US Long-Only Funds Selling Surges To Level Last Seen In Days Following Lehman Collapse

Tyler Durden's picture Submitted by Tyler Durden on 10/12/2010 11:09 -0500

Lehman

The latest confirmation that there is nobody left in stocks save for hedge funds, HFTs (who do so at a comped exchange loss via liquidity rebates), and primary dealers, comes courtesy of UBS Client Flow research, which reports that “long only funds increased their net selling to levels last seen in October 2008.” Putting a number to this: the week outflows by long-only funds was $783 million in the week ended October 1.  This is in addition to observations that retail flows are now a one way street away from stocks, and merely reinforces the threat that the hedge fund playground which is what the stock market is now exclusively, could plunge the moment there is coordinated selling and profit taking. To use more graphic terms, the entire theater is just full of hedge fund millionaires, where everyone owns the same stock (mostly Apple), there is only one open door, and the Fed keeps on pouring gasoline all over the place.

From UBS:

US clients increased their net selling of US equities since the prior four-week period. Most of the increased net selling came from long only funds; this is the most net selling we’ve seen from US long only funds since October 2008. At the same time, hedge funds and corporate clients also decreased their net buying. On a sector level, cyclical sectors all saw increased net selling. Materials and consumer both went from being net bought to net sold.

And here are the charts you will never see on CNBC:

And in tabular form:

You read that right: the 4 week outflows from Long Only Funds is now nearly $800 million, while total UBS clients have withdrawn nearly half a trillion in capial.

More relevantly, in the week ended October 8, nobody bought anything!

US Client Flow: Long only funds increase net selling

US clients continued to be net sellers of US equities for a second week. Long only funds increased their net selling to levels last seen in October 2008. The only net buyers were hedge fund and corporate clients, which both decreased their net buying.

Sector details of US Client Flow: Increased net selling in most US sectors

US clients were net sellers of all US sectors except media, which saw decreased net buying. Both consumer and materials went from net bought to net sold in the most recent period. US financials and tech also saw substantial increases in net selling from US clients, led by US hedge funds. At the same time, US clients have decreased their net selling of foreign financials and tech.

Foreign Client Flow: Also net selling at October 2008 levels

Foreign clients increased their net selling of US equities to October 2008 levels, led by “other” clients, which include family offices, sovereign, and other uncategorized accounts. Only long only funds were net buyers. Nearly every sector saw increased net selling, even tech and media, which had been the only US sectors foreign clients were net buying in the prior four-week period.

And yet, the mockery of stock market was up.

So who is buying? Here are the sectors that hedge funds (the only entities actually putting money in stocks, and only to avoid redemptions) like and hate:

Still with the 4 week average hedge fund buying a speck compared to Long-Only outflows, one wonders where the balance (wink, HFT, Liberty 33, wink) is coming from… 

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by jmf
on Tue, 10/12/2010 – 11:14
#643365

Moin from Germany,

million not billion….

Login or register to post comments by dliebowitz
on Tue, 10/12/2010 – 13:21
#643716

Ok, so retail investors continue to bail on the stock market.  So what? Did it ever occur to you that the crowd is almost always wrong?

Login or register to post comments by dliebowitz
on Tue, 10/12/2010 – 13:26
#643745

“The latest confirmation that there is nobody left in stocks save for hedge funds, HFTs”.  Well hold on there… HFT own nothing at the end of each trading day and Hedge Funds collectively have AUM of under $2 trillion.  Capitalization of US Stock market somewhere around $40 trillion, so it seems somebody still owns stocks besides the hedge funds. 

Login or register to post comments by Ragnarok
on Tue, 10/12/2010 – 11:16
#643369

Is this the seen in that movie where they dig the dead pilots out of the snow and start cutting off strips?

Login or register to post comments by spartan117
on Tue, 10/12/2010 – 12:15
#643566

Who plays the Snow creatures?

Login or register to post comments by Turd Ferguson
on Tue, 10/12/2010 – 11:17
#643370

I must admit that is tempting to own a few equities as further QE floods the market. But, sheesh, at some point the market is doomed to fail in spectacular fashion. 

At least in Vegas or some other casino, you have about a 55/45 risk/reward ratio. In the “stock market” it seems about 90/10 at this point. Therefore, no thanks. I’ll just hold my gold, silver and soybeans and wait.

