>> innovation, money and power collide in silicon valley and beyond. bloomberg technology with emily chang. weekdays at 5:00 p.m. in new york and 2:00 p.m. in san francisco. taylor: i'm taylor riggs. let's look at how markets performed on the day. we are ending the day relatively calmly. up .4% on the s&p. unsure day on big tech. it hides all of the intraday positive and negative territories we had throughout the day. it was not within the bond markets. yields are rising as we are refocused on the short end of the yield curve and how the federal reserve responds to what is a flat -- a flatter and flatter yield curve. what is interesting is if you change the boards, markets are pricing in a lot of rate hikes. 165 basis points, that almost gets you up to seven hikes this year.

that is what goldman sachs is expecting. the markets looking at pricing that in as well. that was the markets wrap. "what'd you miss?" starts now. caroline: welcome to triple take. we are going to be dissecting the world of the winners and losers of hedge funds. that is what we are looking for and dissecting for fourth quarter. also, looking forward into q1. how has the volatility of january managed to be weathered by these key players? macro strategies is starting to win out. what about your short trades? for the next 30 minutes, we will focus on how some of the largest and best known hedge funds have been positioned. interesting buys, sells, key trends. let's start with the data. it has been drip feeding. romaine: we are going to focus on q1.

let's look at what happened in q4. this chart tells you the story in aggregate of what hedge funds bought and sold. on a net basis, they sold off communications and those consumer discretionary names. you ditzy technology get -- you did see technology get into those funds. definitely something significant seeing the selloff we had to the end of december and into january. you wonder how those hedge funds are holding up coming given the positioning. i think you get a sense of the defensiveness when you look at what is going on with staples and energy, health care, financials. these are areas where volker -- where folks have been looking to hide out. it will be interesting to see whether these bets will be stuck by. caroline: why don't we ask that question to our correspondent, sonali basak? what are you noticing about the trends we are seeing, knowing that that is from last quarter? sonali: what are those names? we are getting the answers from

the likes of berkshire hathaway who have bought into chevron. we also know berkshire hathaway has about into activision right before the deal was announced. that is another gainer that has come up. one are other big names? they are not as you would always think. there is one of the buys of viking. you have at&t, which was positioning wise, one of the biggest pies. hertz global which is down significantly on the year, another huge by of one of the funds in the aggregate last year. my personal favorite, since we are talking about hertz, talking about david. one of the top paid money managers of the year has made a lot of money, and the large concentrated bet on avett which is down less. caroline: which they have been betting on for years. finally it paid off. good thing we had those numbers coming out today. i am interested in what the broader picture is. hedge funds are meant to do well

no matter what the market did. are we seeing some sort of outperformance once again? 8 last year -- sonali: last year was a divergent year. we have seen money managers fall off of that we as -- that list. melvin capital also. you saw some funds do very well, particularly some megaphones which include citadel. caroline: what are they doing that is right? sonali: it is interesting because there is a lot of diversification. if you are a long short equity fund alone, you got crashed. and you are continuing to get crushed. macro funds did better. now you are also seeing talent move to the bigger -- romaine: i always scratch my head at this. when you have these giant political events and then you see macro funds either lag or not perform up to snuff, isn't the whole point of these funds is that they tend to do well in

these environments? sonali: and what some of them will tell you is we did less bad than the broader market. at the end of the day, if you are a pension fund on you are losing money on your equity, and you are losing on the fund manager that you are paying two and 24, you were going to be demanding a performance this year more than any other. the cream rises to the top. taylor: with the event driven, i'm thinking merger and arbitrage, we have seen mergers that we have talked about today, are those being able to see through in the performance? sonali: that is the funny thing. no. they are not doing that well. when you go back to the macro play, the interesting thing is the events driving performance are things he would not think about. think about a hedge fund focusing on brazil. those funds have typically done better at the beginning of the year than other types of funds that are doing the older strategies of the past. the other thing, very quickly, a very big point of questions is

the funds on the private market. now the hedge funds that are moving more into private rather than choppy public markets, be they are worth being paid more for, or worth watching for a long time to see how those funds perform as things continue to be tested. romaine: sonali basak, helping us break down the filings. today is the deadline. most of them are out. she gave us a nice preview of what we saw in q4. we are going to dive deeper into these investment trends with shannon murphy, jeffries managing director and head of strategic content. i want to start off with this idea that everyone came into this year, and really toward the end of last year, talking about this is the stock pickers market, and you will see more variation, more deviation in these 13f filings. not everyone will be crowded into the same trade like they were in 2018, 2019, 2020. is that true? shannon: i think it is an there

is a bigger sandbox to play with. it is a little bit of a lag. we saw hedge funds outperform the broader market in january. i think this is where they will shine. there are more places to put your money. you have publicly traded companies at all hot -- all-time highs since 2002. they are more tech -- more technical and strategic on where they are putting their money. we are seeing funds get very concentrated in their best ideas. caroline: is that good to be concentrated in those areas? are they getting by a concentrated into parts of the private market and the public? shannon: they are definitely moving into the private market. you see a lot of nontraditional venture capital funds really getting much deeper into the private markets. i think it is a lot of opportunity that folks are seeing in terms of the multiples and being able to invest in the

