Slaughter: Hedge Funds Have Worst Day Since June 2012

Tyler Durden's picture

Update: As CNBC just reported moments ago, tech fund Coatue is returning $2 billion of $7 billion to investors, citing "difficult market conditions." Just wait until the "difficult market" drops more than just 3% from all time highs...

Over the past few days we have been following, with great interest, the events in the most popular "hedge fund hotel" names on both the long and the short side. Specifically, over the weekend we learned that the mauling that hedge funds suffered in the last week of March, which was also the worst week for HF performance since 2001 excluding "world ending" weeks such as Lehman and the US debt crisis, spilled over into last week as well.

As a reminder, for those with Bloomberg (and the proper permissions) the easiest way to track the performance of the most popular hedge fund names is using the BBG ticker GSTHHVIP, and especially its performance against the S&P. But for those who don't have access, or are too lazy or depressed to type anything into their terminal today, here it is, straight from Goldman's sales and trading mouth, summarizing yesterday's market poundage:

Our HF VIP basket underperforms the SPX by over 100bps, 3 standard dev move and the worst since June 2012.


And since we enjoy being helpful, for those who want to keep the pain on the hedge fund space the easiest way to do this is to keep selling and/or shorting the names the comprise said Goldman GSTHHVIP basket, something we suggested is the right trade two weeks ago. The breakdown is as follows (sorry General Motors and your latest airbag inquiry):


Why trade this? Because recall that hedge fund leverage, as indicated by the following leverage table of one of the "more" levered smart money participants, Balyasny, has never been greater and is now 3.5x - 4.0x.

In other words, either hedge funds rapidly deleverage once the margin calls finally slam the hammer on the smart money, which will crash stocks further, or hedge funds sell the widest held stocks over fears of what other hedge funds do, which also will crash stocks further.

Unless, of course, the Fed's plunge protection team finally steps in as it has always done at key market inflection points in the past 5 years and restores upward market momentum.

Then again, with the market at the same forward multiple as at the last bubble peak, and with increasingly more Fed members screaming "bubble" this time may be different...

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slaughterer's picture

ZH is really using the word "slaughter" alot lately.  Bottom tick sign?

max2205's picture

The only reason there is a std dev is because the fed is propping up SPY

redpill's picture

Hedge funds aren't really hedge funds anymore.  They should be called sheep funds since that's all they are these days in a desperate bid to follow the momentum.  If your "hedge" performs in step with the broader market, chances are you're just overpaying for an index fund of usual momo suspects.

Remington IV's picture

"hedge" =  leverage your portfolio 200% + in the    2 and 20 world of compensation

Tyler Durden's picture

The bottom tick sign, if any, is that Gartman just went mega bearish... a week after saying "experience tells him to stay bullish on stocks"

theliberalliberal's picture

Gartman's tombstone should be a giant thong

GetZeeGold's picture



... a week after saying "experience tells him to stay bullish on stocks"


It's so unlike Dennis to change his mind.

Winston Churchill's picture

Stolper & Gartman should start an inverse consultancy biz.

wallstreetaposteriori's picture

Hey, even a blind dog like Gartman gets a bone every once and while...

theliberalliberal's picture

its supposed to be "laughter" but tyler is drunk and slurring his words

GetZeeGold's picture



That was awesome! Can we do it again?

theliberalliberal's picture

biggest mover airlines?!?!?

firstdivision's picture

That's a sure sign to sell then.

firstdivision's picture

That's what the 2 & 20 is for.  Any fool can track an index with SPY, but we pay extra for the insight of the 'masters of the universe'.

Sudden Debt's picture

Tesla, Netflix, Amazon,Facebook,... now what do you know... I'm shorting all of them :)

GetZeeGold's picture



We could just kill all the golfers.....I'm sure some of them are bankers....and get the picture.

firstdivision's picture

Including those of us that have to play on public courses?

GetZeeGold's picture



Naw.....I wouldn't go that far. I'm sure a lot of those people are completely innocent.

MeMongo's picture


HaHa thanks for the morning laugh :-)

TeamDepends's picture

Carl Spackler: [preparing to dynamite the gopher tunnel] In the immortal words of Jean Paul Sartre, 'Au revoir, gopher'.

I am a Man I am Forty's picture

it doesn't matter, hedge funds are in cahoots with pension funds, etc., nothing but a scam, nobody would pay for 2 and 20, or make that just the 2% this year

101 years and counting's picture

if a 1% move down in stocks causes that, cant wait to have the big 4-6% down days we'll soon be seeing:)

NoDebt's picture

That's what's missing here.  A big ka-thump.  This is the latest in a long line of the most tame, orderly, well-managed sell-offs I've seen since the one before.

101 years and counting's picture

its only been 2 days.  give it some time.  once we start cutting into margin, the selling will accelerate at a ferocious pace.

mayhem_korner's picture



Margin calls are nice.  They are contagion accelerants, like trans-pacific flights during flu season.

Not convinced that this will break the dyke (something eventually will in fantasyland).  Real question is what will the CBs do when the 6+ year print-fest is faded?  They only have one key to press on their terminals, right?

Dr. Engali's picture

It sure seems like a lot of digital currency will have gone to waste to let it all crash now. Maybe they are going to try the unwealth effect since the wealth effect clearly didn't work.

A_Nejad's picture


AdvancingTime's picture

Over the years we have witnessed the type of market reversal the big banks supported by the Fed can generate with a concerted effort to buy S&P 500 index futures at crucial support points late in the day. This has proved more than enough to turn the markets from red to green in the blink of an eye.

This is a reason for caution!  If it looks like a Ponzi scheme, sounds like a Ponzi scheme, and feels like a Ponzi scheme, then it is probably a Ponzi scheme, but that does not guarantee that it is over. More about this subject in the article below.

NoWayJose's picture

Can you really trust 'anything' from Goldman?

The Shootist's picture

Annihilation of hedge funds, someday...

ElvisDog's picture

I love how these retards throw around phrases like "3 standard dev move" as if this little blip in the stock market is such a rare and unforseen occurrence. "We're sorry we lost your money, but this was a 3-sigma event....". I'm sure their "Monte Carlo" simulations didn't predict this either.

Save_America1st's picture

Maybe these hedge fund idiots should read more Zero Hedge and hire Ann Barnhardt as their consultant.  In case they hadn't heard...Ann recommended long ago to get the fuck outta this criminal, fraudulent, manipulated system.

And it's going to be multiples worse than anything they can imagine when it all comes crashing down around them.

I hope they've chosen a nice high building to be thrown, I mean to jump off of. ;-)

NOZZLE's picture

and to think that only a month ago the talking heads and the leg crossers were crowing  about how the Russian stock market was down 10 percent and Putin would have to throw in the towel

Algosaurus Rex's picture

A couple down days and a hedge fund cites difficult market conditions?

This must be the new breed of wuss-class hedge funds. FFS...