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Hedge Funds Have Never Been More Bullish Stocks (And Bearish Gold)

Tyler Durden's picture




 

Across the universe of hedge funds that Goldman Sachs covers, the net long exposure to the market reached a record-breaking 52% in Q4 2012 - the most bullish level on record. It would appear, as we noted here, that the 2-and-20 crowd of alpha generators have merely been corralled into beta-chasers as, just as they did in the run-up to the 2007/8 highs, their exposure is mirroring the broad market performance. It strikes us that a 'hedge' fund should, in general, be contrarily reducing exposure as the market rises but with turnover of all positions also at record lows it would appear the managers have set out their chips and are all holding on - as the reality of relative returns (in a fickle investing environment) trump absolute returns. Despite low turnover, hedge funds notably reduced holdings of underperforming long-time favorites Apple and gold (lowest holdings since the crisis began) while raising allocations to rallying Financials. Seems like deja vu to us?

Will hedge funds be turning point indicator as they were in 2007? Hedgies are the most bullish stocks on record currently - given their most net long nature...

 

as Turnover keeps sliding...

 

and GLD holdings are the lowest since the crisis began...

 

This positioning heading into the new year does make one wonder whether the low volume algo lift we have been experiencing along with incessant sell-side stratification that 'the rotation is here and its time for retail to step in' was merely to enable the over-exposed to exit on the basis of obviously slowing macro and no fiscal solution...

 

Charts: Goldman Sachs

 

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Thu, 02/21/2013 - 13:26 | 3263838 Aziz
Aziz's picture

Everything ounce hedge funds will sell, China and Russia will buy.

Thu, 02/21/2013 - 13:37 | 3263876 DoChenRollingBearing
DoChenRollingBearing's picture

Not if the Central Bank of DoChenRollingBearing gets there first...  Actually, our CB will be taking a month or so off form buying.  So this is your LAST CHANCE to buy before the big boys come in!

Thu, 02/21/2013 - 13:39 | 3263887 MillionDollarBonus_
MillionDollarBonus_'s picture

It's amusing that silly ZH small time ZH day traders consider the world's leading hedge funds the dumb money. It's like a weedy libertarian computer nerd judgmentally criticizing a heavy weight boxing champion for poor martial combat skills. Do you have any idea how pathetic greasy ZH day traders look to professional investors? Financial professionals view ZHers with the same indifference and annoyance as they would view a fly at the dinner table. To them, ZHers are nothing but a bunch of annoying pathetic losers with no investment knowledge or academic credentials.

Thu, 02/21/2013 - 13:42 | 3263909 resurger
resurger's picture

you mad?

Thu, 02/21/2013 - 15:41 | 3264115 Ag Tex
Ag Tex's picture

Zimbabwe was the best performing stock exchange, nominally, with the creation of more trillionaires than anywhere in the world.

Thu, 02/21/2013 - 17:27 | 3264841 thisandthat
thisandthat's picture

He defined himself pretty accurately, though.

Thu, 02/21/2013 - 13:43 | 3263911 DoChenRollingBearing
DoChenRollingBearing's picture

MDB wrote: "Financial professionals..."  That's pretty good, LOL!

Almost as funny as Barron's "investment pros", having the S&P whip 'em every time...

Thu, 02/21/2013 - 14:42 | 3264130 Non Passaran
Non Passaran's picture

What was that research that showed how most of those "professsionals" couldn't beat a random number generator?

Some professionals! 

Thu, 02/21/2013 - 17:30 | 3264857 Stuck on Zero
Stuck on Zero's picture

Yes.  How well did these hedge funds do in the 2008 bloodbath?

 

Thu, 02/21/2013 - 17:35 | 3264872 thisandthat
thisandthat's picture

If by random number generator you mean 16yo debutantes...: http://www.zerohedge.com/news/2013-02-08/friday-farce-16-year-old-outper...

Thu, 02/21/2013 - 13:46 | 3263926 rosiescenario
rosiescenario's picture

You are so correct....those Noble winners have had such a great track record in hedge fund management....LTC comes to mind....

Thu, 02/21/2013 - 13:52 | 3263954 RichardENixon
RichardENixon's picture

No one is saying they are "dumb money", MDB. These hard-charging, savvy and prescient hedge fund managers are busy dawn to dusk, 7 days a week, working to lure the unsuspecting retail investor back into the bubble so that they can pull the plug and enjoy their hard-won and well-deserved gains.

