Sat, Mar 24, 2018
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge funds bearish on US equities and 10-year treasury note - TrimTabs/BarclayHedge survey

Monday, March 07, 2011
Opalesque Industry Update - Hedge fund managers have turned bearish on U.S. equities, according to the TrimTabs/BarclayHedge Survey of Hedge Fund Managers for February. About 40% of the 89 hedge fund managers the firms surveyed in the past week are bearish on the S&P 500, up sharply from 26% in January, while only 26% are bullish, down from 37%.

“Bullish sentiment less bearish sentiment is negative for the first time since November,” said Sol Waksman, founder and President of BarclayHedge. “Increased caution might owe in part to excellent recent performance. Our Hedge Fund Index has posted a positive return for six straight months.”

About 37% of hedge fund managers are bearish on the 10-year Treasury note, while only 15% are bullish. Bullish and bearish sentiment on the U.S. dollar index are balanced at 31%. Meanwhile, 18% of managers aim to increase leverage in the near term, while only 15% plan to lever down.

“Managers aim to lever up even though they are bearish on both bonds and stocks,” notes Vincent Deluard, Executive Vice President at TrimTabs. “Why? They still have a large incentive to gamble with borrowed money because short rates round to nil. If one of the Fed’s goals was to ignite speculation and greed then it has succeeded famously.”

About 52% of hedge fund managers feel the rally owes primarily to QE2, while 35% cite the end of quantitative easing in June as the biggest threat to the rally. TrimTabs points out that the level of the S&P 500 and the size of the Fed’s balance sheet have exhibited a positive correlation of 88.4% since the start of QE1 in March 2009. Meanwhile, managers are concerned about oil prices. About 24% believe oil is more likely to hit $150 per barrel than the S&P 500 is likely to ascend to 1,600.

“We’ll take the other side of that action,” notes Deluard. “We did see a similar surge to $150 from $100 in 2008, and tension in the Middle East is obviously higher now. But oil spiking to $150 from here represents a move of nearly seven standard deviations, while the S&P 500 climbing to 1,600 represents a move of less than three standard deviations. The market participants who agree with us that concern about sharply higher oil prices is overdone might consider capitalizing by selling long-dated out-of-the-money call options on oil futures.”

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.

(press release)



What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. John Paulson, once the industry's largest hedge fund, to return some investors' money[more]

    Komfie Manalo, Opalesque Asia: John Paulson is reported to be retuning some of his investors' money as a number of his hedge funds continue to suffer setbacks, reports

  2. Institutional Investors - Overdrawn pension fund scores gains[more]

    From Investments in big banks, pawn shops and rolling papers helped boost public safety workers' underfunded pensions this past calendar years, according to newly released figures. After recording middling returns in recent years, the Police & Fire Pension Fund (P&F) notched

  3. Activist Investors - The seven most undervalued stocks in Larry Robbins' portfolio, Stamford hedge fund still seeking shakeup of Taubman board[more]

    The seven most undervalued stocks in Larry Robbins' portfolio From ...On February 14th, Larry Robbins' firm Glenview Capital Management filed its quarterly Form 13F regulatory filing. The firm's stock portfolio totals $18.5 billion with 58 positions according to the latest

  4. Hot hedge fund loses 21% after bet on volatility goes wrong[more]

    From In December, Shahraab Ahmad shared with his hedge fund clients the principle that helped him trounce peers for two turbulent decades: steer clear of the crowd. He'd turned $50 million into an operation with more than $700 million over three years and delivered market-beating retu

  5. Opalesque Exclusive: Northern Trust builds on blockchain-backed private equity solution[more]

    Bailey McCann, Opalesque New York: Private equity clients at Northern Trust can now carry out audits of private equity lifecycle events directly from the blockchain. Northern Trust, working with PwC and other audit firms in Guernsey, has added this feature to its existing solution set for private