Hedge Funds Open Massive Bet Against S&P500

Aug 25 2011 | 12:53am ET

Hedge funds are more bearish now than they have been since the collapse of Lehman Brothers Holdings almost three years ago.

As of Aug. 16, hedge funds held a net short position of 71,980 on the Standard & Poor's 500 Index, according to Société Générale. That's their largest net short position on the benchmark since December of 2008.

"Active market participants have switched to a massive net short," Alain Bokobza, one of the authors of the SocGen report, told Financial News. "They have reacted very strongly to the recent economic and political newsflow."

"It indicates just how pessimistic hedge funds are," he said.

But, Bokobza added, hedge funds' piling into shorts are in part to blame for the massive decline suffered by the S&P500 this month. And the level may actually be good news for the markets.

"At some point, they will have to take profits and cover their shorts," he said. "Technically, this will be a bullish indication for equities."


In Depth

Prominent Hedgie Renee Haugerud Embroiled in Ugly Child Custody Battle

Sep 10 2014 | 2:43pm ET

A high-profile hedge fund manager is caught up in a nasty child custody battle in...

Lifestyle

Full House’s Stamos To Play TV Hedge-Fund Manager

Sep 5 2014 | 4:43am ET

The life of a Connecticut hedge-fund billionaire is coming to the small screen.

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.