European Short Observer December 2014

December was a good month to be short European stocks, especially those that were disclosed as short positions by hedge fund managers.

Our model portfolio, tracking all short positions disclosed by hedge funds, returned 4.8% compared to 1.6% for a short on S&P 350 Europe index, accounting for dividends. For the year, the model outperformed its benchmark by 24%, making 2014 a great year for managers to generate alpha by shorting individual stocks in Europe.