Analyzing trading of hedge funds facing substantial outflows, we find that hedge funds that trade against the flow display significant stock-picking skills. Stocks purchased by hedge funds facing large outflows deliver positive ex-post abnormal returns. Such “revealed under pressure”...

This paper produces multiple fund-of-funds’ portfolios based on sorting and a novel non-parametric approach to lend in-depth insights into the extent hedge fund returns display higher order (non-linear) persistence patterns. By exploiting monthly data from Hedge Fund Research Database between...