Things Just Keep Getting Worse for Hedge Funds as Long Bets Sour
- A selloff in favored stocks comes after short-squeeze losses
- It’s a rare blunder for an industry known for picking winners
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In a year when mutual-fund stock pickers are shining, their hedge-fund counterparts are bleeding.
After being burned during January’s retail-driven short squeeze in stocks such as GameStop Corp., now hedge funds are feeling the pain on the long side as well. A basket of the 50 most-popular stocks has fallen this month, while a group of the 50 most-crowded shorts gained, dealing a double blow to performance, client data compiled by Morgan Stanley’s prime brokerage unit show.