Hedge Fund Managers (Slightly) Less Bearish On Equities In March

Date: Wednesday, April 6, 2011
Author: Murray Coleman, Barron

Some 36% of hedge fund managers identified themselves as being bearish on the S&P 500 (SPY) in March,  down from 40% in the previous month, according to a survey by TrimTabs and BarclayHedge.

“While hedge fund managers remain bearish, hedge fund investors are showering them with fresh cash,” Sol Waksman of BarclayHedge said in a statement.

He added that hedge funds posted their heaviest inflows on record in February, “which probably owes in part to superior performance.”

The Barclay Hedge Fund Index has posted a positive return for seven straight months.

A more bearish tone was set by natural disasters in Japan and growing violence in the Middle East and North Africa.

About a third of hedge fund managers were bearish on 10-year Treasuries, the survey found. At the same time, 16% considered themselves as more bullish about bonds. Both remain around the same levels as three months ago, the study notes.

The report found that about 18% of hedge fund managers expect to increase leverage in the near-term while another 14% plan to decrease leverage.

However, it’s probably worth noting that managers have said much the same for 10 straight months now. Meanwhile, TrimTabs has pointed out that margin debt stands at its highest level since July 2008.

Until rates go up, analysts say that such high levels are likely to continue.