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No wonder finance sector so strong recently. I know those hedge funds are borrowing money to pump finance stock.
ugust 25, 2009: 02:52 PM ET
NEW YORK -(Dow Jones)- Hedge funds made an outsize bet on financial stocks
in the second quarter, according to a closely watched report on hedge-fund
holdings.
During the quarter, hedge funds increased their ownership in financial
stocks by 55% to $70 billion, compared with the previous quarter. The funds
now own 3.7% of the sector's market capitalization, according to a Goldman
Sachs research report released Monday. That's an all-time high, the report
said. Among their favorites were the big banks, including Bank of America
Corp. (BAC) and J.P. Morgan Chase & Co. (JPM)
The Goldman "Hedge Fund Trend Monitor" report adds credence to the anecdotal
evidence that hedge-fund managers thought financials were undervalued
during the quarter, after a rough 2008 and start to 2009. The number of
funds holding Bank of America more than doubled, while 38 hedge funds took
first-time positions in J.P. Morgan.
The report defined financial stocks broadly, and included sectors such as
banking conglomerates, consumer finance companies and regional banks.
Hedge funds' surge into financial stocks explains some of the second-quarter
run-ups in these stocks. Questions remain about how long they will stay
bullish on financial stocks, and how much more money a scaled-down industry
can invest in bank stocks.
John Paulson, who runs Paulson & Co., bought 168 million shares of Bank of
America and 35 million of regional bank Regions Financial Corp. (RF) during
the second quarter. Paulson, famous for betting against subprime and
financials in 2007 and some of 2008, also increased his stake in J.P. Morgan.
Other well-known managers, including SAC Capital, Maverick Capital and TPG-
Axon, bought millions of shares of one or more banks.
Goldman's research, which looks at hedge funds' end-of-quarter 13-F holdings
reports with the Securities and Exchange Commission, suggests that hedge
funds' increased exposure was from buying in the open market, participation
in equity raises, and short covering.
Net short exposure of financials rose only 8% to $63 billion, while long
exposure increased 55% to $70 billion. Hedge funds were net long financials
at the end of the second quarter, after being net short in the first.
The prices of most financial stocks increased even more than the overall
stock market since the first quarter, so it's possible that what is now
undervalued could soon be seen as overvalued. Bank of America, J.P. Morgan
and Regions, the three stocks with the most new hedge-fund holders during
the second quarter, were among the biggest gainers in financials.
By the second quarter's end, they owned 14% of Regions, up from just 2% at
the end of the first quarter.
Among financial conglomerates, J.P. Morgan and Bank of America weren't the
only ones hedge funds bought. Several hedge funds added to stakes or took
first- time positions in Citigroup Inc. (C) Two such fund managers were
Sandell Asset Management and Scoggin Capital.
Whether hedge funds continue buying financials depends in part on the health
of the hedge-fund industry, which suffered big losses in 2008 but has made
a bit of a comeback in 2009.
Redemptions at hedge funds have eased, which means fewer hedge funds have
been forced to sell stocks they might have preferred holding.
"Hedge funds' selling pressures have abated," the Goldman report said, "and
smaller hedge funds do not appear as pressured as some investors had feared.
"
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@
dowjones.com |
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发表于 2009-8-25 05:38 PM
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