Hedge-fund manager David Einhorn is betting that gold-mining companies will outperform bullion, reversing the trend from the past six months. “A substantial disconnect has developed between the price of gold and the mining companies,” Einhorn said today in a conference call discussing results at Greenlight Capital Re Ltd. (GLRE), the reinsurer where he is chairman. The reinsurer cut holdings of the commodity in the third quarter and moved funds into the Market Vectors Gold Miners ETF, Einhorn said. The exchange-traded fund lost 5.4 percent in the six months ended yesterday, while bullion gained 11 percent. “With gold at today’s price, the mining companies have the potential to generate double-digit free cash flow returns and offer attractive risk-adjusted returns even if gold does not advance further,” Einhorn said. “Since we believe gold will continue to rise, we expect gold stocks to do even better.” The ETF slipped 0.5 percent to $58.51, paring losses from earlier in the day when it dropped as much as 4.8 percent. Einhorn, president of New York-based Greenlight Capital Inc., invests funds for the reinsurer, which was created in 2004. He said he has positioned the reinsurer’s portfolio to weather volatility in equity markets tied to slowing economic growth and Europe’s sovereign debt crisis. ‘Significant Position’ “Given the challenging macroeconomic environment, we intend, for the foreseeable future, to continue holding a significant position in gold and other macro hedges in the form of options on higher interest rates and foreign exchange rates, short positions in sovereign debt and sovereign credit-default swaps,” the reinsurer said in a regulatory filing yesterday. Einhorn has found new opportunities in the technology and automobile industries, and the reinsurer ended a bet on Pfizer Inc., the world’s largest drugmaker, he said today. Greenlight Capital Re swung to a third-quarter net loss of $4.5 million from a profit of $29 million a year earlier as claims costs increased. The Cayman Islands-based reinsurer slipped 2.8 percent to $21.91 today. To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net; Noah Buhayar in New York at nbuhayar@bloomberg.net To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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