By Nell Mackenzie
LONDON (Reuters) -Hedge funds last week sold the largest amount of stocks in over six months including energy shares, said a client note by Goldman Sachs while a separate note by JPMorgan highlighted a sell-off in banks.
Speculators sold global banks and financial services companies in the U.S. particularly, leaving their positioning in the sector neutral, showed a client note by JPMorgan’s prime brokerage seen by Reuters on Monday.
This came against a backdrop of selling in global stocks late last week, with the bankruptcies of First Brands and Tricolor putting a focus on the risk controls of banks and the opaque credit market, where complex loans and new facilities have made it harder to gauge participants’ exposure.
Still , the S&P 500 index ended last week 1.7% higher as quarterly results from regional banks eased banking sector concerns and investors took comfort from U.S. President Donald Trump’s latest remarks on trade relations with China.
Retail and mutual funds in the first quarter of 2025 held over half of the U.S. stock market volume, whereas hedge funds made up less than 10%, a UBS client note in August showed.
Hedge funds last week sold equities in every major trading region apart from Europe by the largest amount in six months, said a prime brokerage note from Goldman Sachs, seen by Reuters on Monday.
Hedge funds dumped losing long positions and added short bets, the bank said.
A long position bets an asset value will rise, whereas a short wager expects it to fall.
The Goldman note added that energy stocks were sold in the largest clip in four months.
Crude oil fell below $60 last week following a report from the International Energy Agency, which continues to forecast a significant supply glut in the oil market.
Hedge fund selling concentrated in companies related to the oil, gas and consumable fuels industries, said Goldman.
However, uncertainty over where that oil supply currently is in the world and disputing supply projections from other oil forecasting agents including OPEC, have thrown the projection into doubt.
Hedge funds’ energy-related share exposure tracked by Goldman Sachs’ prime brokerage is now the lowest in three years, Goldman said.
Overall performance for stock pickers declined 0.73% between October 10 and 16. Those with systematic strategies saw returns rise 0.22% over the same time frame, Goldman’s note added.
(Reporting by Nell MackenzieEditing by Dhara Ranasinghe and Frances Kerry)
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