Login or register to post comments by tmosley
on Tue, 10/12/2010 – 11:23
#643397

Heh, I heard this morning that King Pharma was being bought out by Pfizer and realized that I had some stock certificates that my father had given me years ago.  I had forgotten all about them until I heard that.  I’ll have to send them in to my broker and cash in on the good news.  Buy some more silver.

Login or register to post comments by TradingJoe
on Tue, 10/12/2010 – 11:29
#643419

Turd,

 

ad some canned stuff, water and ammo! And NO, no more buying of “undervalued” stocks, and “overvalued” bonds, hehehe! All Hell will brake loos and will push it ALL down, including gold, silver and the like, then we’ll ad some more of that shiny metal, guns, ammo…you get my direction!

Login or register to post comments by RobotTrader
on Tue, 10/12/2010 – 11:25
#643402

Wow.

28 weeks in a row of constant selling.

Why is that?

Because “investors” would rather tie up their money loaning 10-year money to Uncle Gorilla at a paltry 2.6% a year.

With no upside in the income stream.

And no upside in the principal amount invested.

If they were smart, there are over 50 stocks in the S & P 500 paying over 4%, and probably 2/3rds of those companies will raise their dividend each year for the next 10 years….

Example:  Nucor now pays a dividend of 3.8%, and has paid dividends every year for 37 years, and is currently a stock in the worst performing sector of the S & P 500 the last 12  months.  And a cyclical industry to boot…

And it is still a better option than buying gold that pays zero, or locking up your money in Treasuries that pay next to nothing.

Login or register to post comments by homersimpson
on Tue, 10/12/2010 – 11:35
#643435

You “always sunny” real estate agents aren’t accounting for the fact that stocks that pay dividends CAN go down for various reasons.. y’know.. lower profits, dilution, HFT computers shuttin’ down, Ben pissing in the US stock market, etc..

Gold is still better than stocks.. It sure pays more than 3.8% or whatever dividend rate you want to quote.

Login or register to post comments by michigan independant
on Tue, 10/12/2010 – 11:51
#643451

Deliver.

To Whom, Exactly, Have You ‘Ceded’ Your Stocks?

What we have now suddenly all come to find out is the Cede & Co is actually not a fictitious name, but a subsidiary company of DTCC.  In essence, DTCC owns probably 99% of all the stocks in the entire world. This is how it works.  You buy some shares of stock at your brokerage.  Your broker tells you that, in order to do business on your behalf, you must give the brokerage power of attorney to buy and sell. 

Therefore, your stock purchases are placed in a “street name” because, according to the SEC, no brokerage can place a stock in its own name.  The brokerage then notifies the DTCC of the transaction. The DTCC is a banking trust company and, by SEC regulation, cannot own shares in its own name, either.  So it transfers the certificates to its subsidiary, Cede & Co. 

What do you own? How about nothing? 

Take delivery since Equity did survive then. The point of older investors is just that if the ship goes down it will not matter since Congress has been removed from the Constitution if you admit it or not. We wish Congress to serve the letter Born in Blood. Zirp is killing the Elderly on issue we all seen coming. Think about that…. Whom do they serve…

Login or register to post comments by Id fight Gandhi
on Tue, 10/12/2010 – 11:42
#643458

Nucor, yeah, that flash crash last week doesn’t inspire me to risk money on that pos.

Login or register to post comments by Samsonov
on Tue, 10/12/2010 – 11:56
#643482

Can you please explain how Nucor, with a P/E of 84 and in an industry full of excess capacity, can possibly be a buy?  The dividend yield doesn’t mean squat when the stock is teetering on the edge.  No way.

Look at American Express (AXP), with a P/E of 15 and having just gone through a lawsuit-driven beatdown in share price.  The dividend of 1.9% doesn’t compare with Nucor, agree, but at this price it’s like getting a free put with every share.

Login or register to post comments by merehuman
on Tue, 10/12/2010 – 12:02
#643524

i junked you because you either fail to see what all of us see or you atr like Leo , a shill for the government and market.

