Both long and short investors prefer TMT growth stocks with high P/E ratios and low dividends. Longs favor rising, highly-rated stocks, while shorts target declining, lower-rated stocks, suggesting diverging strategies based on market momentum.

We combined the long positions (hedge fund) with the short positions to analyze which names are preferred by each.

The names are not correlated; the long and short positions represent different lists.

Both long and short positions favor more volatile stocks with higher price-to-earnings (P/E) ratios and lower dividends, that is TMT stocks.

These growth stocks exhibit greater price movement, offering more potential return when correctly predicted as either long or short. The relationship between P/E ratios and volatility is stronger on the short side.

The long positions are represented in blue, while the short positions are in orange

Despite differing strategies, the graphs are similar.

In terms of analyst ratings, long positions tend to favor higher-rated stocks, while short positions prefer lower-rated stocks. This suggests that both sets of investors either follow the ratings or use a similar algorithm.

For year-to-date (YTD) returns, long positions tend to favor high-return stocks, while short positions prefer low-return stocks, indicating a momentum strategy or window dressing.

If the hedge funds longs are also the winners, and if they established their positions early, the other investors can piggy-back on the stocks the hedge funds own. These can be found in BMAPS {APPS BMAP<GO>} on the Bloomberg Terminal.

In summary, both long and short investors prefer TMT growth stocks. Long investors favor stocks that are rising and highly rated, while short investors target stocks that are declining and lower rated.

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