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David Einhorn Buys Three New Stocks: These Are The Names And Theses (Q3 Letter)
David Einhorn's Greenlight Capital funds returned 5.9% in the third quarter of 2020, compared to a gain of 8.9% for the S&P 500 in the same period. This year has been particularly challenging for value investors. Growth stocks have surged as value has struggled. For Greenlight, one of Wall Street's most established value-focused investment funds, Read More
This week, active managers have, on average, a 63% allocation to equities. This is up slightly from 62% last week. The median allocation rose to 83% while the top quartile of active managers have an allocation of 100% or greater to equities with the bottom quartile at a 50% or less equity exposure. The eight week moving average is now at 66%.
The NAAIM number measures current equity exposure (0% would be all cash, 100% fully invested). Additional detail can be found here.
Individual investor’s sentiment has now increased for three consecutive weeks. Bearish sentiment fell to 23% from last week’s reading of 26%. The Bull-Bear spread is at 31%, the highest level since February 2007. On average, when the Bull-Bear spread is at or above the current level, subsequent 360 day returns on the S&P 500 are only 1.7% compared to 8% over the entire sample. The eight week moving average of bullish sentiment increased to49%.
Individual investor sentiment is now above the “extreme” territory; measured as one standard deviation above average.