Large Hedge Funds Reduced Exposure To Financials In Q1 As Trump Trade Fizzled

May 16 2017 | 12:00am ET

A raft of big-name hedge fund managers trimmed their exposures to companies in the financial sector in the first quarter as the Trump Trade, anchored on high hopes for the rapid implementation of tax and other regulatory reforms, faded.

Adage Capital Management slashed 3.9 million shares from its Wells Fargo position, according to a Reuters article citing regulatory filings, while John Burbank’s Passport Capital sold 947,000 shares of the bank. 

Meanwhile, Dan Loeb’s Third Point sold its JPMorgan Chase down to 3.75 million shares, or 28 percent lower than last year’s levels, as Suvretta Capital Management sold all of its shares in the company. It also liquidated positions in JPMorgan Chase and Citigroup, the article detailed. 

Following Donald Trump’s election last November, financial companies significantly outperformed a buoyant stock market well into the first half of the first quarter. Based largely on pledges to do away with onerous regulations such Dodd Frank’s post-crisis financial reforms, overhaul the nation’s tax code and actively defend domestic U.S. trade interests abroad, the rally began to fade once investors understood that it is much easier to say something on a campaign trail than to actually get it done in Washington D.C.

The quarterly position disclosures were made through 13F filings with the U.S. Securities and Exchange Commission. These filings, which are due 45 days after the end of a calendar quarter, do not reflect any buying or selling subsequent to their dates, and may not reflect current positions. 

Not all financial companies were shunned in the quarter. Dan Och’s Och-Ziff Capital Management bought 12.78 million shares of Bank of America, upping its stake by more than 1.5 times, while David Tepper’s Appaloosa Management revealed a initial stake of 8.7 million shares. 


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

CAIS: How Technology is Disrupting the Alternative Investment Industry

Nov 7 2017 | 5:35pm ET

If there’s one thing that alternative investment professionals can agree on, it...