Hedge funds ramped up bets on megacap US tech stocks and whittled down overall holdings to concentrate on favored names last quarter, with conviction growing to levels last seen before the pandemic, according to Goldman Sachs Group Inc.
Q2 2022 hedge fund letters, conferences and more
The funds boosted tech and consumer discretionary holdings, while cutting energy and materials wagers, strategists including Ben Snider wrote in a note Tuesday. Separately, average weightings of top 10 holdings jumped to 70% in the three months ended June, the highest concentration since the first quarter of 2020.
Amazon.com Inc. supplanted Microsoft Corp. as the most popular long position, a timely call this quarter with the former’s 26% gain more than tripling the 8% climb in the latter. The funds also boosted bets on Nvidia Corp., Apple Inc., Atlassian Corp. and Tesla Inc., according to the report.
“Stymied by an uncertain market environment and poor recent returns, hedge funds have cut leverage, shifted back towards growth, and increased portfolio concentrations,” the Goldman team wrote. “Performance has recently improved, matching the typical experience during correction rebounds, though leverage has room to rise if the market remains resilient.”
Beleaguered tech stocks got a shot in the arm in mid-June, as traders reassessed bets on the number of future rate hikes by the Federal Reserve after the US economy showed signs of slowing. A gauge of megacap tech stocks has risen 10% this quarter, compared to a 9% rise in the S&P 500 Index.
But the optimism has petered out heading into this week’s Jackson Hole conference on renewed hawkish concerns, with the market split on whether the Nasdaq 100’s near 13% jump in July was anything more than a bear market rally.
Read the full article here by Ishika Mookerjee, Advisor Perspectives.
