Another possible strategy on the US
Yesterday, we were discussing of stocks held by hedge funds =>
“…stocks most widely held by hedge funds are underperforming in easing FED cycles and gloomy economic periods! Indeed, these funds have to reduce exposure and decrease their leverage on their stock baskets => in general, these stocks are decreasing faster that the rest of the market…”
From this observation, we have extracted a possible portfolio…
Another idea would be to focus on stocks with the largest short interests: there are a lot of stocks with a short interest ranging from 40% to 70% of their float! Of course, these stocks have underperformed since the beginning of the year… It is quite obvious that any positive sentiment on the market will strongly reverse the situation. These shares will move sharply higher as shorts will need to buy back to cover their positions! We will come back later on this idea if we think that the conditions are gathered for some reasonable picks…