Hedge funds stepped up purchases of US equities last week at the strongest pace seen in six months, according to a report by Bloomberg citing data from Goldman Sachs’ prime brokerage division, signalling a renewed willingness among managers to add risk as US markets continue to rally.
Goldman’s latest client note showed that hedge fund activity was driven by a combination of fresh long positions and the unwinding of bearish trades across both index-linked instruments and exchange-traded funds (ETFs). Short exposure to US-listed ETFs declined for a second consecutive week.
The positioning shift comes as investor confidence remains supported by continued spending on artificial intelligence infrastructure and a corporate earnings season that has broadly exceeded expectations. US equities have enjoyed a sustained advance, with the S&P 500 recording nine consecutive weeks of gains, while the Nasdaq 100 has climbed more than 20% year-to-date.
The latest data suggests a notable change in sentiment compared with mid-May, when Goldman observed hedge funds taking profits in semiconductor names and increasing macro-related short positions amid concerns over higher bond yields and persistent inflation pressures.
Financial stocks emerged as the primary destination for new capital during the latest reporting period. Goldman said the sector attracted its largest net inflows in nearly six months, with buying activity heavily skewed towards long positions. Payments companies led the gains in investor interest, while banks also saw increased demand. Some of this enthusiasm was offset by selling in consumer finance and capital markets businesses.
Despite the recent buying, Goldman noted that overall hedge fund exposure to financials remains historically low. Both gross and net allocations to the sector continue to sit near the bottom of their five-year ranges.
In contrast, industrial stocks remained under pressure. The sector has experienced net selling in seven of the past eight weeks, with bearish positioning continuing to build. Goldman indicated that short interest in industrials has reached elevated levels relative to the past year, driven largely by new short positions rather than investors exiting existing long holdings.
Across individual stocks, hedge fund activity was broadly balanced, with selling of long positions largely offset by short covering, resulting in limited net directional exposure changes.
Risk-taking measures also moved higher during the week. Goldman reported that US long-short net leverage rose to 55.3%, placing it near the top of its one-year range. The firm’s US Fundamental long-short ratio also increased, reaching levels that rank among the highest observed over the past 12 months.
