Hedge funds are sometimes referred to as the smart money for their prowess at generating profits.
And in an effort to give you a leg up, CNBC’s Fast Money often checks in with top hedge fund manager Anthony Scaramucci of Skybridge Capital to learn how he’s positioning -- as well as his peers.
And Scaramucci tells us right now hedge funds are rotating out of commodities.
”There’s a lot of trouble in the markets, a lot of uncertainty. The economy is not doing as well as most people had hoped. That’s the reason why most hedge funds have lightened up on commodities.”
And he adds that money is largely rotating into consumer discretionary.
But Scarmucci doesn’t think you should follow the hedge funds – rather he suggests getting ahead of them -- with long positions in energy.
Huh?
This trade is all about timing, because if either the economy does better -- or we see signs of QE3 -- Scaramucci expects money pros to pile into commodities; especially energy related commodities.
And he thinks it happens hard and fast.
”It’s a spring loaded trade,” he says. “When they see the economy get better I think they pile in. If things pick up I expect to see hedge funds move very quickly back into the commodities space.”
Trader Joe Terranova couldn't agree more.
“You’re absolutely right!” he exclaims. “You’ve got to understand that hedge funds are going from overweight to market weight. They’re not going short. And when the economy turns, they’ll quickly return to this space as aggressively as they can, and chase the market higher.”
Scaramucci adds, "we could see some upside surprise."
* Anthony Scaramucci runs SkyBridge Capital, a leading alternative asset manager with more than $7 billion under management. Every week on Fast Money, Scaramucci, aka 'The Hedge', takes you behind the hedges, giving you an unprecedented
Click here to check out Scaramucci's regulary feature: 'Hedge Fund Trade Of The Week' posts
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Trader disclosure: On July 5 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (XOM); Terranova owns (HAS); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (F); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX) ; Terranova is Chief Market Strategist of Virtus Investment Partners, LTD; Pete Najarian owns (AAPL); Pete Najarian owns (CE); Pete Najarian owns (F); Pete Najarian owns (GE); Pete Najarian owns (MOS); Pete Najarian owns (MS); Pete Najarian owns (SLV) calls; Pete Najarian owns (VLO); Weiss owns (EMC); Weiss owns (MSFT); Weiss owns (JPM); Weiss owns (QCOM); Weiss owns (VZ)
For Brian Kelly
Accounts Managed by Brian Kelly Capital are long Australian Dollars
Accounts Managed by Brian Kelly Capital are long New Zealand Dollars
Accounts Managed by Brian Kelly Capital are long euros
Accounts Managed by Brian Kelly Capital own (TBT)
Accounts Managed by Brian Kelly Capital own (WFC)
Accounts Managed by Brian Kelly Capital own (KRE)
Accounts Managed by Brian Kelly Capital own (MOS)
Accounts Managed by Brian Kelly Capital own (IPI)
Accounts Managed by Brian Kelly Capital own (XLK)
Accounts Managed by Brian Kelly Capital are short U.S. Dollars
For Joe Terranova
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)
For Alexandra Liebenthal
No Disclosures
For Anthony Scaramucci
Skybridge Capital is a fund of funds Manager
Funds held May or May Not Own The Recommended Securities
CNBC.com with wires.
