As volatility gripped global markets to start the week, hedge funds stepped in to buy the big dip in technology shares, according to Goldman Sachs Group Inc.’s prime brokerage data.
The S&P 500 Index suffered its worst rout in almost two years on Monday, although it rebounded from its weakest levels in part as stronger-than-expected economic figures boosted investor confidence. Over the course of the day, net purchasing of US single stocks was the biggest in about five months, the data shows.
Tech shares were among the main losers on Monday, and hedge funds took advantage, adding the most information-technology stocks since June, according to Goldman. The burst of bullishness marks a reversal as these investors had been unwinding high-flying megacap tech in recent months.
“Many hedge funds see a selloff as a buying opportunity,” said Jonathan Caplis, chief executive officer at PivotalPath, a hedge fund research firm. “The majority of the managers we speak to are framing the current problems as short-term and sentiment-driven, versus a long-term issue with the fundamentals of listed businesses or even the wider US economy.”
The S&P 500 was up more than 1% Tuesday, after slumping 3% the day before for its worst day since September 2022. Worries about economic growth, disappointing earnings from some of the biggest tech companies and stretched positioning contributed to the selloff, which swept markets from Asia to Europe to the US.
Even after the Monday buying, hedge funds’ positioning in info-tech shares is still around the most underweight in more than 10 years, according to Goldman’s prime-brokerage book.
Separately, JPMorgan Chase & Co.’s quantitative and derivatives strategists said they saw $14 billion of institutional net buying during market hours on Monday.
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