Thu, 02/21/2013 - 14:49 | 3263967 IridiumRebel
IridiumRebel's picture

i would imagine the vast majority are "retail investors". Why do some of the ZHer's parrot and believe what many heavy-weight Hedge Fund masters state? Some of these people are almost prophetic. I pray you are nimble. Even a dumbass would be able to see that these fundamentals are frail if non-existent. Math is certain.

 

from Han Solo

  • Insider stock sales
  • Investor sentiment
  • Retail investors just got scalped
  • PM slammed prices down to 200 MDA and bouncing
  • Walmart, Foxconn & Catepillar sales
  • ISM index & unemployment divergance
  • Europe not fixed and in depression(Greece & Spain worsening by the day)
  • Berlusconi going may be reelected
  • China tightening
  • and THE US ELECTION IS OVER

tick tock tick tock

Thu, 02/21/2013 - 13:59 | 3263986 Silver Garbage Man
Silver Garbage Man's picture

Not all of us are greasy day traders......some(at least one) of us are greasy garbage man.

Thu, 02/21/2013 - 14:17 | 3264053 JOYFUL
JOYFUL's picture

... ZHers are nothing but a bunch of annoying pathetic losers with no investment knowledge or academic credentials....

can't argue with that...you've nailed most of us to a tee. One of your better postings MDB. But there's one thing I don't quite understand - why do you think we are greasy day traders? Most of us don't trade at all, and are so pathetic that we wouldn't give up our loser hoards of shiny stuff even if you offered us a lucrative opportunity to join the world of professional investors and make some real money in exchange for doin so! Guess we just greasy, not greedy huh?

Once you high-flyer professional traders all follow each other off a cliff in search of an exit, I expect you'll see many of us buzzing around lookin to see if there's anything worth putting up with the putrid stench of your decaying carcasses to make off with!

Later Algotrader!

Thu, 02/21/2013 - 16:59 | 3264740 falak pema
falak pema's picture

wooo? Joy is full of anger, the MDB has got to him.

Gone are the fanciful delusions of a mega conspiracy fermented by Shylock the medieval Jew; of Venice and its toxic brew of nascent, usury capitalism, that corrupted strain having tainted all those good Templars into debased capitalists, forgetting their simple Bible books. 

Its now blatant Mammon who is to blame...forget the blood line, concentrate on the debased knowledge line...we forget what life teaches us.

That is closer to truth than original sin of corrupted blood. 

Fri, 02/22/2013 - 04:52 | 3266321 JOYFUL
JOYFUL's picture

woo hoo?

Angry bud? Has the supply of wormwood dried up in your neighborhood? We havin a bit of light-hearted banter here, me good bud MDB n me...you're usually more on the ball than this bit o bluster n blunder!

c'mon back when you're feeling more yourself squire!

Thu, 02/21/2013 - 14:19 | 3264066 Al Huxley
Al Huxley's picture

You know, there's a subtle difference between expressing your distaste for the corruption of the system by being sarcastically witty and just being a dumb fucking cunt.  Your omments are putting you squarely in the latter category.

Thu, 02/21/2013 - 14:41 | 3264128 Non Passaran
Non Passaran's picture

Haha, that's awesome!  I LOVE to be seen that way.

 

Thu, 02/21/2013 - 15:07 | 3264208 Karlus
Karlus's picture

"It's amusing that silly ZH small time ZH day traders consider the world's leading hedge funds the dumb money."

 

How many of these "funds" beat the S&P, again?

Thu, 02/21/2013 - 13:27 | 3263843 EmileLargo
EmileLargo's picture

I just bought a bucketload of Au. You gotta take the opportunity when it comes. Don't look at a gift horse in the mouth whatever its motives.

Thu, 02/21/2013 - 13:28 | 3263849 kralizec
kralizec's picture

Au member.

Thu, 02/21/2013 - 13:29 | 3263852 BigMike
BigMike's picture

Long KGC, GG, EMXX, AAU, SLW, VGZ. I think risk/reward is favorable in mining, royalty, exploration and development sector. 

Thu, 02/21/2013 - 13:37 | 3263859 JustObserving
JustObserving's picture

Hedge funds are well connected to Bernanke.  They do what he says and US regulators look at porn instead.  This arrangement works well for the 1%.  

Without fraud and a corrupt Fed, there would be no US markets.

Thu, 02/21/2013 - 13:40 | 3263890 TheGermanGuy
TheGermanGuy's picture

Last time I looked, there was no US market.

