Hedge funds net sold US equities last week, Goldman says

Investing.com — Hedger funds (HFs) net sold US equities last week, according to Goldman Sachs, predominantly driven by risk-on flows. Short sales were notably more frequent than long buys, with a ratio of 2 to 1.

This selling activity was largely concentrated in macro products, including indexes and exchange-traded funds (ETFs), which constituted approximately 50% of the net selling.

“A reversal from last week’s covering, US-listed ETF shorts increased by +5.6%, led by shorting in Sector, Credit, and International ETFs,” Goldman Sachs said in the report on Friday.

The shift in investor behavior resulted in net sales of single stocks for the first time in seven weeks, with short sales surpassing long buys by a ratio of 1.5 to 1.

Information Technology, Communication Services, and Materials sectors were the most sold on a notional basis. Conversely, sectors such as Health Care, and Consumer Discretionary saw net buying activity.

HFs continued to show interest in US Financials stocks, the report reveals, marking the second consecutive week of net buying in this sector.

The gross trading activity in US Financials, both in terms of long buying and short selling, has reached a significant high, ranking in the 100th percentile over a five-year lookback period. The sector’s gross and net allocations as a percentage of total US exposure are now at 12.7% and 11.5%, respectively.

Health Care emerged as the most net bought US sector over the past week. According to the report, the buying activity was concentrated in Pharmaceuticals, Health Care Equipment & Supplies, and Health Care Providers & Services. This outweighed the selling seen in Biotechnology and Life Sciences Tools & Services.

“US Health Care has now been net bought in 7 of the last 8 weeks, and the sector long/short ratio now stands at 2.46, in the 92nd percentile vs. the past year and in the 46th percentile vs. the past five years,” Goldman notes.