Global hedge funds have shown “a strong preference” for stocks that could perform well if Republican presidential candidate Donald Trump wins the election, JPMorgan said in a note late last week analyzing how positioning is changing ahead of the nomination.
“In general, net flows year-to-date have been quite correlated to Trump’s odds,” said the bank, adding “there is room for a bit of disappointment and reversal in coming weeks if odds start to shift the other way.”
Democratic candidate Kamala Harris led Trump by a marginal 45% to 42% in a Reuters/Ipsos poll released on Tuesday, with the gap between both candidates remaining steady. Some other national polls have showed the gap between candidates narrowing.
Trump has taken the lead in online prediction markets, with a 60% chance of winning the race on Polymarket.
Over the past few weeks, portfolio managers bought assets in some themes that could benefit from a Republican government, according to JPMorgan’s positioning intelligence unit, which tracks hedge funds’ portfolios.
Meanwhile, hedge funds sold assets that could perform well under a Democratic government. As an example, JPMorgan mentioned renewable energy, which “sold very quickly in past couple weeks as Trump’s odds jumped.”
The Republican candidate has laid out an energy policy platform that opposes president Joe Biden’s clean energy agenda.
Hedge funds have been buying crypto stocks strongly, but positioning is neutral. Trump has positioned himself as pro-cryptocurrency and has unveiled a new crypto business, World Liberty Financial.
JPMorgan did not entirely detail the components of its Republican and Democratic baskets. The bank did not immediately respond to a Reuters request for more information.
Some hedge funds have been more vocal about their trades leaning on a Trump win. Billionaire investor Daniel Loeb has adjusted Third Point’s portfolio to capture a potential boom in corporate activity if the Republican candidate wins the election, according to a letter seen by Reuters.
JPMorgan Chase has rehired scientist Sarah Kapnick to advise its corporate and investment banking clients, according to an internal memo seen by Reuters on Monday, as the Wall Street giant ramps up its climate advisory offerings.
Kapnick rejoins JPMorgan as the global head of climate advisory within the firm’s commercial and investment bank (CIB) unit. She will advise the bank’s clients on climate, energy, biodiversity and sustainability topics.
Her expertise will help clients “realize the economic opportunities of the transition to a low carbon economy, and build resilience to extreme weather and climate events,” Troy Rohrbaugh, co-CEO of CIB, said in the memo.
Kapnick initially joined JPMorgan in 2021 from the U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), and left a year later when President Joe Biden appointed her as chief scientist for the government organization.
In her first stint with the bank, Kapnick served as the senior climate scientist and sustainability strategist for its asset and wealth management business.
Rama Variankaval, JPMorgan’s global head of corporate advisory, said in the memo energy transition was a significant global commercial opportunity with the potential to generate economy-wide growth.
“Decarbonization and energy transition are major trends influencing capital formation,” the memo said.
Kapnick will report to Variankaval and work closely with the firm’s chief risk officer, Ashley Bacon, the memo showed.
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