6 million private companies that are dwarfing the number of public companies. there are all kinds of synergies in terms of information flow between the public and private markets. you some more than 100 billion dollars float into that space last year from nontraditional players. that is from the likes of hedge funds and public market investors. taylor: the information flow as it comes to the smaller cap companies, the stock pickers market that we have all talked about, the ability to really show not market efficiencies but a lack of market efficiencies within those smaller cap markets. is that continuing to be the space where if you want to be the stock picker, that is the market environment? shannon: i think it is one of the real spaces of opportunity. traditionally, public market investors have wanted to stay on

the public side. and in recent years, it has become much more of a full lifecycle investment cycle. these managers, these investors, really want to understand from her earliest stages to public market ipo's and much later stage -- i think the multi-lifecycle or full lifecycle investment is now more of a comfortable place to play for a lot of these investors. romaine: what about the disclosures overall? we know the sec is considering rules to speed up disclosures and the idea here that a lot of investors, to legitimate reasons, have tried to find ways around it. the idea of obscuring what you are buying into so you have more of an advantage before the herd catches up. is that something you are seeing play out more? shannon: i think from an industry perspective,

transparency is obviously something that strengthens any industry. but you don't want to show your competitive advantage across the market to your competitors. i think the issue is not necessarily with heightened transparency and reporting and disclosure. but the issue is really how rapidly regulators want that. if they are talking about the market moves that would trigger these disclosures, i think a lot of pms and cios are going to be busy managing their books, managing risk, talking to their lp's and their partners, and don't want to add a bureaucratic layer in having to disclose in one day. caroline: the sec trying to get its head around that. also trying to get its head around digital assets. i'm interested how much you are seeing that becoming an area of advantage, or at least being eyed up more and more by the hedge fund community. shannon: i think it is a space people can't really ignore anymore. it has become an asset class that has become so substantial. you have 17,000 current ones

with a $2 trillion market cap. investors and managers don't need to play those currencies. they are much too volatile for a lot of folks. they are looking at places and opportunities to really access a one derivative or an one -- or one step to remove, whether it is investing in public companies that are adjacent to these spaces or the 6000 private companies dealing with blockchain, digital assets, the currencies themselves, and really trying to invest more in the pix and axes rather than the currencies because of the volatility. taylor: big picture question here. what is the willingness to still continue to pay the two and 20? shannon: i think for managers who have the pedigree and performance, allocators are willing to pay that. they haven't really substituted

hedge funds in a lot of ways for their former fixed income instruments. and when you can rely on 7%, 9%, 12% returns every year, that is a very worthwhile investment. i think a lot of the headlines ignore the fact that in a depressed rate environment, although that will change this year, these managers are delivering considerable value for pension funds, endowments, and foundations across cycles. caroline: we want to thank you for the perspective. shannon murphy, great to have some time with you. let's bring in breaking news that occurred during that interview. citigroup ceo will -- 22.5 million. less than the come to parts you saw over a moment ago. coming in -- the conversation, $22.5 million.

romaine: in breaking news coming out of canada. . the prime minister is evoking the emergency act in response to the trucker convoy that has blocked several key roads and bridges. . trudeau saying the act is not about suspending fundamental rights or freedom of speech. he is not using the actor to call in the canadian military. but he does say it does give him the power to enforce municipal bylaws and offenses. the act he is invoking, the only time they have done anything similar to this was with the war measures act back in 1970 when they were trying to quell the separatist movement in quebec. we will get back to our conversation about the hedge fund filing and hedge funds in short-sellers. wall street bets for them. greg swenson, he will be joining us. this is bloomberg. ♪

romaine: today's triple take is focused on the latest filings, and hedge funds and how they operate. you remember a year or so ago, it was like anyone who is short in the stock, you had to make that disclosure. all of this unwatched masses on the internet, betting that wall street bets would go after these guys and try to bid up the stock. caroline: and it really worried short investors. use up people exit the market, deciding they would not have short funds. what is interesting is that actually, take away that furor, all of the media attention in january, there are mainly

