Hedge funds tracked by Hennessee Group produced a negative return of -0.37% in May, bringing the 2004 year to date return to +1.82% for the Hennessee Hedge Fund Index.
“Hedge fund managers are calling this ‘the I.O.U. market’ (interest rates, oil, and unemployment). Positive developments on all three fronts have given hedge fund managers encouragement to increase their equity exposure,” says Charles Gradante, Managing Principal of Hennessee Group LLC.
“A growing number of managers believe CEOs have been conservative about 2004 earnings and that there will be surprises to the upside in the third and fourth quarters. The S&P 500 is now trading at 16.5 times forward operating earnings, down from a February peak of 18.5,” oncluded Gradante.