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.
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
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.
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