Thu, 02/21/2013 - 13:32 | 3263861 BigMike
BigMike's picture

BTW, speaking technically, as of yesterday, the RSI 2 and RSI 14 on $GLD have never been as oversold in the history of that instrument. Not that I trade or own it, but it sure is interesting. 

Thu, 02/21/2013 - 13:32 | 3263864 eclectic syncretist
eclectic syncretist's picture

Long Parker Schnauble, short Todd Hoffman.

Thu, 02/21/2013 - 13:33 | 3263866 GoldenGal
GoldenGal's picture

What if  the price of gold goes below 1000?

 

Thu, 02/21/2013 - 13:40 | 3263894 DoChenRollingBearing
DoChenRollingBearing's picture

Paper price maybe.  Not a chance the physical price will get that low ever again.  Think the "India Put" -- they bought over 100 tonnes at $1040 or so an ounce.  

Do you think they would NOT back up the truck if gold gets cheap again?

Do you think the Central Bank of DoChenRollingBearing would not back up the truck long before that happens?  Physical gold has a magnificent future ahead, it will take ALL of our breaths away...

Thu, 02/21/2013 - 13:51 | 3263942 Going Loco
Going Loco's picture

That's if the gold stackers don't asphyxiate themselves first, holding their breath during the long wait for that fabled event.

BTW unlike you lot, I trade gold, at Bullionvault. I don't stack it, I trade it. Has worked very, very well for several years. 

FD: BV account is in cash, USD, at the moment.

Thu, 02/21/2013 - 13:56 | 3263975 DoChenRollingBearing
DoChenRollingBearing's picture

I don't trade, I have a terrible (and verifiable) record trading, it seems to work against my DNA.  Trading never worked for me, stacking gold (since under $500) has.

When I used to live in Texas they had a saying: "Hold your breath, you die."  So, I do not hold my breath.  Besides, my gold will be just sitting there, very still, for a long time.

Thu, 02/21/2013 - 14:13 | 3264032 Shell Game
Shell Game's picture

+1  LOL, I had to chuckle at your trading confession, DonChen.  Rings a bell close to home.. ;)  The calmness and peace that comes with procuring honest money has given me more time to spend with family, improve my shooting, work on alt-skilliing, etc..  I wouldn't trade that for the bullshit of the paper trading world...no sir.

Thu, 02/21/2013 - 14:13 | 3264035 Going Loco
Going Loco's picture

I used to be like that with trading. Everything I touched seem to go wrong. But I have learned how to do it. Trading is a skill which can be learned, and it is worth learning it. OTOH as a stacker you do have some good company - John Mauldin for example. Personally I think we are some way away from the reset and there is still time to accumulate more gold by trading it than by averaging in and stacking. There are so many people on this board who stack and are figuratively holding their breath until der tag arrives.

Thu, 02/21/2013 - 13:44 | 3263917 Greshams Law
Greshams Law's picture

Then I whore myself out to 20 fat chicks at $50/pop and buy an ounce every day.

Fat chicks need lovin' too. But they gotta pay.

Thu, 02/21/2013 - 13:51 | 3263953 DoChenRollingBearing
DoChenRollingBearing's picture

20 * $50 only equals $1000.  You would have to service about 40 or so...

That's called "earning your money!"  40 per day?!?!?!

Thu, 02/21/2013 - 13:59 | 3263982 Greshams Law
Thu, 02/21/2013 - 14:24 | 3264080 GubbermintWorker
GubbermintWorker's picture

I'll be getting close to breaking even?

Thu, 02/21/2013 - 13:35 | 3263870 Doubleguns
Doubleguns's picture

Could this be in anticipation of EZ spectacular fail. All the money in EZ comes running here soon? Just trying to figure out the move that appears so foolish. WTFO!!

Thu, 02/21/2013 - 13:35 | 3263871 El Viejo
El Viejo's picture

Maybe it's different this time?

Thu, 02/21/2013 - 13:37 | 3263878 TrumpXVI
TrumpXVI's picture

This whole thing is just getting fuckin' retarded!

Thu, 02/21/2013 - 13:46 | 3263928 walküre
walküre's picture

Sounds like you had just closed all your short positions on Monday?

Thu, 02/21/2013 - 13:39 | 3263885 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

They are in on the fix simple as that. If they really gave a fuck about the investors they'd hedge a portion of the investments in physical and little to no risk options. When the market crashes everyone loses their savings, they just play the patsies for the theft of everyone's savings and then Satan Claus steps in and promises back those lost savings with the catch your money is where they think it should be invested. It was savings based on nothing and a con game to transfer the numbers from one book to the other.

