AQR Also Hopes To Put More Money Into Quant Funds

Bess Levin of Dealbreaker has the letter that AQR principal Cliff Asness sent to investors worried about losses in his quant-based hedge funds. It seems that the losses are significant, and that AQR is moving money out of that strategy – but at the same time moving money in to that strategy. See if it makes any more sense to you:

In the face of this dramatically increased risk profile, we have temporarily been managing a reduction of our notional exposure to these strategies in the several hedge funds where they are utilized. Despite this reduction, we strongly view that the exit of many others from this style of stock picking represents a striking opportunity for future gains, which we fully intend to capitalize on for our clients. To that end, we’ve already seen increased client demand for our aggressive market-neutral equity fund.

Why is it that hedge fund managers seem incapable of using the word "selling" when they can talk about "a reduction of our notional exposure" instead? And is there any meaning at all to the word "notional" in that sentence? In any event, with the Goldman liquidity injection, it's clear that AQR isn't alone in this "lightning won't strike twice" play.