It was a lot more fun being long equities late last year when everyone else hated them. Especially as the hedge funds began furiously buying to catch up with the year-end rally.
This year its not so fun, knowing that so much money has already been plowing in.
Steven Russolillo (WSJ) has the story on Goldman’s latest report covering hedge fund buying and selling activity during Q4:
Hedge funds are now more exposed to stocks than they’ve been in six years following another underperforming year, while AIG supplanted Apple Inc. as the top hedge-fund holding…
Hedge fund net long exposure to U.S. equities rose to 52% in the fourth quarter, matching a 10-year high that was previously reached in the first quarter of 2007. The average hedge fund rose 8% last year, Goldman says, which came in well below the 13% gain recorded by the S&P 500 (16% including dividends).
“Hedge funds notably reduced holdings of underperforming long-time favorites Apple and gold while raising allocations to rallying financials,” Goldman Sachs analysts wrote in a note to clients. Goldman tracked 725 hedge funds that had $1.3 trillion of gross equity positions ($883 billion long and $442 billion short).
In addition to blowing out of Apple, they’ve also kicked gold – GLD is at its lowest position level amongst hedge funds in four years, Steven says.