Hedge funds surveyed by Evercore strategists have a 51% net equity exposure. Dreamstime
Hedge funds have been buying up stocks of late, but if history is a guide, the trend could reverse itself and that would be a pressure point on stocks.
Hedge funds’ net equity exposure has risen sharply in the second half of 2020 as the stock market has spiked from its pandemic-induced bear market in March. Net equity exposure is the total percentage of a fund represented by long positions in stocks, minus the percentage of the fund in short positions on stocks it is betting against.
Hedge funds surveyed by Evercore strategists have a 51% net equity exposure, meaning the majority of hedge-fund positions are long, a sign those investors are optimistic on the market. That exposure is up from just above 48% at the end of the first half of the year.