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Press Releases

FOR IMMEDIATE RELEASE

Hedge Fund Managers Remain Predominantly Downbeat on U.S. Equities According to Survey; Managers Nonetheless View QE2 as Gift Horse, Some Lever Up Accordingly

New York, NY – November 29, 2010 – Hedge fund managers remain predominantly downbeat on U.S. equities, according to the TrimTabs/ BarclayHedge Survey of Hedge Fund Managers for November.  About 39% of the 83 hedge fund managers surveyed are bearish on the S&P 500, and bullish sentiment sank to 31% from 36% in October.

“Moods are still somewhat sour, but hedge funds returned 7.0% in the four months ended October following a rough patch in May and June,” said Sol Waksman, founder and President of BarclayHedge.  “About 80% of the funds that reported returns for the January-October period are profitable in 2010.”

Almost half of hedge fund managers believe QE2 will have a positive impact on asset prices, although four in 10 feel it will ultimately have a negative impact on the economy.  Meanwhile, only 9% of managers plan to decrease leverage in the coming weeks, the smallest share since May, while 16% are inclined to increase it.

“It is telling that some managers aim to lever up even though they are predominantly downbeat on stocks,” explained Vincent Deluard, Executive Vice President at TrimTabs.  “The Fed is begging firms, consumers and market participants to take risks, and hedge fund managers are capitalizing on kind conditions.  They view QE as an asset-price gift horse — one they are not looking in the mouth — and hedge fund investors have handed them $33 billion in recent months.  Also, it certainly doesn’t hurt that managers can borrow to buy assets for virtually nothing courtesy of historically low short rates.”

Bearish sentiment on the U.S. Dollar Index surged to 44% in November, the highest level in six months, from 30% in October.  Meanwhile, bond sentiment has been hammered as long-term interest rates have spiked.  Bearish sentiment on the 10-year Treasury note vaulted to 49%, the highest level since May, while bullish sentiment dove to 13%, the lowest level in six months.

TrimTabs/BarclayHedge Survey

“Market participants have no interest in fighting the Fed in the belly of the curve, where its Treasury purchases are concentrated,” noted Deluard.  “But hedge fund managers are very bearish on the 10-year, and futures traders have been dumping the 30-year bond contract.  Also, mom and pop ditched bond mutual funds in the past fortnight after pouring money into them for 100 straight weeks, and TIPS funds have raked in assets in 2010.  The more the market feels the Fed’s reflation strategy will succeed, the more powerless policymakers become to prevent long yields from grinding higher.”

The TrimTabs/BarclayHedge database tracks hedge fund flows on a monthly basis.  The TrimTabs/BarclayHedge Hedge Fund Flow Report provides detailed analysis of these flows as well as relevant topical studies.  Click here for further information.

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.

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.  For more information, please visit us here.

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