Hedge funds re-entered technology, media and telecommunications (TMT) stocks in August, in the most active buying since February 2021, according to a report from the services of Goldman Sachs (NYSE: GS ).
Long purchases in the so-called TMT sector outnumbered short sales by a ratio of 6.5 to 1, the bank said in the note, noting that portfolio managers were more optimistic about valuations in the sector.
The move came ahead of a September sell-off on concerns about tightening monetary policy. The tech-heavy Nasdaq is down about 1.7% so far this month.
In addition to technology stocks, hedge funds made net purchases in August in the consumer discretionary, healthcare, real estate and financials sectors, while they were bearish in the industrials, energy and materials sectors.
Despite recent additions to their portfolios, long-short equity hedge funds remained in a risk-aversion mode, according to Goldman Sachs.
The funds’ net leverage — long positions minus short positions — fell 0.5 percentage point in August to 47.5%, in the ninth percentile of the past 12 months. This means that it has only been inferior 9% of the time in the last year.
Long-short hedge funds ended August largely unchanged, down 0.1%. In the year, they have fallen by 14.52%.