Market Factors: I guess I care about top hedge fund holdings now

In this edition, I’ll describe my newfound interest in hedge fund holdings, and cover domestic stocks that might even benefit from U.S. tariffs. The diversion is Swiftie-focused, and we’ll look ahead to the important data points on the calendar.A Goldman Sachs report made me change my mind about something this week. The subject is hedge fund equity holdings.

This time, I did happen to open the report and was taken aback by two data points in the first paragraph. One, long/short funds have so far this year returned 14 per cent on average – double the average return of the past 20 years. Two, Goldman Sachs’ Hedge Fund VIP list of the most common hedge fund equity holdings is up 30 per cent year to date.

To explain why this might be important I’ll need to back up and explain one concept first. Columbia University finance professor and all-around polymath Michael Mauboussin did a relevant experiment every year to show the wisdom of crowds. He would ask each student to guess the number of jelly beans in a jar. Inevitably, no single guess would be close but the average of all guesses would be very accurate.

Donald Trump has stridently proposed corporate tax cuts which, if implemented, would further underscore the tax advantage of operating in the U.S. versus Canada, and may result in domestic firms relocating operations southward. Mr. Jefferies suggests domestic energy stocks, likely exempt from tariffs and generating revenue in U.S. dollars, as promising investments for the next four years. Mr. Aiken mentioned the deceptively named Tourmaline Oil Corp. , which generates 60 per cent of its revenue in greenbacks and will benefit from deregulation, as another domestic stock with a strong outlook.I have nothing against Taylor Swift and don’t begrudge her for the gargantuan fortune she industriously earned.

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