Goldman Sachs: Hedge funds increased their short positions in U.S. stocks to a record high last week, with the information technology sector being the hardest hit
Goldman Sachs pointed out in a report that, based on data traceable to 2016, the nominal short selling scale at the individual stock level reached a historical high last week. During the period from January 30 to February 5, the scale of short selling was twice that of long buying. Hedge funds have net sold U.S. stocks for the fourth consecutive week, with the selling intensity being the strongest since the "Liberation Day" in early April last year
Due to concerns that artificial intelligence may disrupt existing business models, hedge funds have aggressively built short positions in U.S. stocks.
Goldman Sachs' prime brokerage team stated in a report to clients that, according to data traceable back to 2016, the nominal short trading volume at the single-stock level reached a record high last week. Goldman noted that between January 30 and February 5, the scale of short selling was twice that of long buying.
Anxiety surrounding how artificial intelligence will reshape the U.S. economy erupted on Wall Street, leading to a tumultuous week in the markets. The catalyst for this sell-off was a series of new tools launched by Anthropic, aimed at automating work tasks across multiple industries. The combined market value of 164 stocks in the software, financial services, and asset management sectors evaporated by $611 billion last week.
Overall, hedge funds have net sold U.S. stocks for the fourth consecutive week, with the selling intensity being the most severe since the so-called "Liberation Day" in early April last year.
The Goldman team indicated that the information technology sector became the area most severely affected by the sell-off, recording the second-largest net outflow of funds in the past five years. The software sector dominated this retreat, accounting for about 75% of the net selling in that sector. Hedge funds' overall net exposure to software stocks has dropped to 2.6%, with the long-short ratio falling to 1.3, both hitting historical lows.
Semiconductors and semiconductor equipment, as well as IT services, were among the few technology-related sectors that achieved net buying that week. The semiconductor stock index rose last week, further widening the divergence between chip stocks and software stocks—as investors penalized industries they feared would be disrupted by AI, this divergence has continued to expand in recent months.
Outside the technology sector, hedge funds continued to rotate into defensive areas. The Goldman team stated that healthcare became the sector with the highest net buying last week and has jumped to the top of hedge fund inflows this year, surpassing the industrial sector.
Last Friday, the stock market rebounded with some bargain buying, but the NASDAQ 100 index still recorded its worst week of the year
