Saturday, 31 January 2015
Last updated 11 hours ago
Jul 11 2007 | 8:27am ET
Hedge funds are making big bets against the Standard & Poor’s 500 after a months-long market rally sputtered in June.
A Merrill Lynch report shows that “large speculators” have pushed short interest in S&P500 futures to its highest level in three years. The short bets were valued at some $45 billion for the week ending July 3, according to the Hedge Fund Monitor report authored by analysts Mary Ann Bartels and Shan Hasnat.
By contrast, short interest on the Russell 2000 fell to its lowest level in at least five years, the report said.
In spite of “crowded levels” of shorting, Bartels and Hasnat argue that hedge funds are barking up the wrong tree.
“We view this as a contrary indicator and reading continue to be bullish for stocks,” they wrote in the report.
Short-biased funds were among the top performers in June as they take advantage of a 1.66% decline in the S&P500, according to a pair of major indices. The strategy has otherwise taken a beating this year as the index has soared almost 7% in its first six months.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…