Hedge funds U-Turn on tech; sell everything else – Goldman

By Nell Mackenzie

LONDON (Reuters) – Global hedge funds turned positive on U.S. technology stocks, piling into the sector in the week ending Jan. 18 at the fastest pace in two months, a Goldman Sachs note to clients showed.

U.S. tech stocks began the year unloved by hedge funds and were the most net sold sector in the week to Jan. 6, as hedge funds shed these stocks in bulk, the bank had said previously.

But the tech heavy Nasdaq rose 3% to close at a new all-time high last week, fired by renewed optimism for AI and enthusiasm for the biggest global tech companies.

Hedge funds had their busiest trading week in the last five months, the note said. Hedge funds now have long positions in tech stocks, meaning they expect those share prices to rise.

Hedge funds were net short stock sectors including health care, utilities and energy in the week ending Jan. 18, Goldman Sachs said.

A short position expects a stock price to fall.

One reason utilities and real estate faced selling was because these were stocks particularly sensitive to interest rates, the bank said.

In the past week, expectations for a near-term cut in U.S. and European interest rates have seen a push back from central bankers.

Hedge funds have been net short in these sectors in four of the last five weeks, said Goldman Sachs.

They finished the week long in tech firms, financial companies and industrial companies, the bank said.

Speculators sold macro economic products and geographically were generally net short on stocks, but most notably in the United Sates and developed markets in Asia, Goldman added.

Chinese stocks were sold for the third straight week.

(Reporting by Nell Mackenzie; editing by Dhara Ranasinghe and Ed Osmond)