Goldman Sachs: Hedge Funds Bought US Stocks at the Fastest Rate in Six Months Last Week
Claire Weston
Goldman Sachs prime-brokerage data show hedge funds bought U.S. equities last week at the fastest pace in six months, while the S&P 500 extended its streak to nine consecutive weekly gains — the longest since 2023 — signaling a decisive shift from caution to active risk-taking.
Where did the money come from, and where did it go?
The inflow was driven by both long buying and short covering — not one-sided bullishness but also bears capitulating.
Purchases spanned index products and ETFs (exchange-traded funds — baskets of stocks traded as a single security). U.S.-listed ETF short interest fell for a second straight week, down 0.6%.
This means → two forces pushed the market higher at once: new bulls stepping in *and* old bears stepping out.
What is fueling nine straight weeks of gains?
The S&P 500 has risen for nine consecutive weeks, the longest streak since 2023. The Nasdaq 100 is up more than 20% year-to-date.
Two core drivers: rising AI infrastructure spending + a better-than-expected earnings season.
In plain terms = corporate profits are delivering and AI investment is accelerating — this rally has fundamental support, not just hype.
Why did financials suddenly become the biggest winner?
Financials recorded the largest net buying in nearly six months. The long-to-short ratio was roughly 6.5 to 1, led by payment stocks, then banks.
Yet consumer-finance and capital-markets names within the sector saw net selling — a clear split inside the same sector.
This reflects a selective rotation: money did not flood financials blindly but picked the two highest-conviction sub-sectors — payments and banks.
Allocations are still rock-bottom — what does that imply?
Goldman notes that financials' gross and net allocation on U.S. prime books remain near their respective five-year lows, at the 1st percentile.
In plain terms = despite last week's aggressive buying, hedge funds' overall positioning in financials is still near the lowest level in five years.
This means → if the bull case for financials holds, there is substantial room for further buying.
Why do hedge funds keep selling industrials?
Industrials have seen net selling in seven of the past eight weeks. Short exposure has climbed to the 90th percentile on a one-year basis.
Key detail: selling since February has been driven mainly by new short additions, not long liquidation — funds are actively betting on further declines, not just taking profits.
This means → financials and industrials are tracing opposite capital paths; hedge funds are effectively running an implicit "long financials, short industrials" trade.
How aggressive is overall hedge-fund positioning right now?
U.S. net long-short leverage rose to 55.3%, the 89th percentile over one year. The fundamental long-short ratio climbed 1.4 percentage points to the 99th percentile.
In plain terms = leverage measures how much borrowed money funds use to place directional bets — right now they are near the most aggressive level in a year.
Yet Goldman also notes that single-stock directional activity was muted last week, with long sells and short covers roughly canceling out — this reflects a positioning regime that is aggressive at the macro and sector level but cautious on individual stock picks.
Content is for reference only, not financial advice.