UPDATE 1-Greenlight’s Einhorn still shorting Moody’s, S&P

* Greek crisis first sign sovereign debt bubble ‘popping’

* Shares in Moody’s drop 6.6 percent to $19.50 after hours

* Einhorn recently bought African Barrick Gold

By Svea Herbst-Bayliss and Jennifer Ablan

NEW YORK, May 26 (BestGrowthStock) – Hedge fund manager David
Einhorn, who had questioned the health of Lehman Brothers four
months before its collapse, said on Wednesday he is still
shorting Moody’s Corp (MCO.N: ), citing the short-term approach
it uses in its assessments.

Shares of the rating agency plunged 6.6 percent to $19.50
in after-hours trade, following Einhorn’s comments.

Einhorn, whose Greenlight Capital manages $6.5 billion,
reiterated that Moody’s Investors Service continues to use a
short-term outlook — only 12 to 18 months — to analyze data
to assess countries’ abilities to finance themselves. He spoke
before some 1,200 hedge fund executives at the annual Ira Sohn
Investment Research Conference.

Einhorn last fall had criticized Moody’s, saying it
“…makes five-year medium-term qualitative assessments for
each country, but does not appear to do any long-term
quantitative or critical work.”

Standard & Poor’s (MHP.N: ), the rating agency owned by
McGraw-Hill’s, shares the same problem, Einhorn said.

He thinks the euro zone debt crisis could cause more
problems for the rating agencies.

What’s more, Einhorn said the credit debacle in Greece and
its euro zone neighbors could be a prequel to what might occur
in the United States.

The Greek crisis might be the first sign the “sovereign
debt bubble” is “popping,” adding that the United States still
has many inadequately capitalized banks and it is difficult to
get an accurate gauge on their health.

With the instability in the banking financial system along
with poor government policies, Einhorn has increased exposure
in gold and gold securities.

Einhorn says his fund recently bought shares of African
Barrick Gold (ABGL.L: ) because it is cheaper than other gold

Einhorn said last week at Greenlight Capital Re’s
investment meeting that he still holds physical gold. “We tend
to think of gold as a currency,” he said, adding, “I think
there’s going to be a lot of inflation.”

Stock Market

(Reporting by Svea Herbst-Bayliss and Herbert Lash; Writing by
Jennifer Ablan; Editing by Leslie Adler)

UPDATE 1-Greenlight’s Einhorn still shorting Moody’s, S&P