while one measure of their market positioning plunged the most since the March 2020 crash.
Angela Aldrich of Bayberry Capital said this month that her hedge fund holds around 40 shorts in the portfolio.At the same time, short selling rose at hedge funds tracked by JPMorgan, while Morgan Stanley’s clients cut their net leverage at a pace not seen since last October. For investors who have watched 2023’s equity rally lure the gambling crowd, the return of scepticism will likely be welcome news if it prevents the sharemarket from running too hot. However, defensive positioning can also set the stage for a bounce, as happened last October.
“Short additions were concentrated in already shorted sectors,” Morgan Stanley’s team including Christopher Metli wrote in a note. “Positioning was also a clear driver of price action.”