Hedge funds are showing signs of recovery after a challenging period, with some funds experiencing double-digit gains for the second consecutive year. This rebound comes as hedge fund manager Said Haidar faces his worst-ever losing streak amid a broader market environment where hedge funds are typically re-levering long positions. In January, hedge funds are starting from a net short base, with exposure leaning short as they engage with the ongoing market rally. Notably, the Goldman Sachs Most Shorted basket has decreased by 340 basis points, reflecting a shift in market dynamics as speculative junk stocks underperform. The performance of long-short equity hedge funds has improved as the so-called 'retail-pocalypse' impacts these junk stocks, which has contributed to the decline in the Most Shorted basket's year-to-date gains.