Hedge Funds Get Large Outflows, Fund Managers Growing More Bearish

TrimTabs and BarclayHedge report each month about hedge fund inflows and outflows, and if you have been watching the tape you shouldn’t be surprised that the trend is toward ‘outflows’ of late.  What is interesting is that there is a one-month lag and that means that the current report covers the month of April.  If stocks were still holding up in April and the outflows were large then, imagine how bad the outflows were in May.

Today’s data from TrimTabs showed that hedge funds redeemed some $5.1 billion in April 2012, and that would make a net outflow of $12.7 billion that flowed out of hedge funds over the 12 prior 12-month period.  The only good news here is that a more recent hedge fund survey from late in May showed that hedge fund managers were the most bearish on the S&P 500 Index than they had been in six months.

The May 2012 TrimTabs/BarclayHedge Survey of Hedge Fund Managers found that 35.6% of managers were bearish on the S&P 500 for June, while 30.5% were bullish, and 33.9% were neutral. Meanwhile, the bullish sentiment on the U.S. Dollar Index surged to 61.9% in May from 35.4% in April.

Here is an interesting take on QE3: over 28% of managers saw more than a 60% chance of the Federal Reserve launching another round of quantitative easing this year, while over 47% of managers saw less than a 40% likelihood.  Dan Dorfman commented that QE3 could be a Wall Street mirage on the TrimTabs blog.

JON C. OGG