Hedge Funds

The latest trend in hedge fund positioning is to stay neutral. According to recent data from CFTC and BAML’s hedge fund monitor there are no extreme positions, that is to say, there is not much in either the crowded short and crowded long zones, except for long crude oil.

Meanwhile hedge funds continue to underperform the S&P 500 index which is up 4.8 percent for the month till Jan 24th while  the Investable HF index gained 1.41 percent in the same period. John Paulson is having a decent 2013. Paulson Advantage fund is up 1.18% through January 22nd, and Paulson International fund is up 2.97%, according to data from Lyxor. The returns through January 2008 are likely higher as equity markets rallied last week. Event Driven and Equity L/S continue to be the best strategies in the new year while Equity Market Neutral and Macro underperform.

In our last update, till January 17th, hedgers were positioned in the crowded long zone of S&P500 futures but the trend reversed after some serious selling. Despite Apple Inc.’s (NASDAQ:AAPL) free-fall below $500, NASDAQ 1000 and technology are holding on strong and the trend is towards buying.

Trends for wheat approaching crowded short zone also flipped after partial covering in the week ending Jan 17, however large speculators started to pack up on the shorts once again in last week. Gold continues to near the Buy signal as hedgers buy more futures while Platinum looks like it will enter the crowded long zone.

Hedge funds platinum positionsAggressive buying (up 180 percent) was seen in euro; hedge funds were covered their shorts in yen, 30 yr notes while adding to their shorts in Wheat, in last week.

Hedge funds euro positions

The breakup of hedge funds’ positions across asset classes as of the week ending on Jan 22nd is as under:

Buy: NASDAQ-100 (INDEXNASDAQ:NDX), Russell 2000, Soybean, Gold, Silver, Platinum, Palladium, Crude oil, Gasoline, USD, Euro, 10 yr notes 

Net Long: S&P 500 (S&P Indices:.INX), All Metals, Heating Oil, Gasoline, USD, Euro, 10 yr notes, 2 yr notes

Crowded Net Long: Crude oil

Approaching Crowded Long: Platinum

Sell: S&P 500 (S&P Indices:.INX), Copper, Heating oil, 2 yr notes

Net Short: Natural Gas, Yen, Wheat, 30 yr Notes

Approaching Crowded Short: Wheat

Flat: Corn