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Only 17% of hedge fund managers bullish on S&P 500, according to TrimTabs/BarclayHedge survey

Monday, August 30, 2010
Opalesque Industry Update - Managers neutral on dollar. Hedge fund managers upbeat on Treasuries, and most want Bush tax cuts extended.

Only 17% of hedge fund managers are bullish on the S&P 500, according to the TrimTabs/BarclayHedge Survey of Hedge Fund Managers for August. About 47% of the 104 hedge fund managers the firms surveyed in the past week are bearish on stocks, up markedly from 33% in July.

“Bearish sentiment skipped sharply higher, and bullish sentiment plunged,” said Sol Waksman, CEO of BarclayHedge. “Meanwhile, short interest is heaviest in the most cyclical sectors, and from a seasonality standpoint September is far and away the worst month of the year for stocks. The developments hedge fund managers are telegraphing bode ill for equities.”

Sentiment on the U.S. dollar is evenly split, as 29% of managers are bullish and 29% are bearish. Almost half of managers were upbeat on the greenback just three months ago. As to U.S. debt, only 17% of managers are bearish on 10-year U.S. Treasury notes. Bullish sentiment vaulted to 36% from 14% in the past two months.

“Many fund managers have had their heads handed to them betting on an increase in long-term interest rates,” said Vincent Deluard, Executive Vice President at TrimTabs. “If you can’t beat ‘em, join ‘em? Retail investors continue to exhibit an insatiable appetite for bonds—bond mutual funds have sucked in a staggering $679 billion since the start of 2009. Mom and pop are disgusted with U.S. equities, so bond fund inflows are bound to bloat further.”

About 63% of managers want to see the Bush tax cuts extended in some form. Half of managers think decreased deficit spending is warranted, while 18% feel the government should spend more. Almost all of the managers who prefer tighter monetary policy also prefer tighter fiscal policy.

“These ‘double’ hawks are pessimistic about the economy and stocks—only 6% of them are bullish on the S&P 500,” noted Deluard. “They realize their policy prescription is too distasteful for the government and the Fed, and they fear that record deficits and ‘exceptionally low policy rates for an extended period’ read a bit too much like another Greek Tragedy.”

(Press release)


The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis. The Survey of Hedge Fund Managers appears monthly in the TrimTabs/BarclayHedge Hedge Fund Flow Report, which provides detailed analysis of hedge fund flows, assets, and returns alongside topical studies. For further information, please visit http://www.barclayhedge.com/products/trimtabs-hedge-fund-flow-report.html


TrimTabs/BarclayHedge Survey of Hedge Fund

 

Bullish

Neutral

Bearish

Managers for August 2010

 

S&P 500

Jul-10

33.90%

33.10%

33.10%

Aug-10

17.30%

35.60%

47.10%

10-Year U.S. Treasury Note

Jul-10

34.50%

49.60%

16.00%

Aug-10

36.00%

47.00%

17.00%

U.S. Dollar Index

Jul-10

21.90%

49.00%

29.20%

Aug-10

29.00%

42.00%

29.00%


BarclayHedge is a leading hedge fund data vendor and one of the foremost sources for proprietary research in the field of alternative investments. From its origin as a research specialist and performance measurement firm, BarclayHedge has developed complete client services as a publisher, database and software provider, and industry consultant. www.barclayhedge.com


TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity—including mutual fund flows and exchange-traded fund flows—as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. www.TrimTabs.com


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