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Another Bad Week For Hedge Funds

Tyler Durden's picture




 

With hedge funds the most aggregate short since the peaks in 2007/8 and any long/short fund struggling to eke out anything but losses, this week's epic surge in the prices of the "most shorted" stocks confirms once again that the "dash for trash" is alive and well. Buying the "most shorted" stocks has been a massively outperforming strategy for well over a year, and as we noted here, the trend of major outperformance of 'weak balance sheet' firms over 'strong balance sheet' firms continues. The results... "most shorted" stocks +5.1% from last week's lows - more than doubling the S&P's 2% gains...

 

 

Weak balance sheets "winning" over strong balance sheets...

 

As shorts pile up to record highs...

 

Which results in this...

 

 

So we are back to BTFD, and make sure when you BTFD you BTFWSOT (worst shit out there)

 

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Fri, 05/23/2014 - 13:56 | 4789223 Dr. Engali
Dr. Engali's picture

Yellen is laughing it's ass off every time it pulls the football away from the Charlie Brown shorts.

Fri, 05/23/2014 - 14:04 | 4789243 Buckaroo Banzai
Buckaroo Banzai's picture

Well they get the two part of the two-and-twenty no matter how shitty they perform. So who has the last laugh?

Fri, 05/23/2014 - 14:12 | 4789246 Dr. Engali
Dr. Engali's picture

Well they get their two anyway, without returns there is no twenty.

 

Edit: Unless you're Corzine then it's 2 and 120%.

Fri, 05/23/2014 - 15:12 | 4789474 disabledvet
disabledvet's picture

"and jail time."

shorting anything has been a fools errand going on 5 years now. with no recovery in sight...not now or ever it would seem, at some point "bug meet windshield" as there is no great truth in economics than "it is cyclical."

Fri, 05/23/2014 - 14:00 | 4789234 dontgoforit
dontgoforit's picture

The squeeze that chills?  May may still go away - there's 7 days in May (left).

Fri, 05/23/2014 - 14:01 | 4789238 TheRideNeverEnds
TheRideNeverEnds's picture

Its almost time for the end of the day/week ramp up.  are you ready? 

Fri, 05/23/2014 - 14:02 | 4789240 Al Huxley
Al Huxley's picture

Is the market even open today?  I can't tell....

Fri, 05/23/2014 - 14:03 | 4789242 SheepDog-One
SheepDog-One's picture

Well, gotta get the sheeple feelin good before the holiday weekend so they over consume freely!

Fri, 05/23/2014 - 14:05 | 4789244 Fuh Querada
Fuh Querada's picture

Jom Ricktards says you should have long-short funds in addition to your fine art collection.

Fri, 05/23/2014 - 14:05 | 4789247 Occams Aftershave
Occams Aftershave's picture

so, where is the list of most shorted stocks?

Fri, 05/23/2014 - 14:05 | 4789250 fonzannoon
fonzannoon's picture

It's important to be long bonds over the weekend in case there are geopolitical issues and it's important to be long stocks over the weekend in case there are not geopolitical issues.

Fri, 05/23/2014 - 14:09 | 4789262 SheepDog-One
SheepDog-One's picture

Besides, all geopolitical issues are always good news for stocks and bonds anyway. Max complacency there's nothing possible to worry about ever again.

Fri, 05/23/2014 - 14:07 | 4789251 buzzsaw99
buzzsaw99's picture

stupid shorts

rule #1) don't fight the (zirped up) fed

Fri, 05/23/2014 - 14:11 | 4789257 Dr. Engali
Dr. Engali's picture

stupid shorts

rule #2) don't fight the (zirped up) fed

Fri, 05/23/2014 - 14:10 | 4789268 TheRideNeverEnds
TheRideNeverEnds's picture

rule #3) don't forget rule 1 and 2.

Fri, 05/23/2014 - 14:22 | 4789326 Al Huxley
Al Huxley's picture

Shorting's actually kind of unpatriotic if you think about it - it's like saying you don't believe in America.

Fri, 05/23/2014 - 14:38 | 4789386 Spungo
Spungo's picture

This would be funny if it were not believed by so many retards. Short sellers driving down the price means stocks can be purchased at a lower price and thus a higher dividend yield. The government hates all of us, so the government insists on keeping stock prices high and dividends low. The lack of dividend yield and lack of interest rate yield is destroying what's left of the wealth held by retired people.

