Hennessee Group has released its latest data for March of 2010. According to its press release, the Hennessee Hedge Fund Index advanced +3.05% last month, falling behind the S&P 500 (+5.88%), the Dow Jones Industrial Average (+5.15%) and the NASDAQ Composite Index (+7.14%). Managing Principle of Hennessee Group Lee Hennessee commented, “Hedge funds posted a strong, positive month in March, but underperformed the sharply rising equity markets due to conservative positioning and difficulty shorting.”
The Long/Short Equity Index gained +3.07% last month as equity markets “continued to move higher in March, erasing losses from earlier in the year and leading to broad based gains for most major market indices in the first quarter.” The group’s findings conclude that all ten sectors earned positive gains, with industrials and financials at the top. The press release, however, predicts that “long/short equity funds will remain cautious with lower net exposures while emphasizing individual security as the primary alpha generator in 2010” in light of the near-term uncertainty.
The Arbitrage/Event-Driven Index and Global/Macro Indices increased +3.10% and +3.14%, respectively. Charles Gradante, Co-Founder of Hennessee Group, attributes the event-driven performance to high rates of undistributed corporate profits and cited the findings of a Strategas report that S&P 500 nonfinancial companies have accumulated “$830 billion of cash on their books.” Mr. Gradante commented, “Many believe that these cash stockpiles could lead to a pick up in mergers and acquisitions, which could serve as a catalyst for higher prices as it did in 2006 and 2007.” Hedge funds in the Global/Macro Index continued to “remain short the Euro and Yen in favor of the U.S. dollar.” According to Mr. Gradante, “Managers point out the fact that the spread between 10 Year German bonds and 10 Year U.S. Treasuries is the largest in 3 years, which should bode well for a stronger dollar.”
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