Greenlight's David Einhorn: Fed doesn't have the stomach to fight inflation

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• Famed hedge-fund manager David Einhorn said Wednesday that the Federal Reserve "doesn't have the stomach to fight inflation" because policymakers are afraid to trigger a market correction or a recession.
• "They are really left with bad choices," he told CNBC, arguing that the U.S. central bank has waited too long to curtail inflation.
• Einhorn predicted that the Fed will choose to direct its policy towards keeping interest rates under control, allowing the dollar to depreciate via inflation instead.
• Einhorn, the founder and president of Greenlight Capital, added that he's positioned his portfolio to weather inflation.
• The fund has also targeted smaller-cap stocks with low valuations.
• That includes a position in Green Brick Partners (NASDAQ:GRBK), a homebuilding and land-development company. The stock represents Greenlight's largest holding, and Einhorn serves as the company's chairman.
• Greenlight has also added to its position in Sonos (NASDAQ:SONO), which Einhorn says can extract additional value from its patent portfolio.
• Asked about cryptocurrencies, Einhorn said he doesn't currently invest in the asset class, calling the sector "very complicated." He prefers gold as an inflation hedge.
• "I'm not negative on [cryptocurrencies]. ... They may continue to do extremely well. I just haven't chosen to invest in them," he said.
• Turning to Tesla (NASDAQ:TSLA), which Einhorn has expressed bearish views on in the past, the investor refused to disclose whether he currently has a short position in the stock.
• However, he did take a jab at Elon Musk's company, saying "I'm not really sure what they do."
• Einhorn isn't alone in predicting a long battle with inflation. See why billionaire investor Paul Tudor Jones called the inflation situation "very bleak" earlier on Wednesday.