March 22, 2001 – New York, NY – Charles Gradante, Co - Founder of Hennessee Group LLC, interviews on CNBC's Business Center on hedge fund influence on the financial markets.
Noteworthy highlights from this particular interview include Hennessee Group Managing Principal, Charles Gradante, discussing hedge fund influences on the stock market. Gradante points out that the the day's Dow rally of 340 points was due to hedge funds' short covering. He points out that hedge funds covering shorts doesn't mean that they're bullish. Shorts get crowded which causes hedge funds to reduce risk by covering short positions even though they may be bearish on a particular stock or the stock market. Hedge funds can influence the market based on rumors of what big funds are doing or not doing, Gradante states. He notes that hedge funds are at times "herd funds" because non hedge fund managers often follow the lead of big hedge fund managers by mimicking what they do. Bigger is not always better for hedge funds. The bigger you are the harder it is to hide your positions, Gradante points out.
Gradante talks with Bob Pisani on the New York Stock Exchange Floor about Hedge Fund strategies and how active are hedge funds in the market. Short covering. Hedge funds looking for top line growth in revenue which is not there. Hedge fund trades are replicated by non-hedge funds exaggerating their impact on markets. If anything hedge funds are "Herd Funds".