FT : Climate policy success needs mix of three factors, study finds

Climate policy success needs mix of three factors, study finds
Pioneering AI-driven analysis highlights drivers of emissions cuts in UK, Norway, US and China

The best way for nations to tackle the emissions behind climate change involves using a combination of several financial and regulatory levers, pioneering analysis of 41 countries across six continents has found.

The most successful moves in nations such as the UK, Norway, the US and China, involved a mix of policies that included subsidies as well as regulations and pricing mechanisms, the study concluded.

For example, the UK’s effort in winding back coal-fired power generation and Norway’s rollout of electric vehicles was successful only because the policy was in tandem with tax or price incentives.

The study of up to 1,500 approaches to climate change around the world to assess the many policy attempts to curb global warming was led by the Potsdam Institute for Climate Impact Research and assisted by artificial intelligence.

The right mix of measures was “crucial” to driving down emissions, said Nicolas Koch, a co-author. Relying solely on subsidies or regulations, for example, was “insufficient”, he added.

“For instance, we show that bans on coal-fired power plants or combustion engine cars do not result in major emissions reductions when implemented alone,” said Koch, who is also head of the policy evaluation lab at Mercator Research Institute on Global Commons and Climate Change.

In the US, an effective policy combination was the tax incentives, subsidies for low-emitting vehicles and CO₂ efficiency standards that helped it cut transport emissions after 2008.

In China, industrial emissions were curbed by accompanying pilot carbon trading systems with reduced fossil fuel subsidies, and more financing incentives for energy efficiency, the research concluded. 

The study used AI-enhanced statistical techniques to evaluate various policies in place from 1998 to 2022 in countries that imposed them versus those that did not, based on the OECD climate policy database. 

The research comes as countries are under pressure to draw up strong climate plans, known as nationally determined contributions, which are due to be submitted to the UN’s climate change arm in early 2025. 

While other experts welcomed the work, some warned it might not fully capture all the policies driving emissions cuts, arguing the effects could take years to become clear and that falls in emissions might be gradual.

The researchers deemed only 63 policy interventions out of the 1,500 as “successful”, defined as achieving cuts of between 0.6bn and 1.8bn tonnes of CO₂. The paper covered four sectors: buildings, electricity, industry and transport.

Taxation was the “notable exception” in causing large falls in emissions without other policies. 

Examples of success were provided by South Africa on building emissions, Brazil on power generation, South Korea on industry efficiency and Germany on transport.

Bob Ward, policy director at the Grantham Research Institute, said the research was “interesting” but had “serious limitations” because its methodology overlooked key policies “that have driven long-term emissions reductions, but without creating a sharp break in emissions trends”.

Ward pointed to the focus on the UK’s introduction of a carbon price floor in 2013, which was followed by a sharp fall in emissions. It neglected the importance of the introduction of the 2008 Climate Change Act, he said. That “created the crucial system of five-year carbon budgets” and helped pave the way for future effective policies, Ward added.

The researchers acknowledged that some successful interventions might have been set up by previous policies.

Paul Ekins, professor of resources and environmental policy at the UCL Institute for Sustainable Resources, said the analysis reinforced the growing view that a single climate policy was rarely enough.

“While the successful policies in one country may guide a policymaker in another, nothing can replace detailed policy design that is specific and sensitive to each country’s special social and political conditions.”

The research found a difference between the types of policies that worked well in developed economies, where pricing stood out, while regulation was the most effective in developing economies.

The Information : Is Enthusiasm For Meta’s Llama Slowing Down?

Is Enthusiasm For Meta’s Llama Slowing Down?

To compete with OpenAI and other artificial intelligence developers, Meta Platforms CEO Mark Zuckerberg needs cloud providers like Amazon Web Services to convince businesses to use Meta’s AI model Llama.

So far, that has been a mixed bag, as my colleagues reported on Wednesday. And we just noticed another potentially troubling sign about Llama’s popularity.

Llama 3.1, the latest version of the flagship model, has been downloaded a total of about 3.6 million times from Hugging Face in the first month or so since its release on July 23, according to data on Hugging Face’s website. That’s far fewer than the 5.8 million downloads Llama 3, an older and less advanced model, had in the first month after its release in April.

Developers may still be figuring out how they want to use Llama 3.1, but one would expect more enthusiasm for a better model, not less. By contrast, here’s a slightly different metric: The newer versions of Mistral's smallest open-source model, Mistral-7B, has been downloaded more times in the last month than the first version of the model has.

What’s going on?

