20 stocks hedge funds love in an 'Armageddon' recession: BofA

Hedge funds are currently allocating their assets as if a serious recession is coming.Here are 20 stocks that hedge funds are most optimistic about right now.

While most stock market strategists expect the US economy to stay stuck in choppy waters in 2023, some big-money investors are prepping for a full-blown economic tsunami. Hedge funds are currently"positioned for Armageddon, not recession-lite," Savita Subramanian, the head of US equity and quantitative strategy at Bank of America, remarked in a recent note. That stands in stark contrast to the consensus view that"Our economists expect an economic recession of half the magnitude of a typical recession," Subramanian wrote in the late April note."But positioning exhibits extreme risk-off.

Long-only funds are more defensively positioned now than at any point since 2008, including the sharp global downturn in 2020, according to Bank of America. The firm also found that all hedge funds, including long-shorts, are overweight defensives relative to their economically sensitive peers by 14 percentage points, which is the strongest tilt since at least 2012.Hedge fund managers have tried to minimize risk by shifting their sector weightings.

Additionally, hedge funds' allocation to bonds relative to stocks is at a record high, according to Bank of America. Fixed income has

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US Banking Industry in Turmoil: A Comprehensive Look at the 'Great Consolidation' and Largest Bank Failures of 2023 – Finance Bitcoin NewsData shows the combined assets of First Republic Bank, Silicon Valley Bank, and Signature Bank outpaced the top 25 bank failures of 2008. Economics Finance
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Bank stocks continue to fall following First Republic demiseRegulators have barely written the epitaph for First Republic Bank, but investors on Wall Street have already moved onto speculating which bank might be the next to fail. Bank stocks fell sharply Tuesday, led downward by smaller banks with heavy exposure to uninsured deposits and commercial banks like Western Alliance Bank, PacWest Bancorp, Comerica and Zions Bank. Shares of Western Alliance were down 17% in afternoon trading and PacWest dropped 25%, with trading of both stocks halted briefly due to high volatility. The ongoing concern among investors and regulators is that banks such as PacWest have large amounts of uninsured deposits _ those above $250,000.
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