In the first few weeks of 2021, amateur traders who backed meme stocks like GameStop, AMC Entertainment, and BlackBerry caught the world’s attention.
Since spectacular gains resulted in huge losses for hedge funds, who bet that stocks would fall, a David versus Goliath tale seized. Eventually, the little guy triumphed against The Man, who had benefited from a rigged system for decades.
In the end, however, it turned out that Goliath did pretty well.
Global hedge funds that reported data to Eurekahedge, a research group, returned nearly 5% in the first quarter, roughly in line with the broader market. It was the best start to the year for hedge funds since 2006.
“It was definitely a good quarter for returns. Most hedge funds were on the up, ”said Robert Sears, chief investment officer at Capital Generation Partners.
The profits were of course not evenly distributed. Just like some non-professional traders became extremely rich From their risky GameStop positions, hedge funds that have trimmed popular names have made great hits.
Melvin Capital, a major GameStop short seller, was down 49% in the first three months of the year, a source familiar with the matter told CNN Business.
Then there was that Archegos Capital implosion, which collapsed after making large bets on extreme leverage media stocks and complex derivatives.
But in general, hedge funds have taken advantage of the turmoil. When the markets are choppy, investors who play a more active role in managing their portfolios have the opportunity to play bold games. This worked especially well for those who preferred stocks, which Sears said were undervalued versus high-growth tech names.
“The rotation to value from growth … is a positive environment for stock pickers,” said Sears.
The trading desks of Wall Street’s largest banks also paid out money.
Goldman Sachs’ trading revenue rose 47% to $ 7.6 billion in the first three months of the year, its highest level since 2010. JPMorgan Chase’s marketing team posted revenue of $ 9.1 billion, an increase of $ 9.1 billion 25% corresponds. At the stock market counter alone, sales rose by 47%.
Morgan Stanley made $ 5.8 billion in trading stocks and bonds even though it was the blockbuster quarter Losses of $ 911 million related to the Archegos saga.
An increase in trading by individual investors also helped Morgan Stanley since it owns E * Trade. The daily average trades on the platform hit an all-time high of 1.6 million, almost 50% above the last three months of 2020.
Big picture: Wall Street is full of winners and losers. But this time it looks like the big guys still emerged victorious for the most part.
Johnson & Johnson’s vaccination break could slow recovery
Hopes for an economic turnaround are closely tied to the global launch of vaccines – which raises concerns about the Johnson & Johnson recordings is not good news On recovery, my CNN business colleague Chris Isidore reports.
The Latest: The spread of Johnson & Johnson’s single-shot vaccine has been halted in the US, European Union and South Africa as US authorities investigate a possible link to extremely rare blood clots.
Dr. Anthony Fauci, the nation’s leading infectious disease expert, expects the review to be done quickly.
“Hopefully we will soon make a decision as to whether or not we can get back on track with this very powerful vaccine,” Fauci said at a congressional hearing last Thursday.
But even if regulators find the benefits of the shot far outweighed the risks, the headlines could undermine public willingness to vaccinate and potentially prolong the pandemic.
“There is a clear link … between fighting the virus, distributing the vaccine and having a robust and lasting economic recovery,” Jared Bernstein, a member of the White House Economic Advisory Council, said in a recent interview on CNBC.
Surveys show that rare blood clots have concerns with a similar vaccine from AstraZeneca Vaccine reluctantly fed in Europe. An online survey conducted in mid-March for BFM TV, a subsidiary of CNN, found that only 20% of people in France trust the Oxford-AstraZeneca vaccine. (The vaccination skepticism in the country was already high.)
Economists are particularly concerned about the impact of a J&J hiatus outside of the United States. J&J planned to ship 1 billion cans worldwide by the end of the year.
Unlike Pfizer and Moderna, the shot does not require ultra-cold storage and patients do not have to return for a second appointment. This makes it a crucial part of plans to fight Covid-19 in much of the developing world.
Investor findings: The drug manufacturer reports profits on Tuesday. Johnson & Johnson is committed to providing the vaccine at cost during the pandemic. But its reputation is important, especially as countries are starting to weigh suppliers of booster shots.
Monday: Result from Coca-Cola, IBM and United Airlines
Tuesday: Apple Launches New Products; Harley-Davidson, Johnson and Johnson, Lockheed Martin, Philip Morris International, Procter & Gamble, Travelers, Xerox and Netflix
Wednesday: Income from Ericsson, Verizon, Chipotle and Whirlpool
Thursday: Interest rate decision of the European Central Bank; US Unemployment Claims and Existing Home Sales; Profits from Nestle, Credit Suisse, American Airlines, AT&T, Blackstone, Dow, SAP, Mattel and Snap
Friday: Flash PMI data; New US Home Sales; Income from American Express, Honeywell, and Kimberly-Clark