It’s hard to tell, but rivals such as OpenAI and Anthropic continue to push out improvements to their models as well. And unlike with Llama, which is open-source (or open-weight, depending on which terminology you prefer), lots of developers are paying to use the closed-source options. Despite being free, using Llama can sometimes cost more than using OpenAI’s models, as we previously reported.

One problem for Meta is that the top two cloud providers, Amazon and Microsoft, have special arrangements with Anthropic and OpenAI, respectively, to share revenue from model customers. (The cloud providers also hold big equity stakes in those startups and use their technology in their products.) And Google, the third biggest cloud provider, is probably incentivized to sell developers on its own model, Gemini.

A spokesperson for Meta declined to comment on the apparent slower downloads of Llama 3.1. But the trend could speak to why Meta is publicly and privately pushing AWS and other enterprise technology providers to promote Llama.

Zuckerberg has said that Meta has previously taken a cut of the revenue cloud providers generate from customers running Llama on cloud servers and that “it makes sense that we share the upside of that somehow.”

We don’t know if those revenue sharing arrangements have continued. But something tells us that if Zuckerberg wants any chance of changing the pecking order of AI models that cloud provider salespeople promote to customers, he will probably have to forgo that cash. That way, the cloud provider would keep all of the revenue from servers it rents out to users of Llama.

The Meta spokesperson declined to comment on this subject.

Meta itself doesn’t sell cloud computing services, and enterprise sales and marketing have never been a strength of the owner of Facebook, Instagram and WhatsApp. So it’s difficult to imagine Meta directly selling or providing Llama to developers.

But Zuckerberg has a dilemma on his hands. If he agrees not to make much, if any, money from enterprises using Llama, that may be a tough pill for investors to swallow. Meta is spending tens of billions of dollars developing Llama to aid its core social media apps and advertising business, and it needs to show a return on those investments. Zuckerberg has said that if more consumers and businesses embrace Llama, it will help Meta with that mission.

He also clearly wants to pull the rug out from under closed-source competitors so that they can’t make money from selling their AI models—in other words, to commoditize the models so that more money will be generated from applications that use AI models (like Meta’s) rather than from the sale of AI models themselves.

But making Llama as good as OpenAI’s models without a new funding source—such as sharing in revenue from cloud providers’ Llama sales—may be hard to do without also breaking Meta’s balance sheet.

WWD : Prada’s Patrizio Bertelli on His Sailing Ambitions for the Luna Rossa Proj

Prada’s Patrizio Bertelli on His Sailing Ambitions for the Luna Rossa Project at the America’s Cup
The latest iteration of the Luna Rossa Prada Pirelli AC75 foiling monohull was christened in April by his wife, designer Miuccia Prada, and is competing in the 37th edition of the race.

According to Britannica, the definition of passion is “a strong feeling of enthusiasm or excitement for something or about doing something.” This description perfectly describes Patrizio Bertelli’s never-abated gusto for sailing and his ambition to win the America’s Cup — although he contends it’s persistence rather than passion that is “the true motor.”

For the past 25 years Bertelli has been investing in the Luna Rossa project to the tune of hundreds of millions of dollars, building increasingly technologically advanced sailboats and contributing to shaping the history of the prestigious competition.

The latest iteration of the Luna Rossa Prada Pirelli AC75 foiling monohull was christened in April in the Sardinian town of Cagliari by his wife, designer Miuccia Prada, as is the tradition. The boat is set to compete in the 37th edition of the America’s Cup sailing race, which is taking place between Aug. 22 and Oct. 27 in Barcelona.

Decked in a metallic “Metal K”-colored livery, the AC75 marks the 10th Luna Rossa America’s Cup hull unveiled since the first boat in 1999.

Built at the Persico Marine shipyard in Nembro, Italy, the sailboat, made of pre-preg carbon fiber, required 70,000 hours of work by 35 boat builders. It is equipped with a 25.6-meter mast with a soft wing comprising two twin mainsails and a headsail made of carbon and Dyneema.

At the time of the christening, Bertelli, chairman of the Prada luxury group and president of Luna Rossa Prada Pirelli, said the boat has “become an iconic name in sailing worldwide” and that he had accomplished the goal “to create a team of extraordinary technicians and sailors capable of shaping the future of sport in our country and leaving a legacy for future generations.”

The upcoming America’s Cup will mark Luna Rossa’s seventh challenge, but sixth race. The team withdrew from the competition in 2015 after disagreeing with the overturning of rules that had been unanimously adopted the previous year by the then-Cup holder the Oracle Team of the U.S., which was owned by Larry Ellison. The Oracle team eventually lost the America’s Cup to the New Zealand team.

