The apostles of “value investing” have called the top of the Covid-19 equity rally.
The closely watched GMO fund has been liquidating its holdings on US and European stock markets and buying hedges at a breakneck pace over recent days, warning clients that the explosive surge in prices since late March has decoupled from fundamentals and is becoming treacherous. “The huge reversal does not make any sense,” it said.
The group’s main fund has turned outright short, taking large negative positions on equity indexes through futures contracts. “It is going to be very difficult to come out of this pandemic