shortage companies. they dropped. some 3000 companies, the most hated stocks, they dropped 14% to the end of last month. so shorter stocks tend to underperform. taylor: maybe you do it and you are a bit more quiet about what you are doing. let's not get quiet with greg swenson, co-portfolio manager for the grisly short fund and a core investment fund at his company. what did you notice about the shorted stocks? did they actually end up underperforming this by the craze of the reddit traders about this time a year ago? greg: last year, we track about the 15 most shorted names of the market. last january, though stocks outperformed by over 70%. that was two times the previous high observation we had seen. it was obviously a big outlier of that. since that time, that basket of

stocks has underperformed 11 of the last 12 months. they are down 25% on average. most of them have given up the game that they accrued during that time. after you take at amc and gamestop, the two poster children of that episode. romaine: we saw so many investors, so many short-sellers, or at least dedicated shorts out there, kind of run for the hills. some of them were public, saying you can't make money as a dedicated short seller in this environment. was that overstated? greg: i think so. i think there were notable people that bring it up and said, i will not do this anymore. if you look across the aggregate short interest, you look at the percent short on the stock level, it decreased to the lowest levels since 2004. it did come down. but it won the uniform across the market. it came down a tad and is

sitting at that level now. where the retrenchment happened is during small caps. and within those most shorted names, we saw people pullback. within those top 50 shorted names, prior to last january, the average exposure was 40%. right after that, it was cut in half to 20%. which makes sense. people lowered risk by taking off concentration, writing their bets, around and saying i am not getting involved in those dicey situations. caroline: memories are short. pardon the pun. do you think people are going to come back in once again once they feel the coast is clear to a certain degree? greg: i think so. you have seen performance go back there way. and the overall exposure has leveled off, since that time period. if you look at it combined, taking a breather, watch performance go back there way,

and i think performance can be a huge motivator to get back in. i do think if exposure goes higher, it will be different. that was a painful memory. we didn't take it on the chin, but it still was a very volatile time period. to the extent people bring exposure back up, i think it will be with lower concentration, with an eye on liquidity. probably larger cap, and trying to stay out of those really volatile names. taylor: on that note, do you see structural shifts in the way people are advertising those positions? greg: do you mean talking about them in the press? taylor: correct. greg: yeah, i think some of the people you saw hanging up were the ones out there talking about their stocks. short-sellers. i think that will probably happen less because, why put

your neck out there to let that happen? taylor: appreciate it, greg swenson come up the loophole to group. we will be back with our final thoughts, are triple take, our third take. this is bloomberg. ♪

romaine: we are getting headlines from dow jones, saying regulators are probing block trading on wall street, and subpoenas have been issued for morgan stanley and goldman sachs. this is according to dow jones news service. we are keeping an eye on this. it is moving the shares. morgan stanley shares down 2% in the post-market. goldman sachs also lower. the dow jones stories as the sec

sent subpoenas to morgan stanley and goldman sachs, as well as several hedge funds asking for trading records and information about the investors communications with bankers. this is according to people familiar with the situation. caroline: the key issue is, have they, what they, have improperly tipped the hedge fund clients off in advance of these larger sale -- larger share sales? all of this is currently being reported by the wall street journal. taylor: not lost on us that today, we have talked about are triple take, as we -- as it relates to hedge funds, and who has been focused on tag, who has been getting more defensive within the energy. you rightfully point out that was fourth-quarter. through the middle of february, it is always notable to see who is buying what. romaine: you can see on the screen here, i think it is interesting the individual names. using technology at the bottom. i thought in terms of market value chains for hedge funds, you saw drops in meta, paypal,

moderna, doordash, some heavyweight names that at least on a net basis, we saw a bit of a selloff. taylor: what is interesting, pension funds are actually in aggregate buyers of technology. which when we talked with chris ailman, eager to get his take on the teacher side, but otherwise the pension fund seems to be doing different. caroline: the pension funds are taking stakes in hedge funds to diversify their own investment. romaine: why not? what i don't see on here is apparently they don't give a breakdown for crypto. i guess you don't have to disclose your bitcoin yet. caroline: not yet. he is looking into both. now just to repeat the breaking news, federal investigators are probing block trading on wall street. that is it from "what'd you miss?" "bloomberg technology" is up next in the u.s. they will delve into the names

that they will be buying and selling. that's it. this is bloomberg. ♪

>> from the heart of where innovation, money and power collide, in silicon valley and beyond. this is "bloomberg technology" with emily chang. emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up, tensions still high on the ukrainian border. we will look at how disinformation is sowing chaos and confusion about rushers troop buildup on social media.