This year, five challengers in the Louis Vuitton Cup regattas — Ineos Britannia, Alinghi Red Bull Racing, Luna Rossa Prada Pirelli, NYYC American Magic and Orient Express Racing — will battle it out on the water to win the right to face off against defender Emirates Team New Zealand for the Louis Vuitton 37th America’s Cup Barcelona.

The Luna Rossa team was established in 1997 by Bertelli with the original name of “Prada Challenge for the America’s Cup 2000.” The team won the Louis Vuitton Cup in 2000, with a record of 38 victories over 49 races. It also competed in 2003 and in 2007, when it reached the Louis Vuitton Cup final.

Luna Rossa won the most recent Challenger Selection Series, the Prada Cup, in 2021 but lost to contender Emirates Team New Zealand, which succeeded in defending the 36th America’s Cup with a 7-to-3 victory over Luna Rossa Prada Pirelli, wrecking the latter’s ambitions to take the trophy home.

Here, Bertelli explains why the America’s Cup continues to hold his interest, reveals his expectations for this year and talks about the lessons learned through the different stages of the competition.

WWD: Beyond your passion for sailing, what moves you to continue to invest in Luna Rossa and in the America’s Cup? When did you first think you wanted to participate once again?

Patrizio Bertelli: After the last edition in Auckland [New Zealand] I immediately said we would continue even without knowing at the time where the next challenge would take place. The Cup fascinates me because it’s a difficult, complex project that requires to develop a team of highly professional individuals super specialized in many different sectors that know how to unite and work together in harmony for a long period of time at a pace that is very intense. It’s a difficult structure to set up but even more to manage.

WWD: How does this reflect on you personally and what did you learn over the years from the past experiences?

P.B.: Since the first launch in Punta Ala [Tuscany], 25 years have passed and the enthusiasm is the same. As [Sir] Peter Blake wrote in the foreword to the first “Luna Rossa” book [on the 30th America’s Cup in 2000] it is the difficulty to win that makes the America’s Cup so unique. Time is not important, it’s necessary to have the courage to continue to try and not give up. This curious and strange game requires persistence to reach the objective and it is the difficulty that gives meaning to the challenge. Passion has nothing to do with it, persistence is the true motor and behind this obstinacy is all the technological research that over these past years brought an enormous development to the world of sailing and repercussions also on daily sailing. It’s a continuous challenge where you learn something every day.
Patrizio Bertelli
© Carlo Borlenghi
WWD: How does all this affect Prada and the brand’s products?
P.B.: There wouldn’t be enough time to explore this in this interview, I would rather go back to talk about Luna Rossa.
WWD: How has Luna Rossa changed and how has the project changed over the years?
P.B.: Everything has changed if we look at all the challenges we took part in. In the first three challenges we sailed with the traditional IACC [International America’s Cup Class yachts], which today seem almost prehistoric where the team was engaged in changes of sails at every lap and the regattas were stretched on for hours. Then the era of catamarans started with the 34th edition in San Francisco, fast boats with winged masts and rigid sails similar to wings of airplanes. Now from the last Cup, in 2020, we sail with flying boats that travel at more than 40 knots and that have only the helm and the lateral foils in the water. You don’t change the sails, the regattas are very fast, they last around half an hour, and tactics and strategies have been revolutionized. The regatta field is limited by virtual boundaries, so it’s entirely another story. But this is the America’s Cup, the most advanced expression of this sport.


WWD: Some sponsors have also changed, and Oakley for example has joined as the new technical performance partner. Can you tell us abut the relationship with those who believe in the project with you, including skipper and team director Max Sirena?

P.B.: Our storied sponsor Pirelli has stayed on and I think the relationship with Marco Tronchetti [Provera, executive vice president of Pirelli, the co-title sponsor of the team] is increasingly more solid. Also Panerai and Woolmark have renewed their confidence in the team because they believe in it. We have two new sponsors, Oakley and Unipol. In addition, on the sails are now the logos of UNESCO and Sea Beyond, the educational project aimed at the protection of the oceans, born from a collaboration between our group and UNESCO. Then there are the suppliers that have a fundamental role in the project and with which the relationship developed over the years has increasingly strengthened. They represent Italian excellence and have obtained global recognition also thanks to Luna Rossa. With Max the relationship is excellent and consolidated, he has all my trust.

