While today's cash market session started off confused, with the Dow crossing the unchanged line numerous times before the selloff once again accelerating, it follows a furious plunge yesterday which was driven by momentum stocks, and as noted yesterday, the MSCI USA Momentum ETF (MTUM) suffered it worst performance day ever on Wednesday.
One place to watch the carnage first hand is the Goldman Sachs Hedge Industry VIP ETF, or GVIP, which was created to replicate exposure to stocks which are the most widely held by hedge funds long portfolios: this ETF has tumbled >7% from its recent just two weeks ago and has fallen 12 of the last 14 trading sessions.
And while it is common knowledge that the mega-cap tech names are – or at least were – a magnet for hedge funds, with the BofA fund manager survey reporting the “Long FAANG+BAT” as the most crowded trade for eighth straight month.
a look at the performance over the past five days of some non-supercap “hedge fund hotels” which have at least 10% hedge fund ownership, paint a far more troubling picture of the bigger problem at hand for hedge funds.
Here are the details from Bloomberg: Roku -22% (Melvin, Whale Rock, Citadel, Hitchwood, Buckingham were among top hedge-fund holders as of the last filings, many of which were from June 30) Trivago -18% (PAR Capital, 683 Capital, Greenhouse Funds, Altimeter, Apertura, Citadel) Etsy -17% (Renaissance, DE Shaw, Millennium, Citadel, Black-and-White, Goodnow, Hitchwood) Spotify -16% (Tiger Global, Coatue, Steadfast, Lansdowne, Jericho, Soros, Hitchwood) Stitch Fix -15% (Light Street, Steadfast, Hitchwood, Park West, Citadel, Garelick, Scopus) ANGI Homeservices -15% (Luxor Capital, TCS Capital, SQN, Tiger Eye, PAR Capital) Autodesk -14% (Viking, Tiger, Darsana, PointState, Meritage, Citadel, Sachem Head) GoDaddy -14% (Select Equity, Renaissance, Egerton, Brahman, Silver Lake, DE Shaw) Square – 13% (DE Shaw, Lone Pine, Whale Rock, Matrix Capital, Hitchwood Capital) Lululemon -13% (AQR, Laurion, DE Shaw, Renaissance, Arrowstreet, Millennium, Alyeska) Goodyear Tire -12% (Diamond Hill, Citadel, DE Shaw, Moon Capital, AQR, Portolan) Ralph Lauren -12% (Renaissance, AQR, Millennium, DE Shaw, Maverick, Arrowstreet) Needless to say, this is the last thing the industry needed, when it was already suffering from shrinking assets, bad performance, and prominent hedge fund closures such as lthe $12.1 billion Highfields Capital fund, the $2 billion Criterion Capital fund, and Tourbillon's Jason Karp returning $1 billion as he shuts his main fund.