Salient to Investors:

Markit reports US hedge funds were short 2.4 per cent of shares, close to an all-time low. Only 6 companies reporting earnings this week have more than 3 per cent of their stock sold short. In Europe’s Stoxx 50 index of top companies, it is only 2.

HFR reports the average equity hedge fund is up 7 per cent for 2013 and 8 per cent in the entire preceding 3 years.

Rick Teisch at Liongate Capital said you would expect hedge funds to capture some of the upside and to significantly limit the downside, which is what they have mostly done in 2013.

Many equity hedge funds, particularly those with a long bias, concentrated portfolio of a focus on a particular theme,  have done really well this year with returns of as much as 30 or 35 per cent.

Hedge funds focused on stock-picking are having a boom year. Ben Watson at Aberdeen Asset Mgmt said fundamentals are increasingly being rewarded and share prices are taking more account of them than in 2010 or 2011 or 2012 – it is a stock-pickers’ market.

Many hedge fund managers, particularly US firms are looking at Europe. And demand for hedge fund office space and equity analysts in London has been rising fast this summer.

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