Hedge Funds Stock Market

Hedge Funds Stock Market

Hedge Funds Investing More in Stock Market


Hedge funds invested heavily in the stock market during the third quarter of 2009.  This represents hedge funds' biggest appetite for stock market risk in two years and may signal a broader recovery of the financial industry.  Goldman Sachs' most recent Hedge Fund Trend Monitor found that hedge funds amassed just over $600 billion of long equity positions and with an estimated $363 billion in short positions, net long exposure increased to 40%.  This is the "most bullish level" since December 2007, according to Goldman's analysis.
"The equity market appreciated 16 percent during the quarter, suggesting that hedge fund net exposure increased as a result of active equity buying as well as short covering," Goldman analysts wrote.
Goldman observed that hedge funds, though upping the ante on every sector, in particular raised their net long exposure in financials: to 29 percent from 9 percent in the second quarter and from net short positions last year.
Funds also showed greater interest in information technology and consumer discretionary companies. Industrial companies were the only sector where hedge funds pared their exposure. Source

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