Cnt you see that it will ALL stop? We are weimar,zimbabwe and argentina and then some. Wake the fuck up  Robonut

Login or register to post comments by chopper read
on Tue, 10/12/2010 – 12:10
#643551

…RobotTrader, someday when you come to clean my house I will pay you in a bit of silver.  then you’ll know what it is worth.  ha, ha!

 

Login or register to post comments by Bill Lumbergh
on Tue, 10/12/2010 – 12:37
#643625

Just when I thought you could not write anything more absurd than some of your previous commentary then you create this one:

“Example:  Nucor now pays a dividend of 3.8%, and has paid dividends every year for 37 years, and is currently a stock in the worst performing sector of the S & P 500 the last 12  months.  And a cyclical industry to boot…”

As we all know since something has happened every year for 37 years it must continue for the next 37 right?  Besides, who cares about loss of capital as long as you can continue to collect that great dividend.

That is one big LOL.

Login or register to post comments by Tyler Durden
on Tue, 10/12/2010 – 13:37
#643803

Great example – Nucor Steel Sept 14 flash crash:

Login or register to post comments by RecklessMonkeys
on Tue, 10/12/2010 – 11:26
#643405

Would the new owners of stock not start showing up on company registers and substantial owner notices?

Or are these dark pools?

Login or register to post comments by LibertyIn2010
on Tue, 10/12/2010 – 11:27
#643414

It’s over people….go home.

 

Login or register to post comments by frankTHE COIN
on Tue, 10/12/2010 – 11:31
#643426

The Main Event.

Login or register to post comments by espirit
on Tue, 10/12/2010 – 11:33
#643430

…”and the Fed keeps on pouring gasoline all over the place”.

I’ve got matches, a lighter, and can rub two sticks together to get a spark. Now where can I put it?

More Eagles on their way home.

Login or register to post comments by putbuyer
on Tue, 10/12/2010 – 11:38
#643444

The shit storm is upon us. I can smell it everywhere

Login or register to post comments by michigan independant
on Tue, 10/12/2010 – 11:53
#643490

Agree, but the thinking process is pecentages only.

Login or register to post comments by Downtoolong
on Tue, 10/12/2010 – 11:52
#643489

the entire theater is just full of hedge fund millionaires, where everyone owns the same stock (mostly Apple),

 

The only thing I want to buy now is a ticket for a seat, so I can watch what happens when this den of thieves has no true investors left to rob.

Login or register to post comments by shushup
on Tue, 10/12/2010 – 11:56
#643505

At least they’ve been able to sell at good prices since the fed and HFTs keep ramping every single itty bitty pull back.

Login or register to post comments by shushup
on Tue, 10/12/2010 – 12:00
#643517

Someone please give me the deffinition of “Long only”

Login or register to post comments by michigan independant
on Tue, 10/12/2010 – 12:14
#643523

2 milliseconds

In the rare instances when an executing broker demurs, he sends the trade to a dark pool, usually one owned by his firm. (Dark pools are electronic-trading venues where institutional investors trade stocks away from the public stock exchanges.) If the dark pool can’t execute the trade, it is sent to one of the stock exchanges. This largely automated process occurs in sub-seconds.

On May 6 when the market fell out of bed, the report says blandly, some of these players reduced executions of sell orders but continued to execute buy orders. In other words, they’d sell stock to a retail customer but wouldn’t buy stock from a retail customer. They wanted to get rid of their own inventories, not accumulate more shares. So they sent the customer sell orders onto the swamped stock exchanges.

WSJ http://finance.yahoo.com/banking-budgeting/article/110989/the-real-flash-crash-culprits?mod=bb-budgeting

Login or register to post comments by digalert
on Tue, 10/12/2010 – 12:13
#643562

Some shares are traded, some are bought. Trade as in buy in the morning and sell in the afternoon. Bought “long” means you intend to hold for a period of time.

Login or register to post comments by Bankster T Cubed
on Tue, 10/12/2010 – 12:04
#643533

when the markets are controlled by “an official entity”

then freedom is just an illusion

we passed that point

and now we’re fucked

the whole of it is a rotten farce

Login or register to post comments by RandomRick
on Tue, 10/12/2010 – 13:14
#643684

It’s nice that TPTB keep holding up the markets so the really slow thinking public has all the time it needs to head to the exits in an orderly manner.

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