Hedge funds have "changed their face" again! Last week, they massively sold off American tech stocks

"Reversal, reversal, and another reversal." Last week, hedge funds significantly reduced their positions in the U.S. technology, media, and telecommunications (TMT) sector, marking the largest reduction since July 2024 and ranking in the 98th percentile over the past five years.

This move signifies yet another sharp shift in hedge fund investment strategies. Just a week prior, they had aggressively bottom-fished U.S. stocks, making the largest purchases of technology stocks since December 2021, ending a previous five-week selling trend. The buying at that time was primarily driven by short covering and long positioning, with a ratio of approximately 1.5 to 1.

Goldman Sachs' Prime division noted in its latest weekly report that most sub-sectors within the TMT sector experienced a reduction in risk exposure last week. Among them, the interactive media and services sub-sector primarily achieved this through selling long positions, while the software and semiconductor sectors were mainly driven by short covering.

However, not all sectors faced selling pressure. The net buying in the materials sector last week reached the second highest recorded by Goldman Sachs Prime, only behind the week following the "meme stock" craze in January 2021, and was entirely driven by increased long positions.

Consumer health remains a hot topic in the market. Data shows that the consumer discretionary sector has faced net selling for eight consecutive weeks, making it the most severely sold sector this year. Nevertheless, Goldman Sachs maintains an optimistic internal view, with analysts stating:

"Although recent weak data has led to a significant reduction in investor positions in the consumer discretionary sector, actual income growth remains strong, and consumer balance sheets are in good shape."

It is noteworthy that Goldman Sachs' market summary for the day indicated that both hedge funds and long-term investors were selling stocks, with each group supplying approximately $200 million. Hedge funds primarily sold non-essential consumer goods and macro products, while long-term investors focused on selling technology and healthcare stocks.

Currently, the main forces supporting the stock market come from corporate buybacks (with 80% of buyback windows open) and retail investors; however, it remains uncertain whether these factors can provide sufficient support for the market.

Risk Warning and Disclaimer

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