builder and land developer in regions of the U.S. that people are gravitating towards, he said. 

The company has a compound revenue growth rate of 28% and a pre-tax profit growth rate of 44% since its public debut in 2014, Einhorn said, adding that it's trading at around six times this year's earnings. He described the positioning of Green Brick Partners as an "extraordinary situation."

Einhorn also owns stock in Sonos Inc SONO and recently increased his stake from "a very small position to a small position."

He increased his position following the U.S. International Trade Commission's ruling that Alphabet Inc GOOGL GOOG was infringing on some of Sonos' patents. 

The hedge fund manager thinks Sonos has an intellectual property portfolio that's being infringed upon by a lot of the large tech companies.

"So there's a possibility somewhere down the line that they will be able to license those patents and get an extra revenue stream at a very high margin that's not yet really factored into the estimates."

Sonos has a disciplined management team that has been executing for an extended period of time, as well as a good product and good growth prospects, Einhorn said.

GRBK, SONO Price Action: Green Brick Partners was up 9.99% at $23.78 and Sonos was up 0.93% at $32.48 at time of publication.

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