WWD: What are your thoughts now on Luna Rossa and the team? What has impressed you the most so far and how has the team evolved in parallel with the changes of Luna Rossa?

P.B.: Ever since the first challenge in 2000 we have invested a lot in our team because I think it is fundamental to compete at these levels. We have focused on the human relations, creating a community of interests that has generated strong and close-knit relations. There have been weddings, children, people that went to other teams and then returned recognizing the human quality of the relations within our team. Naturally in 25 years many things have changed to adapt to the evolution of the challenge and especially of the boats and the technology, even if a storied nucleus is still present.
Once we had a group of more than 30 sailors because we trained with two boats and there were 16 on board. Today they are eight — two helmers, two flight regulators and four cyclists who, pedaling, produce the energy for the functioning of all the systems aboard. Instead, the design team has increased exponentially with the evolution of the boats and the systems. We have inserted AI, mechatronics and simulators.


The shore team has also changed. Today there is a true dockyard within the base, where we have realized both the hull for the LEQ 12 [less than or equal to 12 meters] training, the masts of Luna Rossa and many other parts of the boat.
The Luna Rossa Prada Pirelli boat with the UNESCO and Sea Beyond logos.
courtesy of Prada

WWD: How do you think this evolution will impact the sailing world?

P.B.: The impact is already visible on daily sailing. Today if you don’t have a foil, from the sailing boards on, you are a “nobody.” I think this course has been very fascinating for the new generations who find an added pleasure in speed.

WWD: What do you think about the other teams?

P.B.: It’s premature and I don’t like to talk about others. Surely they are all very well-prepared also because if you think you are not, it’s best to give up. It is a very cynical competition because you work for years and then only one of us challengers will acquire the right to participate in the America’s Cup against the New Zealanders.

WWD: Do you think you will be present in Barcelona for the whole time? What are your expectations?

P.B.: I will be in Barcelona, I don’t know if for the whole period but as long as possible.

WWD: Do you continue to sail?

P.B.: Certainly, whenever I can, I like to stay on the open sea and navigate.

WWD: I know you collect boats; can you tell us about this?

P.B.: It’s a great passion, I very much enjoy it. I am fascinated by the restoration phase. We try to safeguard as much as possible the originality of the construction and return the original beauty and function to the boats. I also very much like to race with them. Today, modern boats require professional crews who need to be very well-prepared athletically. Instead, vintage boats allow me to race and have fun with a team of friends led by [Olympic Brazilian sailor] Torben Grael.
This year, we were gratified by winning both the 12 mR Pre-Worlds at Saint-Tropez as well as the 12 mR World Championship in Porquerolles [France] with Kookaburra II, a world championship we won twice before with Nyala and once with Kiwi Magic KZ 7.
Kookaburra II, Patrizio Bertelli
© Carlo Borlenghi

Barron's : Generic Weight-Loss Drugs Won’t Come for Years

Generic Weight-Loss Drugs Won’t Come for Years

Eli Lilly
LLY

0.21%
and Novo Nordisk enjoy the highest values in the pharma sector, as investors expect years of high-volume, high-price sales for their GLP-1 weight-loss drugs: Lilly’s Zepbound, and Novo’s Wegovy.

One limit to those vistas will be the arrival of generics. So Guggenheim analyst Seamus Fernandez checked what some of the big generic drugmakers have been saying about the booming GLP-1 category. Many are making plans, but according to the analyst’s Aug. 16 note, Novo and Lilly won’t face substantial competition in the U.S. or Europe until the early 2030s.

The big generic firm Teva Pharmaceutical Industries already launched the first GLP-1 generic, an injectable drug known as liraglutide, at the end of June. It’s a generic version of a first generation GLP-1 that Novo launched years ago, under the names Victoza and Saxenda. Other generic makers will follow with liraglutide launches this year.

Like other first generation GLP-1s, however, liraglutide produces only a fraction of the weight-loss that Wegovy or Zepbound can achieve. Fernandez doesn’t think liraglutide will affect their demand.

The active ingredient in Wegovy goes by the chemical name semaglutide. The first place an expiring patent will allow generic semaglutide to appear is Canada. The Swiss generic company Sandoz plans a launch there in 2026.

“Clearly this is a space that we’re intending to go after,” said Sandoz CEO Richard Saynor, when asked about GLP-1s on its Aug. 8 earnings call. After Canada, semaglutide patents will expire in some other countries, for use as a diabetes treatment. Saynor said that sales won’t amount to much until the early 2030s, when the U.S. and European patents expire.

