Hedge funds turn the most bearish on stocks this year. Plus, why oil isn’t surging on the latest Middle East tensionsHedge funds globally have turned the most bearish they’ve been on equities this year, as sticky inflation and renewed geopolitical concern have dragged stock markets lower. Short sellers, meanwhile, have been raking it in over the last 30 days.
After ending each of the last three months with a net bought position, hedge funds held a net sold position by mid-April, the note said. “We are seeing significant interest in market neutral and long short equity managers due to investor concerns relative to high U.S. equity valuations, stubbornly high inflation, and geo-political risks,” said Don Steinbrugge, founder and chief executive of Agecroft Partners, a hedge fund consulting firm.
Traders added long positions in consumer staples such as food and beverage companies and also piled into health-care stocks, the Goldman note also showed. Hedge funds kept buy positions in semiconductor and related equipment stocks which remained at multi-year highs. Short sellers were in a bind for most of last year as a raging bull market, partly powered by enthusiasm around AI as well as hopes of an early rate cut, forced them to book nearly US$190 billion in losses for 2023.Overall U.S. and Canadian equity short exposure fell by US$50 billion to US$1.08 trillion in the last 30 days, largely due to a fall in the mark-to-market value of short positions and short covering, according to S3 Partners.
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