Hedge funds got back in to stocks in the technology, media and telecom (TMT) sector in August, in the most active buying since February 2021, according to a Goldman Sachs prime services report.
Long buys in the so-called TMT sector outpaced short sales at a 6.5 to 1 ratio, the bank said in the note, underscoring that portfolio managers were more optimistic about the sector's valuations.
The move came before a selloff in September on worries about monetary policy tightening. The tech-heavy Nasdaq is down roughly 1.7% so far this month.
Besides tech stocks, hedge funds were net bought in August in consumer discretionary, healthcare, real estate and financials, while they went bearish on industrials, energy and materials.
Despite recent additions to their portfolios, equity long-short hedge funds remained in a de-risking mode, Goldman Sachs said. Funds' net leverage – long positions minus short positions – went down 0.5 percentage point in August to 47.5%, in the ninth percentile in the last 12 months. That means it has been lower only 9% of the time over the last year.
Long-short hedge funds ended August roughly flat, down 0.1%. In the year, they have fallen 14.52%.
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