Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

Continue Reading


BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

Continue Reading


Zoopla wins back customers from online property rival

Zoopla chief executive Alex Chesterman has branded rival OnTheMarket “a failed experiment”, and said that his property site was winning back customers at a record rate. OnTheMarket was set up last year, aiming to compete with Zoopla and Rightmove, the UK’s two biggest property portals. It allowed estate agents to list their properties more cheaply […]

Continue Reading


Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

Continue Reading

Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

Continue Reading

Categorized | Equities

Hedge funds move out of shorts

Posted on September 30, 2013

Hedge funds’ bets on falling share prices have dropped to their lowest level in years as traders predict an extended bull run for equities over the coming months.

According to data from Markit, the overall value of short positions on European shares has dropped to $144bn, the lowest level since the data provider began monitoring in 2006.

    In the US too, short positions are touching record lows. Just 2.4 per cent of S&P 500 shares are on loan to short sellers, Markit said.

    The figures represent hedge funds’ conviction that equity markets are poised for significant further gains in the wake of the US Federal Reserve’s decision not to curb its programme of quantitative easing earlier this month and renewed belief in strong corporate performance in the coming months.

    “The dynamics in the securities lending markets prior to the Lehman crash were completely different than they are today,” said Alex Brog, director at Markit. “Firstly, there were far more hedge funds, which were more leveraged. Regulatory uncertainty has deterred some from engaging in short selling. Also in today’s prolonged bull market, it has been hard for short sellers to bet against a rising tide, much of which has been driven by macroeconomic sentiment.”

    Global equities have risen 19 per cent so far this year, according to the MSCI All World Index.

    US stocks have been among the strongest performers. The S&P 500 is up 18 per cent over the past nine months.

    Paul Hickey, co-founder of Bespoke Investment Group, said that US equities have average positive returns on the day of their earnings report for the past five quarters, the longest streak for Wall Street stocks in at least a decade. The US third-quarter earnings season is about to begin.

    “With shorts getting burnt repeatedly, there are only so many times you are going to put your hand on the hot stove,” he said.

    The average equity hedge fund has made about 7 per cent so far this year, according to HFR, though some of the biggest names in the industry have posted outsize returns.

    TCI, the $7bn London-based activist hedge fund run by Christopher Hohn, is up 34 per cent so far for 2013, according to an investor. Mr Hohn has enjoyed big gains from investments in companies such as EADS in Europe and News Corp in the US.

    Lansdowne Partners, Europe’s biggest equity hedge fund, is meanwhile up 20 per cent, thanks in part to wagers on US banks.

    John Paulson, the US hedge fund manager who correctly called the housing bubble in 2007, has seen big gains for his Recovery fund, which is geared to the state of the US economy. The fund has made its investors more than 35 per cent in the first eight months of the year, thanks to US stock market picks.