Weekly Update

Goldman Sachs: Hedge funds turn bearish in April

Hedge funds around the world are feeling pretty pessimistic about stocks this year, according to a note from Goldman Sachs . They're betting that stock prices will fall, especially in North America, Europe, and parts of Asia. This means they're selling stocks they don't own yet, hoping to buy them back later at a lower price. Normally, hedge funds buy stocks expecting their prices to go up, but lately, they're selling more than they're buying. The S&P 500 in the U.S. and stock indices in Europe and China have dropped in April, which adds to the hedge funds' caution.

These hedge funds are also borrowing less money to make trades, showing they're being more careful with their investments. Investors are turning to managers who balance their investments or bet on both rising and falling stocks, rather than just expecting stocks to go up. In particular, hedge funds are betting against companies that sell non-essential items like luxury goods and cars. They're also still betting against energy companies, despite tensions in the Middle East raising energy prices. On the other hand, they're buying into food and beverage companies and health care stocks. Interestingly, they're sticking with technology companies that make semiconductors and related equipment, which are at their highest levels in years. But they're starting to bet against software companies, which have seen a drop in interest from hedge funds.

Hudson Bay Closes $800 Million Fund to Bet on Special Situations

Hudson Bay Capital Management has gathered over $800 million for investing in special opportunities, reports Bloomberg . The fund, operating as a closed end drawdown fund for six years, will utilise a strategy called "fat pitch" to seize opportunities as they arise. It's managed by Hudson Bay's Chief Investment Officer Sander Gerber along with managing partners Yoav Roth, George Antonopoulos, and Roy Astrachan.

Investments from the fund have already been made in companies like New York Community Bancorp Inc., with Hudson Bay being part of a group that provided over $1 billion to support the struggling commercial real estate lender recently. Hudson Bay, which oversees around $20 billion in assets across various strategies, has launched its first special opportunities-focused fund after beginning fundraising in late 2023, aiming initially for $500 million.