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

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…