A long-held perception is that hedge funds, especially those up big for the year, like to take it easy in December. Why keep risk on, the thinking goes, when you can guarantee a fat, marketing-friendly return for the year?
"Do I hope they are locking in their profits? I sure the hell hope so," said financial advisor Ed Butowsky of Chapwood Investment Management.
But anecdotal evidence, data and conversations with investors in hedge funds show most are standing by their bets this year and keeping risk on.
Take Philippe Laffont's Coatue Management. The technology and Internet-focused hedge fund manager with $7.51 billion in assets could sit on his 16.64 percent gain through November by lowering risk levels or shifting to cash.
But, according to investor materials, Coatue recently ramped up its market exposure from 31.79 percent "net long" in October to 47.57 percent in November, meaning the size of its long bets on stocks outweigh its shorts by even more. Laffont did this by increasing Coatue's long positions in Internet companies and decreasing its short bets on technology stocks (its top longs include , and ).
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