Fri, 05/23/2014 - 15:47 | 4789568 disabledvet
disabledvet's picture

dividends are starting to rise.

the irony of course is that makes the pain for the shorts all the better.

of course the companies that have slashed their dividends (cough, cough GE cough cough) have never recovered. that strikes me as a good shorting opportunity has "it's only lost 67% of its value as the market overall keeps hitting one record high after another and bond yields plunge to all time record lows as well."

forget just energy companies but the entire energy complex has never done so well...anywhere, ever.

"they're so rich they can afford to allow the Tesla Model S and X to be mass produced."

I do find the huge explosion in the price of nickel to interesting.
http://en.wikipedia.org/wiki/Eagle_mine_project

http://en.wikipedia.org/wiki/Copper_mining_in_Michigan
"pure copper came from the deposits in Michigan." to call that "rare" is an understatement. Again "one should research the origin of the moon" if you want to start figuring out how precious metals in already refined form can possibly even exist.

Just a theory of course...but the refined copper sure wasn't. "Million ton nuggets" existed...sitting right on top of the land no less.

Fri, 05/23/2014 - 16:30 | 4789693 TheSecondLaw
TheSecondLaw's picture

Same as those killjoys who punt 'don't come' in craps.

Fri, 05/23/2014 - 19:08 | 4790012 AdvancingTime
AdvancingTime's picture

Seriously, or is this sarcasm?

It should be noted that when a market falls and shorts cover their position to take profits they in effect support the market. A market without shorts becomes very vulnerable.

Fri, 05/23/2014 - 14:07 | 4789253 SheepDog-One
SheepDog-One's picture

I still hold the firm belief it is the Fed itself shorting most of it so they can provide a way to squeeze higher. Why wouldn't they? None of it costs them anything at all.

Fri, 05/23/2014 - 14:19 | 4789310 I Write Code
I Write Code's picture

Or else it's the fed reading the most-shorted list and making sure they don't actually go down, since down is simply not allowed.

Fri, 05/23/2014 - 14:08 | 4789256 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

I've concluded that it will take a double blackswan-like event to send the markets down in a correction. Anything other than that will be seen as a dip to be bought. I know that seems almost too obvious by now, but it is worth repeating as we are asked to look at one chart after another of how screwed up the current financial situation (e.g. leverage, P/Es, number of short positions, VIX, credit, yields, etc and so on...)

 

Fri, 05/23/2014 - 14:10 | 4789265 dontgoforit
dontgoforit's picture

Yeah - it's like we're waiting on a baby Godzilla to be born.....waiting, (it's gonna fall)...waiting....

Fri, 05/23/2014 - 14:11 | 4789276 SheepDog-One
SheepDog-One's picture

I conclude they'll pull the rug out whenever they've planned to, same as 2008 staged robbery.

Fri, 05/23/2014 - 14:17 | 4789292 Slave
Slave's picture

Agreed. The only questions are do they want to make the affirmative action clown look good until he's out of office? Or do they want the war party back in power after 2016?

Fri, 05/23/2014 - 15:16 | 4789488 PontifexMaximus
PontifexMaximus's picture

Where is Nassim Taleb?

Fri, 05/23/2014 - 14:20 | 4789315 starman
starman's picture

The Fed erected the tallest house of cards! Wait for the wind!

Fri, 05/23/2014 - 16:39 | 4789719 TheSecondLaw
TheSecondLaw's picture

All together now...

"I see a black swan rising,

I see trouble on the way,

I see earthquakes and lightnin'

I see those bad times today.

Don't trust the Fed tonight

Well it's bound to take your life,

There's a black swan on the rise."

Fri, 05/23/2014 - 15:01 | 4789441 Ban KKiller
Ban KKiller's picture

Hedge funds can eat my dirty shorts. Punk ass punks. Man, I just want to go to Wall Street and mug some trader/hedgie who is looking sharp in his "Batemans". Ok, no, just go hit a bong instead. 

What crisis? I am medicated.  

Fri, 05/23/2014 - 15:18 | 4789492 PontifexMaximus
PontifexMaximus's picture

How do you program algos in a market which opens and remains there.....for hours?

Fri, 05/23/2014 - 18:54 | 4789989 AdvancingTime
AdvancingTime's picture

To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong. An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position.

For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. The bottom-line is that the higher the market goes the more vulnerable it becomes to a major collapse and sudden downward move. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/07/markets-more-lies-and-munipulatio...

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