There are some unusually severe moves today across the sector – it strikes us as being partially driven by HF capitulation as lower multiple, lower quality names that are the usual targets for short sellers are outperforming the bulk of staples today.
Similarly, we are also seeing some modest outperformance in the higher multiple names, suggesting some additional short covering in what may be valuation shorts.
However, short covering doesn’t seem to be the sole determinant of today’s stock price movements as seen below. Nor are we seeing any meaningful disparity in performance based on beta.
Bottom line, it seems as if the HNZ transaction and the continued resilience of the market have caught some HFs offside, and we are seeing scrambling and associated “odd” moves as investors take down/take up exposure or reposition their books to reflect a more bullish stance.
Call with questions.
Rob
Robert Campagnino
Managing Director
HEDGEYE RISK MANAGEMENT, LLC
Matt Hedrick
Senior Analyst
