Hedge Funds Lose Luster for Gold In Q4

Hedge Funds Lose Luster for Gold In Q4

While Apple Inc. (NASDAQ:AAPL)’s dethroning from its top spot among hedge fund holdings may have been the headline in Goldman Sachcs’ hedge fund trend montior for Q4, it was not the only asset that lost some investor interest. Gold has also failed to spike any major activity in the last quarter, in fact long exposure in Gold measured by SPDR Gold Trust (ETF) (NYSEARCA:GLD) is now at its lowest in at least four years.

GLD now takes only 0.6 percent of the hedge funds’ long holdings. SPDR Gold Trust (ETF) (NYSEARCA:GLD) fell 6 percent in Q4 compared to an 11 percent rise in Q3.

GLD activity

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The downfall in long interest in GLD ETF is just an overall indication of how hedge funds moved away from Gold to other assets in Q4. There is some irony when we see both Apple Inc. (NASDAQ:AAPL) and GLD hitting multi year lows at the same time. We have pointed out in our previous analysis that these two assets have the highest possible analyst coverage and a ubiquitous investor thesis that deprives these holdings from having any edge on others.

Of course Apple Inc. (NASDAQ:AAPL) still has immense potential and in all likelihood hedge funds reclaimed their holdings when Apple was trading on really low numbers in early January.

As for Gold, we cannot name one hedge fund that was profitable on it in Q4 owing to massive decline in price. Seth Klarman’s Baupost Group, David Einhorn’s Greenlight Capital, Dan Loeb’s Third Point, Paul Singer’s Elliott Management, all lost in Gold, which was among their major holdings. This is just naming a few bigwigs and believe us when we say that this is a much longer list.

The losses were not a major surprise as Gold prices hit unexpected lows in Q4. The noteworthy aspect is the uniformity of this holding, except Warren Buffett nearly everyone else holds a position.

The long interest in SPDR Gold Trust (ETF) (NYSEARCA:GLD) now amounts to $5.866 billion, down from $7.271 billion in Q3 according to Goldman Sachs Group, Inc. (NYSE:GS) data pertaining to holdings of 725 hedge funds.

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