Thu, 02/21/2013 - 15:12 | 3263924 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

These fuckers can smack down precious metal prices all they want. Once the confidence crisis happens and it will, who is the average joe going to trust more, the guy with physical gold/silver etc. (regardless of how much it is worth) as long as it isn't fake, the weight is the weight along with tried and true methods for purity testing, you can't fake that. You can be 100% confident that the gold you are getting is what it is claimed to be. The dollars on the other hand unless backed by tangible assets don't pass that credibility test. The price of pm's will rise in proportion to the lack of confidence in the paper, rigged market or not. That is probably the one absolute everyone can bank on.

 

These central planning assholes in fantasy land can run all the algos they want but none of their models can predict the human(rational/irrational) pysche where people just say fuck you and stop playing the game. We'll know when we hit that point because the police state will turn the guns on us to force back into the game against our will when all the other false pretense methods fail like a stock market that is clearly rigged based on not reflecting any sort of rational human behavior patterns.

Thu, 02/21/2013 - 13:45 | 3263895 Monedas
Monedas's picture

They sold all the peoples gold trying to supress gold fever .... probably sold foreign gold under custody .... now they want Americans to disgorge their private gold .... these Socialists are "Hell Bent" on destroying every vestige of Capitalism and "American Exceptionalism" !  On a scale of 100 .... of believers in Capitalism .... Monedas is a 100, Doug Casey 98 or 99, Ron Paul is a 92 and Obama is a 1  !  I may have to start assigning numbers to some of the inane posters around here !       Monedas     1929     Comedy Jihad What's Your Number World Tour    PS:  Milton Friedman was a 100 !

Thu, 02/21/2013 - 13:48 | 3263934 DoChenRollingBearing
DoChenRollingBearing's picture

If they sold our gold, that just makes my case even stronger: EVERYONE should have some physical gold in their own possession!  The best innoculation against Socialism Fever wrecking your financial future...

Monedas, I wold assign Obama a -100 as a Capitalist.

You ask: "...What's Your Number..."  My number is $55,000!

Thu, 02/21/2013 - 13:58 | 3263981 Monedas
Monedas's picture

Do Chen, I knew I could count on you !  If you run for Presidente of Peru .... you got Monedas' vote !

Thu, 02/21/2013 - 13:54 | 3263965 Monedas
Monedas's picture

Elizabeth Warren is a two .... Putin is a 20 and ascending .... China is waxing Capitalist .... North Korea is a - 20 !

Thu, 02/21/2013 - 13:41 | 3263902 Bam_Man
Bam_Man's picture

And everyone knows hedge funds are never wrong.

BTW, what was the average hedge fund return last year? Around 2%? 

Thu, 02/21/2013 - 13:43 | 3263907 John McCloy
John McCloy's picture

   Well I bought more FAZ for the first time in 3 years yesterday at around the 52 week low...I am getting the 2008 feeling I had, 800K pentagon layoffs coming, less money in middle class paycheck weekly, inevitable health care bill layoffs, student loans bubble, news of liar loans being back in both the home and auto industry and there are essentially no tricks left up the EU sleeve nor the Fed and the citizens will never stomach a 2008 TARP replay.

  Hoping to ride a market crisis while gold and silver fall/collapse along (temporarily) and then all in metals for the inflationary nuclear bomb that they are going to try to pull out of their hats along with the announcement of price controls and gold and silver confiscation. That is the end game along with the nationalization of every single TBTF.

Thu, 02/21/2013 - 13:46 | 3263927 helping_friendl...
helping_friendly_book's picture

The Associate Director for FHA was testifying to Congress that they were loaning to people who had been in foreclosure more than 2 years ago. I couldn't believe my fucking ears. Makes me want to go out and buy property, rent it out, and never make a fucking mortgage payment.

Thu, 02/21/2013 - 13:42 | 3263908 helping_friendl...
helping_friendly_book's picture

Just broke below 1500. 

Mr. Margin Call. Please pick up the courtesy telephone in the lounge. Calling Mr. Margin Call.

PMs should be selling off so the leveraged can meet their margin requirements.

Thu, 02/21/2013 - 13:43 | 3263912 Tsar Pointless
Tsar Pointless's picture

When this whole House of Ponzi collapses, it is going to be spec-tac-u-lar.

Oh, and it will likely involve war. Lots and lots of war.

Thu, 02/21/2013 - 13:45 | 3263919 walküre
walküre's picture

Clearly the GREAT ROTATION out of bonds into equities is happening right before our very eyes.

