Dialectic Capital, like other short biased hedge funds has been taking heat from the booming equity markets. The hedge fund notes in a recent letter obtained by ValueWalk that most shorted stocks have performed unreasonably well in the past months, defying fundamentals. Dialectic thinks that this outperformance is a predictor of a market correction, as similar corrections have occurred on three previous occasions according to Morgan Stanley’s analysis. Dialectic Antithesis Offshore is down 4.82 percent in Q1.

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