Losses betting against meme stocks have hit hedge funds hard this year. The latest data from Barclay Hedge shows year-to-date gains for equity long/short funds of 8.51%. (This is the type of fund that would typically take short positions in stocks.)
Meanwhile, the S&P 500 has returned 18%.
One of the largest sources of losses for hedge funds this year is short positions in AMC Entertainment Holdings, Inc. Its shares are up more than 18 fold this year, inflicting billions in losses on short sellers. Other meme stocks like GameStop Corp. have also produced large losses.
This continues a pattern of long term underperformance for this strategy:
Investors are losing patience and rapidly withdrawing their money.
If you’re an investor in a fund with a losing strategy, a weak track record, and a habit of betting against the hottest stocks in the market, I ask you: why not try an index fund?
More on hedge funds and AMC:
SHORT SELLERS LOSE $44 BILLION IN 30 DAYS
HOW AMC IS BLOWING UP THE HEDGE FUND INDUSTRY
NEW DATA SHOWS BIG DROP IN AMC FAILS TO DELIVER
Photo: “the Great Hedge Fund Hei$t” by eyewashdesign: A. Golden is licensed under CC BY-NC-ND 2.0
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