Hedge fund clients are selling out of semiconductor and equipment stocks even as technology shares climb to record highs, according to Goldman Sachs Prime Services.
The semiconductors and related equipment subsector is the most net-sold U.S. subsector over the past month and is now modestly net sold on a year-to-date basis, Goldman Sachs Global Banking and Markets reports.
Vincent Lin, co-head of Prime Insights and Analytics, says the move reflects risk management and profit-taking rather than a fundamental shift away from the artificial intelligence theme, which remains central to the broader market rally.
According to Vincent Lin:
“In the middle of this substantial price rally in the group, hedge funds have not been chasing. They’ve been selling down their exposure in the sector. It is a reflection of hedge funds taking profits, taking some chips off the table.”
Despite recent selling, cumulative hedge fund exposure to semiconductors since the start of last year remains among the highest of any U.S. subsector. Lin says broader hedging is also underway, with short exposure to U.S. index and ETF macro products rising to a 10-year high. Gross leverage among Goldman Sachs Prime Services clients has reached record levels, but net leverage remains flat.
According to Lin,
“It points to some restraint by hedge funds. It doesn’t point to euphoria.”
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