Preliminary May returns show carnage among long/short funds

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Hedge funds, looking to extend the long-awaited gains reaped in the first third of the year, saw their dreams crushed by late May.

Following the best four-month performance run since 1999, the third week of May bludgeoned an overly bullish market, and especially long/short equity funds, as the year's major trends reversed. The bloodshed is reminiscent of last October, when a partial trend reversal reined in many brand-name funds across a broad range of strategies.

The U.S., European and Asian stock markets were all in decline by the month's end, with preliminary data showing that both global and U.S.