These Are The "Highest Conviction" Hedge Fund Strategies And Most Crowded Trades

A month ago, we showed that the two most crowded trades in the hedge fund community going into 2015 are quite familiar: being long the USD, and short the 10 Year. Since then, the 10 Year has soared, having its best month in many years, and crushing those who were erroneously  - for the 5th consecutive year - short bonds on hopes that this year, finally, the recovery will arrive (it didn't) in the process leaving just the USD long (as represented by various pairs, most notably EURUSD shorts) as the most crowded trade of the year, which it will remain until the Fed finally cracks and admits that a strong dollar in a global recession, in which every other central bank is easing, is suicide for the US central bank.

So what are the other "highest conviction trades" for the hedge fund community?

Here, courtesy of SocGen, is the answer, first for assets:

And specifically for commodities:

Some further commentary from SocGen:

• The market has pushed back on Fed guidance and the view of most Fed Watchers concerning the probability of a first rate hike in summer 2015, as evidenced by the huge shorts at the long end of the UST curve since summer 2014. Curiously, hedge funds remain somewhat net short on long dated bonds.
• Peak long dollar positions versus euro: The hawkish mood of the Fed supports net long dollar positions against all other currencies (€, £, ¥). Despite the sharp appreciation of the Swiss franc, induced by the sudden ‘de-peg’ by the SNB, positions are still net short the CHF.
• Treasuries: Being buyers of 30-year Treasuries for the better part of 2014, HF’s were correctly positioned for the drop in long term interest rates as well as for the ensuing yield curve flattening.
• Long oil, heavily short copper: Hedge Funds are still hugely long oil, whereas our commodity strategists anticipate that Brent will fall to $40. Meanwhile, the sharp drop in copper prices was correctly accompanied by historically strong net short positions (see chart below). We also note hedge funds’ renewed interest in gold with the strongest net long positions in over two years – this could prove to be a costly strategy when the Fed actually tightens.
• Long US equities but now short the Nikkei: Doubts about financial risks associated with huge BoJ injections (Japan CDSs are rising fast) has led hedge funds to turn net short on the Nikkei for the first time in two years (see our latest Asia Equity Compass). We switched to an underweight position on Japanese equities in December despite a continued bearish view on the yen. A return to net long VIX (yes, long equity volatility) rimes with hedge funds willing to hedge their ultra long positions on US equities.

Comments

[Hitlery_4_Dictator]

Without Hedge Funds and HFT trading the market would be toast.  God bless the traders. Doing God's work for the little people. That's all.

[nuubee]

I can't wait for artificial intelligence trading. Then I'll be going long Brawndo.

[Hitlery_4_Dictator]

The mandatory chips are coming, which will help greatly.  I am really happy that we are now talkign about mandatory vaccinations from the MSM and other important political and health experts.  Anyone who's not onbard with this is hurting our future. 

[NitneLiun]

You play your role very well.

[nuubee]

I'm not sure we can conclude that... what if Chicken Pox is desperately trying to give us some important DNA that our bodies keep rejecting? If we wipe out these childhood diseases, we may miss an important step in our evolution.

I say inject everyone with small pox at birth, those who survive are winners. Everyone else, well, there's always reinkarnation.

[Father Lucifer]

Some favorite vaccination movies;

DOOMSDAY

28 DAYS LATER

QUARETINE

WORLD WAR X

and of course CONTAGIN

[Greenspazm]

Fuck every single one of them with the wrong end of a pineapple.

[PartysOver]

Not the whole pineapple?

[anonymice]

If you think the CHF de-pegging was carnage, what would Draghi changing his mind about QE be?

[Bam_Man]

They should all be "convicted".

[sidiji]

Whatch bet Chelsea's husband in that crowd shorting EUR/USD? lmao.

[Joebloinvestor]

Boy I need to clean my glasses.

I thought the headline was "Highest Conviction Rate of Hedge Fund Managers".

LOL

[Greenspazm]

you wish....

[cigarEngineer]

Hey everyone, my uncle makes $7k per hour sitting at home waiting for his CDFs to blow up, so I’m starting a new contrarian exotic financial instrument that is mega-short the NASDAQ, VIX, and S&P and is ultra-double-long €/$, TF, and JPY/USD. Buy your tranche today!

[Ban KKiller]

You fogot to mention the triple A rating!

[Emergency Ward]

where's the link, where's the link?!?!

[cyclist]

2015 will mark the official "blow up" year of hedge funds, as the pair trades they covet  ie. long oil and short copper , short bonds and long USD will create a massacre as they scramble to exit trades ahead of the HFT machines, which are just too damn fast for them.  In the world of 20/20 points for annual fees, these robbers will see their comeuppance.  So many events in store for so many thieves.