European Short Observer August 2014

In line with the trend established this year, shorts disclosed by hedge fund managers outperformed an equivalent short on the broad European market.

Our model value-weighted portfolio based on publicly shorted stocks in Europe made 0.74% compared to a 2% loss for a short position on the S&P 350 Europe including dividends. This implies that a passive strategy of shorting each disclosed stock in Europe and buying the index would generate over 5% Alpha year-to-date.