Bearish investor Boaz Weinstein is feeling the pain from this year's unexpected stock rally

• Boaz Weinstein has been tagged by this year's stock-market rally, according to the Financial Times.
• Saba Capital's flagship $1.3 billion fund is down 8% year-to-date, the publication reported.

Boaz Weinstein's Saba Capital is reportedly the latest hedge fund to have been tagged by the surprise 2023 rally, with bears racking up major losses as stock prices continue to soar.

Saba's flagship $1.3 billion fund is down just under 8% so far this year, while another $1 billion fund it runs has fallen by a similar amount, according to a report by the Financial Times citing a letter to investors. The funds aim to protect investors against periods of market dislocation.

That disappointing performance came after Weinstein said at the end of last year that US stocks could stagnate for decades as the Federal Reserve started to unwind its $9 trillion balance sheet through quantitative tightening.

"I'm very pessimistic. There isn't a rainbow at the end of all this. [Quantitative tightening] is going to be a real headwind for investors," Weinstein told the FT back in October.

Contrary to Weinstein's gloomy forecast, US stock valuations have soared in 2023, powered higher by the rise of AI and rapidly cooling inflation.

The benchmark S&P 500 has jumped over 16% year-to-date, while the Nasdaq Composite and Dow Jones Industrial Average are up 31% and 6% over the same period.

Those unexpected gains have piled on the misery for some of Wall Street's most prominent bears, with hedge funds losing $6 billion betting against cruise lines and hotels alone.

That's sparked a bout of soul-searching, with Morgan Stanley's top strategist Mike Wilson recently admitting that the bank was flat-out "wrong" to have written off stocks at the start of this year.

Before 2023, Saba, which manages $4.4 billion worth of assets, had enjoyed a strong run since the pandemic rocked global markets at the start of 2020.

The hedge fund racked up a 73% gain that year alone, slid 1% in 2021 and then bounced back 22% last year, according to the FT.

Saba Capital declined to comment.