“Hedge Fund Hotels” Blow Up: September Slams Billionaire Stock Pickers

In August, hedge funds blamed risk-parity funds for their dramatic underperformance.
In September, the underperformance continued however this time, with risk-parity funds supposedly buying stocks, one can’t blame them. To be sure, some such as Ackman whose 20 million shares of Valeant are hurting badly, will blame the Martin Shkrelis of the world for the biggest biotech tumble in years, but others may have to bite the bullet and admit it is their own lack of ability to come up with alpha in a centrally-planned “market” that is the reason.
That, and idea “clustering”, of course, because over the past few years the best performers have been the “hedge fund” hotels – stocks that have dozens if not hundreds of hedge funds invested and piggybacking on each other. The problem is that in the past two months it was the hedge fund hotels that have led to the biggest losses. Even the mainstream media finally discovered this little “short cut” to creating if not alpha, then levered beta.
A few days ago, Reuters reported that “new data shows that some of the industry’s biggest firms’ top 10 stock picks bear striking resemblances to each other.”
You don’t say….

This post was published at Zero Hedge on 10/01/2015.