As observed last week [9], 2014 will be the sixth (and record) consecutive year in a row in which the hedge fund community will generate lower returns than the S&P. Worse, as of November 19, the average hedge fund was down year to date, which explains why as Reuters reported [10]last week, there has been a deluge of redemption requests into the 2 and 20 space, assuring that this bonus season may be great for M&A bankers, but it certainly will be a disappointment to the lofty remuneration expectations of the vast bulk of hedge fund workers.
Furthermore, as we also showed, in the new normal, in which the market's Chief Risk Officer(s) are all economist graduates of either Princeton or MIT, and congregate at the BIS HQ in Basel every few months to plot the future of the world's centrally-planned economy, the best strategy has been to do the opposite of what hedge funds have done: something we first observed [11]over two years ago, as the most shorted companies have outperformed the vast majority if not all traditional strategies year after year.
And yet, just like the lunacy of believing that central banks are "fixing things", when the current global economic situation is getting worse by the day precisely due to central bank policies, there are those pattern-chasing momos, who still find delight in copycatting whatever it is that the if not smartest, then best paid men, in the room do. For their benefit, here via Goldman, is the most recent, Q3, summary of the most popular stocks within the hedge fund community.
Here we find that, unsurprisingly, AAPL has regained its top spot as the global hedge fund hotel's most beloved stock. In fact, 4 of the 5 most widely held names are all tech names, with GOOG, MSFT and FB rounding out the top 4, and only Citigroup as the outlier in the top 5. Perhaps more notable is that the former hedge fund darlings AIG and GM, have been abandoned by the HF crowd, and were in 9th and 16th place, respectively.
[12]
And here is how the popularity of various stocks changed during Q3 2014: below is a list of the largest positive and negative popularity changes.
[13]
