Survey: Sentiment for US Stocks Among HF Managers Grows Bearish

Amid concern about slowing economic growth, a new survey shows more than a third of managers are increasingly bearish about the US stock market and upbeat on 10-year Treasuries.

(August 31, 2010) — A survey by TrimTabs Investment Research and BarclayHedge reveals that nearly half of hedge fund managers have become bearish about stocks.

“Bearish sentiment skipped sharply higher, and bullish sentiment plunged,” Sol Waksman, CEO of BarclayHedge, said in a release outlining the study, which consisted of research compiled from interviews with 104 hedge fund managers over the past week. “Meanwhile, short interest is heaviest in the most cyclical sectors, and from a seasonality standpoint September is far and away the worst month of the year for stocks. The developments hedge fund managers are telegraphing bode ill for equities.” Over the past two months, bullish sentiment has increased to 36% from 14%, as hedge fund managers continue to favor US Treasury bonds.

About 47% of the managers interviewed said they were not optimistic about returns of the Standard & Poor’s 500 Index, compared to 33.1% a month earlier. Meanwhile, the number of hedge fund portfolio managers who were bullish on the S&P 500 dropped in August to 17% from 34%.

Additionally, the study revealed hedge fund managers were increasingly optimistic about the strength of of the US dollar in August — 29% categorized themselves as bullish, compared with 22% in July.

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In regards to fiscal and monetary policy, almost 63% of managers surveyed this month said they want to see the Bush tax cuts extended in some form. According to TrimTabs and BarclayHedge, half of managers believe decreased deficit spending is justified, while 18% feel the government should spend more.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Pension Deficits Haunt 32% of FTSE Firms

A study by KPMG shows 32% of firms "can now not payoff deficits in any realistic time frame from discretionary cash flow."

(August 31, 2010) — Thirty-two percent of FTSE 100 firms are struggling to fill gaps in their pension deficits from current discretionary cash flow, a recent study by KPMG shows, with pension deficits of FTSE 100 companies jumping by £15 billion this year to £65 billion.

“At first sight, these figures look alarming, but they mainly reflect the consequences of the economic downturn on companies’ profits and cash flow,” Mike Smedley, pensions partner at KPMG, said in a statement. “The key message to sponsoring companies, pension fund trustees and regulators is to maintain a long-term view and avoid knee-jerk reactions.”

With £2 out of every £3 in 2009 being spent on deficit reduction, the firm’s Pensions Repayment Monitor survey showed companies are spending more on deficits than funding pensions for current staff. Total employer contributions paid to defined benefit schemes increased from £14 billion in 2008 to £17.8 billion in 2009 in the midst of rising demands to fund deficits following the economic downturn, KPMG’s research revealed. Many companies have already closed their final salary schemes to new members as they are too expensive to run.

According to the study, 46% of the FTSE 100 would be able to pay off pensions deficits from discretionary cash flow in a single year, and 63% in three years, compared to 62% and 75% respectively in 2008.

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While KPMG’s study does not pinpoint those firms with the least affordable pension shortfalls, the study does indicate blue chip companies with some of the largest deficits, including BT, British Airways, and utility groups with high capital expenditure commitments such as National Grid.

Pension fund deficits that are increasingly plaguing pensions in the UK is also reflected by the growing demands put on the Pension Protection Fund (PPF), which backstops failed corporate pensions, as experts have warned that the fund is being overstretched and may soon have to reduce the amount it pays out.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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