Hedge Fund Redemptions and Volatility

Investors trying to divine the near-term future of energy stocks should consider a factor that doesn't show up in sector fundamentals: bad hedge fund returns.

The problem is redemptions, which occur when a fund's returns are weak enough that investors ask for their money back. After a grim October, it's a safe bet that redemption requests are rolling in at some shops, especially since many funds require up to 45 days' notice before paying money out. An investor hoping to collect before year's end has only a few days left.

The need to raise cash could add to the market's volatility, particularly in popular sectors. ...