Just that the rotation OUT of equities is quicker than the rotation INTO equities, hence the downdraft. I'm so smart, I think I should work on Wall Street or at least work at a business network reporting ON the market.

Thu, 02/21/2013 - 13:46 | 3263920 centerline
centerline's picture

Potential scenerio... Japan and/or EU implodes in short order.  Scared money flees.  Runs right into US markets buying up anything that is not nailed down.  US Stock markets take off.  Bonds outperform.  Gold drops some - maybe just holds steady - but does not crash (real problems not solved - hence no crash).  Etc.  We find out that high unemployment was a buffer against all of this causing massive immediate price hikes (inflation shock absorber).

Thu, 02/21/2013 - 13:45 | 3263921 buzzsaw99
buzzsaw99's picture

notably reduced holdings of underperforming long-time favorites ***Apple and gold...***

 

WHOOMP! THERE IT IS!!

http://www.youtube.com/watch?v=Z-FPimCmbX8

Thu, 02/21/2013 - 13:49 | 3263936 Quinvarius
Quinvarius's picture

I can see long stocks on printing.  I can see long gold on printing.  I can see long gold and stocks on printing.  How you could be long one and short the other based on money printing is beyond me.  Clearly some groupthink put them all on the same side of a very small boat:  http://www.gotgoldreport.com/2013/02/got-gold-report-courtesy-release-of-our-entire-february-18-report-.html

Thu, 02/21/2013 - 13:50 | 3263946 Bicycle Repairman
Bicycle Repairman's picture

In a meeting with the FED the major hedge funds are ordered to buy stocks and dump gold.  Bang.  Done.

Thu, 02/21/2013 - 13:51 | 3263950 ekm
ekm's picture

As I've been saying over and over and over:

 

At Dow 15k, only "smart money" is the sucker to the smarter money.

Thu, 02/21/2013 - 13:53 | 3263961 Dr. Engali
Dr. Engali's picture

When the third attempt at a new high for the S&P fails for a third time it will have proven to be the final nail in the coffin for what we used to call a market.

Thu, 02/21/2013 - 14:03 | 3264003 falak pema
falak pema's picture

Apparently the HFs and shadow banking players do not perceive the WS market with the same eyes as ZH.

One thing which is opaque about the US banking market is the BS of the 4 biggest banks. It appears small relative to their Euro counterparts.

EX : 4 French banks have a BS which is 350% of French GDP.

In the US this official BS ratio is much lower; more like 50% of GDP. But in fact if we include shadow banking and OTC derivatives it probably exceeds US GDP.

Why does the market not recognise this risk and the collateral risk for all assets and bonds (corporate and US T)  on these BS?

Given the huge % of WS stock held by these banks. 

And, these scions of WS that are these leveraged HFs,  that use these same banks as lending partners and share inordinate risk with them...do they not see the writing on the wall?

A FED hocked to its neck, 4 banks whose collective BS including derivatives and off BS "assets" that could be ballisitic, and these HFs are all so hunky-dorey n bullish...

There is something that only Krugman and they understand about this truly super cycle market.

Fracked beyond Moon...heading towards MArs.

Please enlighten me on this shooting star! 

Hilarity ensues, indeed!  

Or will it be crocodile tears?

Thu, 02/21/2013 - 14:12 | 3264028 Aliblahblah
Aliblahblah's picture

Hugh Hendry is short S&P and long gold..and Kyle Bass long gold big time and the physical (he took delivery) ..so tell me who is slamming the paper precious metals markets every morning? The BIS that's who. And in the longer run it means nothing.

Buy low sell high.

Thu, 02/21/2013 - 14:25 | 3264083 reload
reload's picture

HH -SAID, he was positioned as you say....but not HOW he had the exposure. If his previous form is anything to go by, he will have a deeply out of the money set of lottery ticket type options strategies in place.

His MO is to make big wins when market moves his way in a big way - and to try and not take to much pain when he is wrong. His Q1 results are going to be interesting......but I would be suprised if he has been taken out to the woodshed.

And no - no connection to him or Eclectica or whatever his fund is called.

Thu, 02/21/2013 - 23:22 | 3265826 DowTheorist
DowTheorist's picture

Paper gold may be about to change its fortunes, as GLD inventory is being drained. This is the so called "puke" indicator and according to it, GLD may be making a bottom soon as explained here:

 

http://www.dowtheoryinvestment.com/2013/02/dow-theory-update-for-feb-21-...

Do NOT follow this link or you will be banned from the site!