People tend to give us a look when we scowl at the managed futures association with hedge funds. After all, if you see hoof prints, you don’t think zebras, right? The problem is that, while CTAs may leave hoof prints, their stripes are way different from their hedge fund brethren.

More fuel for the fire… we’ve complained in the past about the correlation between hedge funds and equities, and a story coming out of Business Week amplifies this irritation. Not only are they correlated with stocks, they’re also underperforming. So much for the smartest money in the room…

Bloomberg notes that some of the best performing shares in the rally have been those of such companies asNetflix (NFLX), Bank of America (BAC), and Sears (SHLD). What do they have in common? They were targeted by short sellers, many of them at hedge funds. Now these pessimists have been forced to buy shares of the companies to cover their losing positions. ”Hedge funds are at least part of the underlying strength in the recent move [in the stock market], and it has to do with not only buying stocks, but first and foremost covering,” says Michael Holland, founder of Holland & Co. in New York. ”It’s been a brutal time to be on the short side.”

Either way, the industry largely missed out on a 27 percent gain in the S&P since October. If fund managers want to look smart and collect high fees, they shouldn’t do anything like that again.

Now, we’re not saying we buy into the bull, but talk about having to eat crow. To be entirely fair, managed futures can’t claim to have captured the move, and has faced struggles on their own, but, then again, isn’t stock picking supposed to be hedge funds’ expertise?