Stern trends 2012
Consumer: Hedge funds are buying last years’ losers and selling last years’ winners (buying CROX, ANN, HBI, KSS – selling ULTA, BKE, DDS, M) …vanillas are staying away from apparel and specialty retail, but adding to department stores aka M, JCP, JWN as part of a domestic recovery play without margin compression concerns.
Financials: The recent rise in shares was mostly due to shorts covering from the previous year and just shaping up positions into earnings. If you look at it, volumes are much lower now where they were at this point last year, so moves are exaggerated. On the desk, we have been better to buy in the regional banks compared to money centers…think it may be a combination of attractive valuations and less headwinds in regards to Europe and regulatory concerns. Vanillas have been quiet, if anything a bit better for sale.
Industrials: we have seen buyers in Autos/Parts (-30%), one of the most beaten down sectors in 2011, has become a leader in 2012 (+12%). Vanillas have been quiet so far.
Energy: With the sell-off in natural gas we have seen both long (vanilla) and short selling in gas levered E&P’s – COG, SWN, UPL, CHK, EQT. Same action in coals although we are starting to see some long only money being put to work at these levels.
Sterne trading trends so far in 2012