Trimtabs – Barclayhedge Survey: Hedge Funds Getting More Bearish

Trimtabs – Barclayhedge survey indicates that hedge funds are getting more bearish. According to CNBC, TrimTabs – BarclayHedge monthly survey of 86 hedge funds showed that egative emotions of hedge funds have increased from 27% to 42%: the highest level so far this year. Only about 27% of the hedge funds are bullish about the market, which is the lowest level since April.

Taking a deeper look into the survey, we found that more than 50% of those who were surveyed believe the economy is in recession, and only 17% believe that President Obama and Congress will reach an agreement on a plan that will more than just cut the expenses. Just 3% of those surveyed think economic growth will be accelerating.

The report on the survey stated that hedge fund managers have reversed their stance on US equities: “Bearishness on the part of hedge fund managers squares with equity futures flows. Speculative traders have been net buyers of equity futures in only six weeks in 2011.”

Another similar informal survey was done by Doug Kass of Seabreeze Partners among 14 of his hedge fund peers. In this survey, only one hedge fund manager increased his net long exposure in the past two days while nine managers decreased their long exposure, and the remaining four made no changes.

S&P 500 is down 15% since April, and more and more investors are betting against the market. According to the data from Bank of America Merrill Lynch, the number of shares shorting S&P 500 index has jumped 7.7% in mid August, which is the biggest increase since June 2008. Clearly, these short sellers believe the market will continue to go down and expect to make profits when S&P 500 index drops. The main targets of the short sellers are consumer, technology and finance sectors.