Long Energy, Short Financials Trade 'Almost Over' ... Maybe

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NEW YORK (HedgeWorld.com) - For months now, hedge funds have favored a simple trade: long energy and short financials. Since last week, though, a new theme has emerged, reversing the old trade. Financial stocks have rallied while energy shares are down as a result of oil prices easing.

Are hedge funds merely covering their shorts in bank stocks and adjusting short term to lower crude prices? Or is the market at a turning point?

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Long Energy, Short Financials Trade 'Almost Over' ... Maybe

"I think the long energy-short financial trade is almost over," said Peter Rup, chief investment officer at Orion Capital Management LLC, a multi-family office and fund of funds manager in New York, in an interview. "It's one of those popular themes that played out for a while - similar to the long small caps-short large caps trade. This, too, shall pass. We're seeing a healthy correction that will continue in the second half. Being short financials and long energy is going to work against you," ...

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