Hedge funds have suffered over $6 billion in losses this year, underestimating the resilience of U.S. consumers, particularly in the cruise line and hotel sectors, Financial Times reports.
Hedge funds bet against companies like Royal Caribbean RCL and Carnival Cruise Lines CCL, expecting their stock to decline. However, these companies have more than doubled in value this year, leading to significant losses for the short sellers.
These losses amount to $6.4 billion in mark-to-market losses, with Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings Ltd NCLH accounting for $2.9 billion. Large short positions in Airbnb ABNB up 70% year to date and Booking.com BKNG, up 44%, have also resulted in substantial losses.
Despite the high levels of debt and rising borrowing costs, the valuation of these companies, particularly Carnival, has normalized, confounding market expectations.
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