Hedge Fund Shorts – More Alpha than Meets the Eye?

The short end of the long / short ratio has been much maligned. In July, for instance, shorts shorts subtracted -5.1% from hedge fund performance, according to a Morgan Stanley Prime Brokerage report out Thursday. Five of the last six months the short end of the long / short ratio was negative.  But while longs have outperformed, the contribution of short alpha has been under-represented in performance attribution. Don’t be dissuaded by poor recent performance, “short alpha might start looking better” the Prime Brokerage report concluded in a report titled "Reconsidering Shorts: More Alpha than Meets the Eye?".

Also see top hedge fund letters from Q2 2016 

[dalio]