Hedge Funds Net Bought U.S. Stocks for Five Consecutive Days as Tech Sector Short Squeeze Drives Second-Fastest Buying Spree of the Year
Nashnova编辑部
Goldman Sachs data shows hedge funds net-bought U.S. equities every trading day last week at +2.1 standard deviations — the second-fastest pace in a year — with software short-covering at the core. This means → the most crowded short of the first half is being forced to unwind.
How intense was last week's buying?
Hedge funds net-bought U.S. stocks on all five trading days, at a pace of +2.1 standard deviations — the second-fastest concentrated buying wave this year.
Single-stock long additions dominated. The long-to-short-cover ratio hit 7.6 to 1. This means → funds were actively going long, not just covering forced short squeezes.
The backdrop: CPI, PPI, retail sales, and consumer sentiment all came in mild, with U.S. equities nearing all-time highs.
How did the money flow into tech?
Information technology was the largest single-sector net inflow (+1.2 standard deviations), split roughly 2-to-1 between long adds and short covers.
The core driver was software short-covering. After Workday's acquisition news landed, a broad squeeze hit software stock baskets and related ETFs.
In plain terms = software was the most crowded short of H1 2026. Now those shorts are being forced to buy back — that is the squeeze.
Hedge-fund net allocation to software rose from a year-low of 1.3% to 4.5%, but remains well below the 7.0% level at the start of the year. This means → the short-covering may not be finished.
What about semiconductors?
Semis and semi equipment also saw notable net buying, driven mainly by long additions.
The catalyst was positive storage-industry signals from SanDisk's investor day.
Hedge-fund net allocation to semis stands at 10.4% — below the year-high of 14.1% but up sharply from 6.8% at the start of the year. This reflects a steady rebuild in conviction, though not yet back to peak optimism.
ETF shorts have shrunk for six straight weeks — what does that signal?
U.S.-listed ETF short interest fell another 3% last week, with a cumulative monthly drop of 12% — the sixth consecutive week of net reduction.
Covering concentrated in small-cap ETFs, tech ETFs, and large-cap ETFs, partly offset by new shorts in real estate, Latin America, and healthcare ETFs.
In plain terms = the broad direction is short retreat, but selective new shorts are still opening. The market is not uniformly bullish.
What do leverage levels tell us?
U.S. long/short funds' gross leverage fell to 203.5%, sitting at the 4th percentile over the past year. Net leverage dropped to 51.3%, at the 13th percentile.
The fundamental long/short ratio declined to 1.674, at the 66th percentile over the past year.
This means → despite aggressive buying, overall positioning is not crowded. Put simply = funds still have dry powder, and the buying wave has room to continue.
Real estate suddenly flipped to net selling — what signal is that?
After net buying in seven of the prior eight weeks, real estate became the largest net-sold sector this week (-0.4 standard deviations), with a short-sell-to-long-buy ratio of 1.3 to 1.
Selling concentrated in specialty REITs, retail REITs, and industrial REITs. The sector's long/short ratio stands at 1.70, at the 82nd percentile over the past year.
This reflects relatively crowded valuations prompting profit-taking. The next key catalysts are the Fed's FOMC minutes and flash PMI data — whether the software squeeze continues likely hinges on whether these readings sustain the current mild-expectations narrative.
Content is for reference only, not financial advice.