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Hedge Funds ‘Particularly Vulnerable’ To Market Unwind On ‘Crowding Risk’

Still, everything should be fine as long as nobody yells "fire!". Or "recession".

Still, everything should be fine as long as nobody yells "fire!". Or "recession".
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4 comments on “Hedge Funds ‘Particularly Vulnerable’ To Market Unwind On ‘Crowding Risk’

  1. SouthBySE

    It doesn’t matter if the hedge funds’ risk is concentrated.

    The mega stocks they hold are more liquid than the average stock……if they have to sell, they have to sell whatever they have, and it’s much easier to sell big, liquid stocks…….. which also have liquid options for hedging.

    • well, right, but the problem for everyone else when they “sell what they have” is that “what they have” is a big pile of exposure to the names that matter most to the broader market, so when they start dumping that, it’s a problem.

  2. surprised Apple is not a top 10 holding.

  3. Dust cloud

    Concentrated crowds chasing the same party punch?

    It was the year (2017) of the “trillionaires,”
    with the top ten firms capturing some 90 percent
    of positive flows (Exhibit 16, next page). Starkly,
    no firm that posted more than $30 billion in net
    flows last year had less than $1 trillion in AUM (assets under mang)

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