FMP

FMP

Enter

Hedge funds endured a difficult week last week, according to a report by Morgan Stanley. This pain stemmed from a combination of factors: Falling Markets: Ma

Hedge Funds Hit Hard by Market Downturn

-

twitterlinkedinfacebook
blog post cover photo

Image credit: Maxim Hopman

Hedge funds endured a difficult week last week, according to a report by Morgan Stanley. This pain stemmed from a combination of factors:

  • Falling Markets: Major U.S. indices, including the S&P 500, Nasdaq, and Dow Jones, all experienced declines.
  • Disappointing Earnings Reports: Tech giants like Dell Technologies and Salesforce fell short of expectations, impacting the broader market.
  • Slower Economic Growth: Economic data indicated a weaker-than-anticipated economic growth in Q1.

Hedge Fund Struggles:

  • Long Bets Backfire: Hedge funds, which typically hold long positions (bets that a stock will rise), suffered losses as the overall market dipped.
  • Selling Spree: Morgan Stanley, a leading prime broker, observed hedge funds net selling equities across all regions, particularly in North America's tech, media, and telecom sectors. This selling included prominent large-cap stocks.
  • Short Selling Uptick: In addition to reducing long positions, hedge funds also increased short bets (wagers that a stock's price will fall) across various markets.

Performance Lag:

  • Weekly Performance: Compared to the S&P 500's 1.3% decline, Americas-based long/short funds suffered a steeper drop of 0.9%.
  • Monthly Performance: Over the month, these hedge funds only captured 35% of the S&P 500's gains, highlighting their underperformance.

In essence, the confluence of a bearish market, disappointing corporate earnings, and concerns about slowing economic growth led to significant losses for hedge funds, particularly those heavily invested in long positions and technology stocks.

Industry PE Ratio as a Valuation Tool

For investors interested in comparing Intel's valuation relative to its industry peers, the Financial Modeling Prep (FMP) Industry PE Ratio API https://site.financialmodelingprep.com/developer/docs/industries-pe-ratio-api

provides a valuable resource. This API offers daily updated industry PE ratios, allowing you to assess whether the technology sector, where Intel operates, is currently overvalued or undervalued. By leveraging this API and similar valuation tools, investors can make more informed decisions about their technology holdings.

Other Blogs

Nov 25, 2023 6:39 AM - Parth Sanghvi

DCF Valuation vs. Comparable Companies Analysis: Choosing the Right Valuation Method

Choosing the Right Valuation Method: DCF vs. Comparable Companies Analysis Introduction: Valuation methods play a pivotal role in determining the fair value of a company, aiding investors in making informed investment decisions. Two commonly used methods, DCF Valuation and Comparable Companies A...

blog post title

Dec 23, 2023 2:19 AM - Parth Sanghvi

Understanding the Limitations of DCF Analysis: A Guide to Overcoming Challenges

Introduction: Discounted Cash Flow (DCF) analysis stands as a cornerstone in valuing investments, yet its efficacy is contingent upon various assumptions and methodologies. While a powerful tool, DCF analysis comes with inherent limitations and challenges that investors must acknowledge to make i...

blog post title

Dec 25, 2023 2:28 AM - Parth Sanghvi

Integrating Sustainability into Valuations: Navigating ESG Factors within the Discounted Cash Flow (DCF) Model

Introduction: The investment landscape is undergoing a profound shift with a heightened emphasis on sustainability and responsible investing. In this blog post, we explore the intersection of Environmental, Social, and Governance (ESG) considerations within the Discounted Cash Flow (DCF) model, h...

blog post title
FMP

FMP

Financial Modeling Prep API provides real time stock price, company financial statements, major index prices, stock historical data, forex real time rate and cryptocurrencies. Financial Modeling Prep stock price API is in real time, the company reports can be found in quarter or annual format, and goes back 30 years in history.
twitterlinkedinfacebookinstagram
2017-2024 © Financial Modeling Prep