A unexpectedly sharp surge in stocks last week saw hedge funds rushing to exit losing bets on falling markets at the fastest pace in years, according to a report by the Financial Times.
A unexpectedly sharp surge in stocks last week saw hedge funds rushing to exit losing bets on falling markets at the fastest pace in years, according to a report by the Financial Times.
The report cites a client note released by Goldman Sachs as confirming that this latest flurry of ‘short covering’ – with investors buying back rising stocks they had previously bet against in a bid to limit losses – was the largest seen since November 2015.
Many of the speculative stocks that suffered big falls during 2022’s global sell-off have been at the forefront of this year’s equity market rebound, leaving lots of funds that profited from the rout poorly positioned.
The scale of hedge fund buying helped fuel a 3.3 per cent jump in the Nasdaq index on Thursday.
Caravana is among the companies that have caught out hedge fund so far this year with the online car retailer’s stock rebounding by 200 per cent in 2023 following a 98 per cent due last last year, while Cinema chain AMC Entertainment, whose shares fell 76 per cent last year, has seen its stock prince jump by 49 per cent this year.
