Data from Goldman Sachs shows hedge funds are now aggressively shorting tech stocks, with the sector’s largest dollar net sale in June on record.
Hedge funds “have been aggressively shorting TMT shares in the past month, led by Semis & Semi Equip (reversing a year-to-date trend) – US dollar net sales in TMT will be the largest ever,” Goldman strategists said in a report . recent research report.
The data also shows hedge funds’ exposure to momentum stocks fell for the first time in six months.
“Exposure to Momentum HFs may decline for the first time in 6 months and is now at the 72nd percentile over 5 years (down from the 91st percentile at the end of May),” the report said.
Goldman’s report follows the recent decline in artificial intelligence company NVIDIA (NASDAQ: ). After briefly becoming the world’s most valuable company, NVIDIA’s market capitalization fell $430 billion in three days before recouping some of that loss. In terms of market capitalization, NVIDIA currently lags behind Microsoft (NASDAQ:) and Apple (NASDAQ:). In addition, stocks such as Broadcom (NASDAQ:) saw strong selling after hitting record high earnings in mid-June.
“After adding risk to their portfolio for all but one week this year, trading flows from recent sessions indicate some de-risking driven by long selling and, to a lesser extent, short covering,” the report added.