With a group of the most popular stocks owned by the world’s largest hedge funds, again starting to underperform the broader market, another sell-off of US stocks could be on the cards, according to a team of analysts at RRBC Capital Markets.
With a group of the most popular stocks owned by the world’s largest hedge funds, again starting to underperform the broader market, another sell-off of US stocks could be on the cards, according to a team of analysts at RBC Capital Markets.
A report by Marketwatch says that the equity analysts, led by RBC’s head of US equity strategy, Lori Calvasina, track the so-called ‘hedge fund hot dogs’ a basket of the most popular S&P 500 SPX, +1.41% stocks owned by 300 of the world’s largest hedge funds. The basket is updated every three months when hedge funds file their end of quarter holdings.
And the team has found that when the hot dogs start to underperform the broader S&P 500, it can be a signal that a sell-off in stocks is looking large. Conversely, hot dog outperformance can indicate that a sell off bottoming out.
So far in Q3 2022, just 25% of the current hedge fund hot dog stocks have outperformed the S&P 500.
