The flaw is that Navlio is basing the recommendations on long equity positions (as well as other securities reported in HFs' 13F filings). But hedge funds hedge their bets -- hence the name -- by placing more complicated bets than just buying long, and that includes short sales. You don't have to report short sales in a 13F.
If you don't know both sides of HFs' bets, you actually have no idea how they feel about a company. They could have a big long position and a bigger short that's not reported.
It's central to a hedge fund's business to conceal the kind of bets they are making, and what they plan to do, until the precise moment that it benefits them for the rest of the market to pile in.
The flaw is that Navlio is basing the recommendations on long equity positions (as well as other securities reported in HFs' 13F filings). But hedge funds hedge their bets -- hence the name -- by placing more complicated bets than just buying long, and that includes short sales. You don't have to report short sales in a 13F.
https://www.sec.gov/divisions/investment/13ffaq.htm
If you don't know both sides of HFs' bets, you actually have no idea how they feel about a company. They could have a big long position and a bigger short that's not reported.
It's central to a hedge fund's business to conceal the kind of bets they are making, and what they plan to do, until the precise moment that it benefits them for the rest of the market to pile in.