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Where The Hedge Fund Herd Was Parked Last Week: The Most Long And Short Net Specs
After 7 years of consistently failing to generate alpha, hedge funds as a group have become the vastly overpaid laughing stock of the asset management business (of course, there are still the occasional borderline criminal outliers); in fact after we first predicted their demise about 3 years ago (because in a world in which central banks are also Chief Risk Officers, who needs "hedging"?) the pension funds have finally figured out the futility of parking cash with the 2 and 20 crowd, and first Calpers and soon most other managers of other people's money are now pulling out their cash in droves from the hedge community.
However, hedge funds are still useful for one thing: observing where the fast money herd is parked, and doing precisely the opposite in advance of the herd dispersing (see "Presenting The Best Trading Strategy Over The Past Year: Why Buying The Most Hated Names Continues To Generate "Alpha""). Because in a market as illiquid as this one, any and all fast, sudden moves by even the smallest group of traders results in dramatic price movement outliers.
So for those curious how to do the opposite of what the "smart money" is doing, here is the full breakdown. Presenting a list of the biggest outliers from the mean weekly position in the most popular assets in the speculative universe: everything from the massively, near-record, overbought US Dollar, all the way to dramatically oversold Aussie Dollar, the easiest proxy for the Chinese slowdown.
This is how JPM, the source of the chart above, calculates the data set: "Net spec positions are the number of long contracts minus the number of short using CFTC futures only data. This net position is then converted to a USD amount by multiplying by the contract size and then the corresponding futures price. To proxy for speculative investors, commodity positions use the managed money category, while the other assets use the non-commercial category. We then scale the net positions by open interest."
And in case that isn't enough, and one wishes to add insult to injury and go long the most shorted sectors (and vice versa), here is the breakdown of the S&P500 sectors with the highest and lowest percentage of short interests as a % of shares outstanding.
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Long WTI hedged with long USD?
Yep, nothing like a clean and open market for true price discovery. I just wish we HAD a clean and open market.
It looks like the lazy-ass hedge fund managers are just tracking eTrade baby and the TD Ameritrade lamb.
I guess the Geiko Talking Pig has fallen out of favor - probably because he's a minion of the dark prince. Which made him especially appealing to hedge fund mangers and banksters alike. It must have something to do with the blood moons or HAARP - that's how they get messages from their evil master.
E Trade baby gets Corzined.
https://www.youtube.com/watch?v=AYrpROr9Gmk
Do you see any problems with that in a world where too much debt is battled with more debt?
Is there a Chief Risk Officer of New York position?
Fired for incompetence and corruption. The corruption charge added because no one could be that incomptent unless part of a team.
Short Energy (wow, imagine) and short telecom (FCC-uber-alles, ftw).
Any way to go long litigation attorneys?
go long australian miners
While I see a recurring theme of poking fun at "Hedge Fund" managers on this web site - whatever they are - most of the "data" in this article is so vague and untimely as to be of no use to anyone.
And, by the way, if these "Hedge Fund" managers were long Financials, Technology and Materials for the period 1/30/2015 - 2/15/2015, they did quite well. That is, if they were invested in say the XLF, XLK, and XLB. But, again, if just going by this article - who knows?
they're all shorting AUD. oh great gold's getting more expensive here.
Numbers are three weeks old, ancient history.
Obviously not all hedge fund advisors are savants at generating alpha in 'normal' environments.
But even the best of breed is having trouble in this non-normal environment, since market distortions are prevalent, and seemingly the only alpha opportunities reside with having inside knowledge of politicians' and political appointees' next proclamations. And HFT'ing.
Short positions got massacred in 2013, for example.. How do you generate alpha when everything is rising indiscriminately lockstep with everything else?