ML note - hedgies sell equities

Date: Wednesday, July 15, 2009
Author: Laurence Fletcher, Reuters.com

Bank of America-Merrill Lynch’s latest “Hedge Fund Monitor” note shows managers are aggressively selling equities and building a record net long position in 2-year Treasuries.

According to the note, hedge funds last week continued to decrease aggressively their net long position in S&P 500 futures and added to net shorts in the Russell 2000.

In commodities they held onto their “crowded longs” in gold but added marginally to net shorts in copper, while in energy they cut their net long positions in crude oil and heating oil and marginally covered crowded shorts in natural gas.

Elsewhere, they added to shorts in 10-year Treasury notes and built a record net long in 2-years.

Meanwhile, market neutral funds’ market exposure dropped last week, while long/short funds are now modestly underweight equities