>HEDGE FUND ACTIVITY (GOLDMAN SACHS)

Fund re-risking: Net long exposure rises to pre-Lehman levels

■ Net long exposure rises to 31%, highest since June 2008
Hedge funds have increased net long exposure to the highest levels since June 2008, amidst improving economic data, stabilizing capital markets, and rising equity prices. Hedge funds are no longer net short Financials.

■ We estimate 7% of hedge funds have shut down since June 2008
Based on public 13-F filing information, roughly 7% of hedge funds that filed their holdings in June 2008 did not file in June 2009. These 7% of funds represented 4% of total hedge fund long equity AUM in June 2008.

■ Invest in the re-risking theme: Buy our Hedge Fund VIP List
Using the 13-F filings to identify the “stocks that matter most” to hedge funds has proven profitable in the past. Hedge fund selling pressures have abated, and hedge funds are likely to put more cash into their top positions. Falling correlation suggests that single-stock investment ideas will gain favor over a macro-driven market.

To see full report: HEDGE FUND ACTIVITY