Last week, hedge funds bet on a rise in stocks, expecting a ceasefire in Iran, according to two client notes from Goldman Sachs dated Saturday and seen by Reuters on Monday.
These bets were made just before global markets were shaken on Monday by the threat from the United States to impose a blockade on Iranian shipping.
On Friday, the majority of hedge fund stock transactions were long for the first time in eight weeks, with hedge funds abandoning their short positions to take long bets, as shown in the Goldman notes.
A short position anticipates a drop in asset prices, while a long position anticipates a rise.
Here are the key takeaways from the two Goldman notes:
* Systematic hedge funds, such as commodity trading advisors (CTAs), are expected to buy S&P 500 stocks worth an estimated $40 billion this month.
* Traders who only take long positions have returned to the markets “after being sidelined since the start of the war.”
* While broader macro-hedging positions have turned long, hedge funds have remained short on individual stocks.
* Hedge funds sold the most tech stocks in five years.
* Software accounted for 60% of sales.
* Stocks were bought globally, with Europe and Asian emerging markets leading in terms of dollars.
* Hedge funds specializing in stock picking recorded a 4% return during the week ending last Friday.
