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Alternative Market Briefing

Hedge funds bullish on US equities, will need to invest aggressively to pass 2008 highwater marks

Tuesday, August 02, 2011

amb
Sol Waksman
From Kirsten Bischoff, Opalesque New York:

Even ahead of the US debt ceiling agreement, hedge fund managers have been turning increasingly bullish on US equities. With TrimTabs and BarclayHedge reporting 43% of managers expressing bullish sentiments about the S&P 500 (in July), it seems as though hedge funds are holding tight to the belief that the US has turned the corner in its financial crisis. The bullish equities outlook is the highest it has been since December of last year, and was up 15% over the outlooks expressed only one-month prior.

"This reversal is striking," Sol Waksman, Founder and President of BarclayHedge. "Hedge fund managers were meaningfully bullish on domestic stocks in only one month in the first half of the year. Our research shows that hedge fund sentiment is a decent leading indicator, so the shift could help support stock prices in the near term."

The sentiment of these managers is even more important for investors to evaluate because managers may need to make strong investment commitments based on this outlook if they hope to make up for YTD performance that is lagging the greater financial markets and that has disappointed many hedge fund investors. The firm points out that many funds are now back to being in the red, or are only just above their June 2008 high-water marks. Performance fees, which may have eluded many funds since 2007 are in dan......................

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