Key insights
- Hedge funds significantly reduced technology stock exposure, marking the largest selloff in a decade, excluding the meme stock surge. This de-grossing, driven by long sales, impacted semiconductor, hardware, and software sectors, including the Magnificent Seven. This indicates increased risk aversion and potential downward pressure on tech stocks.
Investing.com -- Hedge funds executed their largest reduction in information technology stock positions in a decade over the past two weeks, according to Goldman Sachs’ Prime Book data.
The de-grossing activity was driven by long sales and short covers for the second consecutive week. Goldman Sachs’ team, including Vincent Lin, noted in a report that the scale of risk unwinding surpasses any period in the last ten years, with the exception of the meme stock episode in early 2021.
Last week, most technology sub-sectors experienced risk reductions. Semiconductors and semiconductor equipment, technology hardware, storage and peripherals, and software were the categories with the highest selling volumes.
The Magnificent Seven stocks collectively underwent de-grossing activity and were net sold in four of the last five trading sessions. Long sales exceeded short covers during this period.
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