Many of the leading generic manufacturers are based in India, and several mentioned the category in their June quarter calls. Fernandez cites Biocon, Cipla, Divi’s Labs and Sun Pharma for plans to launch liraglutide in the U.S. and other markets. They are considering other GLP-1s for India’s home market, which doesn’t recognize every international drug patent.

The U.S. generic firm Viatris also said it is laying the groundwork to compete in GLP-1s. On its own Aug. 8 earnings call, research chief Philippe Martin said the company had its eyes on liraglutide, a semaglutide rival for Novo’s Wegovy, as well as a version of Lilly’s Zepbound, which has the generic name of tirzepatide.

“We anticipate we’ll have a significant role going forward in that GLP-1 market,” Martin said. Viatris’s plans are surely long term, since Lilly’s patents on the compound tirzepatide don’t start expiring until 2036.

Lilly and Novo are hard at work developing new kinds of GLP-1 drugs, as well as other weight-loss treatments. But semaglutide and tirzepatide will be big markets for generics to target.

Novo’s European Union and U.S. patents on semaglutide as a compound expire in 2031 and 2032, respectively. But Fernandez says Novo is working to extend its exclusivity by wrapping the drug with other patents. Such patent defenses are what keep lawyers employed, at generic and branded drug firms.

Fernandez sees a good number of untroubled sales for the two GLP-1 pioneers.

“The threat of competition from generic semaglutide—particularly given the extraordinary capital expenditure necessary to deliver billions of injection devices—looks to be ~7 years off,” he writes.

WSJ : Advance Auto Parts to Sell Worldpac to Carlyle for $1.5 Billion

Advance Auto Parts to Sell Worldpac to Carlyle for $1.5 Billion
Deal is expected to close before the end of the year

Advance Auto Parts AAP 1.83%increase; green up pointing triangle has agreed to sell its Worldpac subsidiary to Carlyle CG -0.72%decrease; red down pointing triangle Group for $1.5 billion in cash.

The aftermarket car-parts retailer said Thursday that the deal for its automotive parts wholesale distribution business is expected to close before the end of the year and generate proceeds of about $1.2 billion after taxes and transaction fees.

The company said last fall that it has initiated a sales process for Worldpac as well as its Canadian business, aiming to become a more simplified and profitable business.

“The sale enables our team to sharpen their focus on decisive actions to turn around the Advance blended box business,” Chief Executive Shane O’Kelly said Thursday.

Proceeds from the deal provide Advance Auto with greater flexibility as it continues a strategic review to improve productivity of the company’s remaining assets, O’Kelly said.

Members of the Carlyle investing team said Worldpac was a great business that operates in attractive markets.

In the 12 months that ended at the close of the second quarter, Worldpac generated about $2.1 billion in revenue and about $100 million in earnings before interest, taxes, depreciation and amortization.

