Hedgeye Reviews

I was a Hedgeye user for ten years and was always enthusiastic about their values, people, and process. The cold hard fact is that I couldn't parlay their investment recommendations into investment success. In spite of liking their daily market commentaries, I abandoned Hedgeye when it comes to the fundamental question of what to own and when. Hedgeye prides itself on transparency and accountability, on developing a new approach to investing that leaves the Old Wall and SPY Monkeys in the dust. As the data above show, the four Hedgeye products I examined and subscribed to look like sick puppies next to those SPY Monkeys, consistently underperforming by 160-300 basis points. I shared this information with Hedgeye and asked the pointed question “If these were hockey players, would Keith put them in the game?” (Keith played hockey at Yale and is now a coach and often uses hockey analogies.) The real test for the integrity of Hedgeye is how they respond to the information I presented to them – they need to measure and map their products and set reasonable benchmarks to determine success or failure. The key question is whether they can provide non-institutional investors with products that live up to the very alluring promise and claims of a superior investment approach – so far, sadly, I must say they have failed.

For ten years, I was an eager student of the Hedgeye process and especially like their macro outlook and insights. I like the team, and listening to the Macro Show was part of my daily routine. They often have great interviews with other investment professionals.

There are glaring discrepancies between how their investment approach is described and the actual results.

Hedgeye emphasizes not letting small losses turn into larger losses. But: 1) for 157 closed trades in Signal Strength from Feb-Sept 2024, 23% had losses from 10% to 33%; 2) for 142 closed trades in Top Stock Picks Mar-Sept, 22% had losses from 10% to 36%; 3) for 139 closed trades in Investing Ideas from 2020 through May, 2024, 23% had losses from 10% to 95%; 4) even in ETF Pro, where beta is significantly less, 7.5% of 226 closed equity trades July, 2018-Sept. 2024 had losses of 10% to 31%. Hedgeye’s risk management system is not a magic bullet that limits losses to a few percent.

Keith is fond of asking, “Who gets you out?” after exiting a position that subsequently goes south. In ETF Pro, July, 2018-September, 2024, of 300+ closed trades, post-sale, 53% were actually higher 1 month later, 52% were higher 3 months later, and 51% were higher 6 months later. Whatever sophisticated process led to the sell decisions, you were as likely to avoid gains as you were to avoid losses.

For all that Hedgeye talks about being data-driven and measuring and mapping everything – and their data presentation is indeed impressive – I am confident in saying they don’t measure and map the results of their own products (except MacroPro, where a meaningless win/loss percentage is tracked). In trying to understand my sub-par investment results, largely informed by ETF Pro and Investing Ideas, I did some grinding and present the data here.

For ETF Pro, the description: "This monthly macro strategy update is designed to select 10 to 20 essential ETF exposures within each of the seven major asset classes to keep you and your clients ahead of the next big market move."
The data from July, 2018 through early September, 2024:
• Equities: 225 closed trades, 30% had positive returns, -0.86% average return
• Commodities: 56 closed trades, 32% positive returns, -0.48% average return
• Bonds: 53 closed trades, 30% positive returns, 0.50% average return (-1.74% since 2020)
• Currencies: 25 closed trades, 38% positive returns, 0.86% average return (-0.33% ex-gold)
• Alts (CTA, BTAL, KMLM): 9 closed trades, 0% positive returns, -4.73% average return
• Average hold time for all trades was 9.6 weeks; 46% of trades were 4 weeks or less.
If the equity trades had been invested in SPY, 58% would have been positive with a 2.18% average return (ETF Pro equity trades underperformed SPY by 300 basis points). For the closed equity trades, 56% would have been higher 1 month later, 51% would have been higher 3 months later, and 53% would have been higher 6 months later. In each of those cases, SPY would have been higher 1 month later 65% of the time, higher 3 months later 79% of the time, and higher 6 months later 80% of the time.

For Investing Ideas, the description: “. . . tailor-made for the thoughtful investor with a longer-term investment horizon seeking high-conviction opportunities they can keep in their portfolio for many months - in some instances, years to come. In a nutshell, Hedgeye CEO Keith McCullough handpicks the ‘best of the best’ long and short ideas delivered to him by our team of over 40 research analysts across multiple sectors.”
The data from January 2020 through May, 2024:
• Of 148 closed long-only trades, only 36% had a positive return and only 32% did better than SPY for the same holding period. If SPY had been traded rather than the recommended stock, 77% of those SPY trades would have seen a positive return.
• Of 148 closed long-only trades, the average return was 8.87% vs. SPY at 5%. Trimmed for Gamestop (+906%) and Playboy (-94%), the average return of 146 trades was 3.43% underperforming SPY by 1.57%.
• Only 25% of the closed long-only trades were held longer than 92 days; only two trades were held longer than a year.

For Signal Strength Stocks, the description: “Each week, Signal Strength Stocks provides you a best-of-the-best list of stock picks. Here’s how it works. Our team covers hundreds of stocks (across Retail, Restaurants, Financials and everything in between). CEO Keith McCullough uses his proven buy low, sell high market signals to select the highest-flyers so you can make better investment decisions.”
The data based on stock purchases from mid-February of 2024, when the product launched, through October 18, 2024:
• As of October 18, 62 open stock positions showed an average return of 12.29%, bettering SPY at 6.01%.
• As of October 18, 157 closed stock positions averaged -3.22%, vs. SPY at 2.49% (only 17% of the positions did better than SPY and only 29% had positive returns; 68% of SPY returns were positive).
• The October 18 snapshot of all open and closed positions showed an average return of 1.17%, vs. SPY at 3.49%.
• Average hold time of closed positions was 45 days; 48% were held for 4 weeks or less

For Top Stock Picks, the description: “BEST OF THE BEST, LONG TERM STOCK IDEAS - Top Stock Picks provides our most elite 20 stock ideas. . . This performance-driven list of long ideas is refreshed in real-time to turbocharge your portfolio . . . – spotting winners and cutting losers – so you can adjust your portfolio for long-term investing success.”
The data based on stock purchases from product launch (March 28, 2024) through October 18, 2024:
• Of 142 closed trades, only 35% had a positive return and only 32% did better than SPY for the same holding period. If SPY had been traded rather than the recommended stock, 55% of those SPY trades would have seen a positive return.
• As of October 21, 22 open stock positions showed an average return of 9%, bettering SPY at 4.5%.
• As of October 21, 142 closed stock positions averaged -2.2%, vs. SPY at 1.12%
• The October 21 snapshot of all open and closed positions showed an average return of -0.69%, vs. SPY at 1.57%.
• Average hold time of closed positions was 25 days; 56% were held for 2 weeks or less

Hedgeye uses data p*rn to promote their products. In a recent promotional email for Signal Strength Stocks, the headline was “97% of Keith McCullough’s Current Stock Picks Are Winners Since Being Added to Signal Strength Stocks." A true claim, but look at the investment results above to see how misleading the headline is.