Japan and Hedge Funds 2011
Japan Disaster Causes Hedge Funds to Lose Big in March
The earthquake and tsunami in Japan created a lot of turmoil in the markets and hedge fund managers' portfolios were hurt by the instability. As one hedge fund professional described it "“We just got whacked. Japan was a double hit—killing our longs and our shorts."
But for many hedge fund traders who take bets on economic trends around the world, March was the cruelest they can remember.
“We just got whacked. Japan was a double hit—killing our longs and our shorts,” a young hedge funder said at a beer garden in Manhattan’s meatpacking district.
One of the most popular positions for many global macro hedge fund managers was shorting clean energy companies—especially solar companies—and ETFs associated with clean energy indexes. On December 1, Bloomberg reported that seventeen percent of the freely traded shares of the 35 U.S. stocks in the WilderHill New Energy Index were sold short. Many expect that this only increased in January and February.
Similarly, many hedge fund investors believed that uranium was due for a boost—thanks in part to rising cost of oil.
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