The Longest Bias
Speaking to institutional investors in recent weeks, analysts at Brighton House Associates have noticed increasing interest in long-biased hedge fund managers. Although equities are generally still in the red compared to a year ago, many keen investors are considering the long term and beginning to position themselves to capitalize on a potential market turnaround.
Although some investors have told BHA analysts that they are hesitant to get back into the market, many investors expressed excitement about the ample number of new opportunities, however, and see it as a positive outcome of the shakeout in the hedge fund industry. Many fundamentally sound securities have been devalued due to the overpowering downward pressure of the market. This environment can be an ideal scenario for a profitable buy and hold strategy.
These undervalued securities are becoming prime targets for opportunistic long-biased managers. Since early March when the market hit bottom, the Dow Jones Industrial Average has rebounded nearly 25%. This sort of movement is encouraging many institutional investors to actively pursue long-term opportunities in the equities market. These investors have identified experienced long-biased managers as players that can reap the most benefits.
A managing partner at a California-based wealth advisor expressed some interesting insight on this trend. He explained that the firm’s clients are interested in fund managers that take a fundamental approach to long-term investments and maintain a long bias in their portfolios. His general sentiment was that seeking out appropriate long-biased investments now will allow the firm’s clients to succeed in the long term.