These Are The Top 50 Hedge Fund Long And Short Positions
One can argue that few industries have "suffered" more under central planning than billionaire hedge fund managers. It is no secret to regular readers that over the past decade, hedge funds have not only underperformed the market, but had as a group failed to generate "alpha" since 2011.
As we have shown year after year, the centrally-planned "New Paranormal" has been a disaster for traditional alpha generation, since with all conventional, fundamental-analysis relationships flipped upside down thanks to central banks (which as BofA calculated earlier have purchased some $1.7 trillion in assets in 2017 alone, in addition to roughly $18 trillion since Lehman) the only way to generate outsized returns for one's investors (and one's offshore bank account) was to be massively levered beta, or merely wrong. Back in April, none other than Goldman confirmed as much when it found that QE "triggered the onset of active's run of underperformance."
That underperformance, however, came to an end in late 2016 and early 2017, as a result of two things: a huge clustering by the marquee investors in a small group of (mostly tech) stocks, a surge in gross leverage to record highs, boosting returns, and a collapse in short positions.
According to the latest Hedge Fund Tracker forecast released by Goldman overnight following the just concluded 13F season, the bank calculates looking at 803 hedge funds with $1.9 trillion in gross positions, that the average equity hedge fund has posted a 7% YTD return, "benefiting from large allocations to growth stocks and the Info Tech sector despite low volatility and dispersion."
And yet, despite its "best" half-year performance in years, the average equity hedge fund not only can not outperform the S&P, but is lagging by nearly 50% as the chart below shows. Worse, all hedge funds have returned just 4% YTD, massively underperforming the average plain vanilla mutual fund, whose YTD 10% return crushes the so-called "smart money." As for macro hedge funds with their -1% YTD return, well that's why the entire industry is being redeemed into oblivion.
That said, after years of missing out on the S&P rally - carefully micromanaged by every single central bank in the world whose employees have become Chief Risk Officers for the world's stock indices - hedge fund LPs will be delighted even with a modest underperformance to benchmarks. And for that they have to thank a small group of shares, also known as the Goldman Hedge Fund VIP basket: