Short selling hedge funds pushing up the Russell 2000 small-cap index 13.7%
Investors are continuing to have a difficult time devising a consistent winning strategy.
If anything, the large-cap stocks are better poised to ride out the rocky economy with a larger portion of their customer base in non-US economy.
Much of the fuel for the small stocks are coming from hedge funds closing out their bearish bets to lock in profits. And since small-cap stocks can be thinly traded, a rush of traders buying back stocks during the summer, when volume typically is light, is increasing the Russell 2000’s move.
In the Spring, nearly 11% of the shares in the Russell 2000 were sold short vs 2% for the Russell Top 200 index. The Russell 2000 is trading at 14.3 times analysts’ earnings forecasts for the next 12 months, compared with a historic multiple of 14.8, according to Merrill Lynch. Other factors?
The SP500 has more energy companies which aren’t doing as well with lower commodity prices.
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