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Crowding hits record high as hedge funds weigh in on ‘Magnificent Seven’ bets

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Hedge funds have weighed in on bets on the “Magnificent Seven” tech stocks that have boosted portfolio returns this year, sending “crowding” to the highest level on record, according to a report by Reuters

The report cites a report by Goldman Sachs prime brokerage division as highlighting that megacap growth and technology stocks now account for 13% of the aggregate hedge fund long portfolio, twice their weight at the start of 2023, with companies like Microsoft and remaining popular long positions.

Returns for the stocks identified by Goldman Sachs as the most popular hedge fund long positions have jumped 31% so far this year, compared to the 19% rise in the benchmark S&P 500 index.

However, the report, which analysed the holdings of 735 hedge funds with $2.4tn of gross equity positions, also shows that crowding has reached its highest level since Goldman started tracking the funds 22 years ago, with the average hedge fund holding 70% of its long portfolio in its top 10 positions.

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