How’s this for an election trade? Sell your winners now so you have cash on hand this fall to do some aggressive buying as the political jockeying heats up.
That’s precisely what hedge funds have been doing since May, even as the market continued to set records. Their net leverage, which is often viewed as a barometer of risk appetite, fell to 54% in early July, the lowest level since January, according to Goldman Sachs Group Inc.’s prime brokerage desk. Hedge funds are now underweight technology, media and telecom by the most on record after spending two months unloading the best performing stocks in the market.