Nearly half of hedge fund managers have become bearish about stocks, according to a survey by TrimTabs Investment Research and BarclayHedge.
About 47% of the 104 hedge fund managers interviewed in August said they were not optimistic about returns of the S&P 500 index, compared to 33% in July. The number of hedge fund portfolio managers who were bullish on the S&P 500 dropped by half in August to 17% from 34%. Managers who were neutral about prospects for stocks rose slightly to 36% from 33% in July, according to a joint news release from TrimTabs and BarclayHedge about the survey results.
Hedge fund managers’ sentiments about 10-year U.S. Treasury notes were little changed in August, with 36% of managers surveyed declaring their bullishness, compared to 35% in July. Managers who were neutral about T-bills dropped to 47% from 50% and those who were bearish rose to 17% from 16%.
Hedge fund managers were more optimistic about the strength of the U.S. dollar in August with 29% placing themselves in the bullish category compared to 22% in July. Managers who said they were neutral dropped to 42% in August from 49%. There was no change in the percentage of hedge fund managers — 29% — who said they were bearish on the U.S. dollar from month-to-month.
“Bearish sentiment skipped sharply higher, and bullish sentiment plunged,” Sol Waksman, CEO of BarclayHedge, said in the news release. “Meanwhile, short interest is heaviest in the most cyclical sectors, and from a seasonality standpoint September is far and away the worst month of the year for stocks. The developments hedge fund managers are telegraphing bode ill for equities.”
Also, 63% of those surveyed said they want the Bush tax cuts, due to expire at the end of this year, to be extended.
