Greenlight Capital Re, Ltd. (NASDAQ:GLRE) announced its third quarter earnings after closing bell today, reporting net income of $56.5 million for the September quarter. That’s compared to net income of $46.1 million in the same quarter a year ago. Fully diluted net income per share was $1.50, compared to $1.23 in the same quarter a year ago.

See Greenlight Q3 letter to shareholders here.

Greenlight Capital

Fully adjusted book value per share was $25.70 as of the end of September. That’s a 9% increase from $23.57 per share at the end of last September.

Greenlight Capital’s filings

The filing talks about the fund’s reduced exposure to gold over the course of this year, both due to price fluctuations and because it trimmed some positions. However, it is not clear whether the fund sold more gold in last quarter like it did in Q2. The fair value of Greenlight Capital Re, Ltd. (NASDAQ:GLRE)’s commodity investments which primarily comprises of gold bullion stood at $67.49 million at the end of Q3, up from $50.48 million at the end of Q2. Greenlight Re’s total long investments on the consolidated balance sheet amounted to $1.23 billion, up from $1.07 billion in Q2. Still, the long investments have only just edged past the $1.2 billion the fund reported on its balance sheet at the end of FY2012.

The filing also shows that Greenlight Capital Re, Ltd. (NASDAQ:GLRE) is shorting Chinese yuan, AUD and JPY through options, however it is not clear if this position is merely a hedge or an outright short (a spokesperson for Greenlight Capital told ValueWalk that they were unable to add anything at this point beyond what is stated in the filing). The 10-Q says,

As of September 30, 2013 and December 31, 2012, included in interest rate options are contracts on U.S. and Japanese interest rates denominated in U.S. dollars. Included in put options are options on foreign currencies, primarily the Japanese Yen, the Australian Dollar and the Chinese Yuan, denominated in U.S. dollars.”

Greenlight Capital’s filing reveals more details

The hedge fund chaired by David Einhorn provided additional information in its regulatory filing today. It stated that as of September, its investment portfolio “was conservatively postured with a net long position of 35.0%.” The firm noted that equity markets rose even though corporate earnings showed “lackluster growth.” It suggested that rising stock prices appear to be driven “by a more stable environment and continued monetary policy stimulus.” The firm also warned that difficult times may be ahead:

“In the face of a more challenging earnings backdrop, and a continuation of emergency policies, we believe the market’s rapid advance is creating a potentially unstable condition, which could resolve itself in a number of ways and is difficult to predict.”

Greenlight prepares for volatility

The firm stated that at the end of the September quarter, it had reduced its gross exposure in order to plan for the expected volatility ahead and also “to take advantage of new opportunities.” They plan to keep holding a combination “of a significant position in gold, macro positions in the form of options on higher interest rates and foreign exchange rates, short positions in sovereign debt and sovereign credit default swaps.”

Greenlight reports on long and short investments

At the end of September, Greenlight Capital Re, Ltd. (NASDAQ:GLRE)’s long investments and financial contracts receivables reported were $1.236 billion. That’s compared to $1.2 billion as of the end of December last year. It’s an increase of 2.9%, mostly because of an increase in financial contracts receivable. The firm reported that the increase was partially offset by “the disposal of a portion of our long equities and, to a lesser extent, the decrease in commodities during the nine months ended September 30, 2013.”

As of the end of September, Greenlight Capital Re, Ltd. (NASDAQ:GLRE)’s exposure to long investments rose to 106%, compared to 102.5% at the end of December last year. Their exposure to short investments rose to 71% compared to 54% as of the end of last September. This doesn’t include gold, CDS, sovereign debt, cash, foreign currency positions, interest rate options and other macro positions.

Tabinda Hussain contributed to this post.