>>> US Research Calls I

Research Calls I
  • Upgrades:
    • Crocs (CROX) upgraded to Buy from Hold at Williams Trading
    • Estee Lauder (EL) upgraded to Overweight from Neutral at Piper Sandler; tgt raised to $114
    • Navigator Holdings (NVGS) upgraded to Buy from Neutral at Clarksons Platou; tgt $20
    • Select Water Solutions (WTTR) upgraded to Outperform from Market Perform at Northland Capital; tgt $14.50
    • SentinelOne (S) upgraded to Overweight from Equal Weight at Wells Fargo; tgt raised to $29
    • Unilever PLC (UL) upgraded to Buy from Underperform at BofA Securities; tgt raised to $72
  • Downgrades:
    • Assurant (AIZ) downgraded to Neutral from Overweight at Piper Sandler; tgt $200
    • Goosehead Insurance (GSHD) downgraded to Market Perform from Outperform at BMO Capital Markets; tgt $90
    • Itau Unibanco Holding SA (ITUB) downgraded to Neutral from Buy at UBS
    • Sprout Social (SPT) downgraded to Underweight from Sector Weight at KeyBanc Capital Markets; tgt $28
    • TJX (TJX) downgraded to Neutral from Buy at Citigroup; tgt raised to $128
    • Urban Outfitters (URBN) downgraded to Market Perform from Outperform at Telsey Advisory Group; tgt $44
  • Others:
    • Arcadium Lithium (ALTM) initiated with a Hold at Deutsche Bank; tgt $3
    • BrightView (BV) initiated with an Equal-Weight at Morgan Stanley; tgt $16
    • CubeSmart (CUBE) initiated with a Sector Outperform at Scotiabank; tgt $53
    • Dada (DADA) resumed with a Neutral at Daiwa Securities
    • Disc Medicine (IRON) initiated with an Overweight at Wells Fargo; tgt $75
    • Edwards Lifesciences (EW) added to 90-day Positive Catalyst Watch at Citigroup
    • Emergent BioSolutions (EBS) initiated with a Buy at Rodman & Renshaw; tgt $16
    • EPAM Systems (EPAM) initiated with a Hold at Deutsche Bank; tgt $204
    • Establishment Labs (ESTA) added to 90-day Positive Catalyst Watch at Citigroup
    • Flutter Entertainment (FLUT) initiated with an Overweight at Morgan Stanley; tgt $247
    • Globant (GLOB) initiated with a Hold at Deutsche Bank; tgt $210
    • Hims & Hers Health (HIMS) initiated with a Buy at Needham; tgt $24
    • INmune Bio (INMB) initiated with a Sector Outperform at Scotiabank; tgt $22
    • JD.com (JD) added to 30-day Positive Catalyst Watch at Citigroup
    • Journey Medical (DERM) initiated with a Buy at Rodman & Renshaw; tgt $9
    • Milestone Pharmaceuticals (MIST) initiated with a Buy at Rodman & Renshaw; tgt $9
    • Orchestra BioMed (OBIO) initiated with a Buy at H.C. Wainwright; tgt $14
    • Tandem Diabetes Care (TNDM) initiated with an Equal-Weight at Morgan Stanley; tgt $45
    • Tectonic Therapeutic (TECX) initiated with an Overweight at Wells Fargo; tgt $55
    • Unity Biotechnology (UBX) initiated with a Buy at Rodman & Renshaw; tgt $8
    • UroGen Pharma (URGN) initiated with a Buy at Guggenheim; tgt $40

FT : Hedge funds are consciously uncoupling from the Mag7

Hedge funds are consciously uncoupling from the Mag7
Crowding down; density up

Hedge fund crowding has been pretty extreme over the past year, but many big players are now paring back their exposure to the Magnificent Seven tech stocks that powered the recently rally.

Goldman Sachs has once again tallied the 13F filings of hundreds of US hedge funds — with gross stock market positions of $2.8tn — and one of the big takeaways is a modest but notable rotation away from a lot of hot names. They even seem to be falling out of love with Nvidia.

Stanley Druckenmiller is a good example. His family office has now liquidated almost his entire position in Nvidia, and ratcheted back his position in Microsoft in the second quarter.

This exemplified a broader tend. The number of hedge funds that held one of the Mag7 as one of their top-10 positions fell almost across the board. The sole exception is Apple: 43 of the 693 hedge funds tracked by Goldman now hold it as one of their 10 biggest positions, up from 30 at the end of the first quarter.


(FWIW, Tesla is such a Bizarro World stock that even though it is part of the Mag7, so few hedge funds have exposure to it, whether short or long, that it doesn’t even appear in Goldman’s data.)

When it comes to the absolute number of hedge funds that have positions in these stocks, the trend was similar.

A few more hedge funds added Apple and Amazon to their portfolios in the second quarter — and TSMC seems to be benefiting from worries about Nvidia — but aside from that the overall picture was of general Big Tech position pruning.


As a result, the Mag7 now account for just 13 per cent of the average hedge fund portfolio, and Goldman’s measure of hedge fund crowding — the similarity of portfolios across the industry — has dipped back a little.


This has also helped performance, given the turbulence that a lot of the Mag7 subsequently saw this summer. Goldman Sachs estimates that classic US long-short equity hedge funds are up 9 per cent this year.

That said, there are still a few really stark hedge fund hotels. Hedge funds own at least 10 per cent of Hess, TransDigm, Tenet Healthcare, AerCap, Insmed, Teva Pharmaceutical, IAC, SharkNinja, Western Digital, Caesars, and HubSpot, and at least 20 per cent of Endeavour, US Steel, HashiCorp, Alight, Natera and Liberty Broadband.

Moreover, Goldman’s analysts note that their measure of hedge fund density — the weighting of a fund’s 10 biggest positions compared to its overall portfolio — has hit 72 per cent (which, eyeballing the below chart, looks like a new record).


Of course, this is kinda what you want to see. Investors don’t pay long-short hedge funds to have broad, bland portfolios. They pay for skill and conviction.

But it is notable how little dispersion there is across the hedge fund industry — crowding has dipped but remains elevated — and each individual fund is becoming much more concentrated. That’s obvious fuel for shocks to be transmitted to disparate stocks.