Hedge funds are betting against banks, insurance and property, says Goldman Sachs By Reuters

By Nell Mackenzie

LONDON (Reuters) – Hedge funds continued to bet against banking and financial stocks in the week to Friday, Goldman Sachs wrote in a note seen by Reuters on Monday, amid reported job cuts and reduced trading.

Financial stocks ended the week as the net-sold sector at Goldman Sachs’ prime brokerage trading desk, which serves global hedge funds, the note said.

Banks, insurance companies, publicly traded real estate trusts and capital market firms that allow people to buy and sell bonds and stocks were all sold on a net basis for the fourth straight week.

A short position bets that the price of an asset will fall in value, while a long position expects it to rise.

Europe’s banking index has risen 1.7 percent since Aug. 26, while the Dow Jones banking index closed up more than 2 percent on Friday in the week ahead of Monday’s US holiday.

Financials as a sector of stocks have sold off in six of the past seven weeks, the Goldman Sachs note said.

Sales were global, led in notional terms by North America, emerging markets in Asia and Europe, the note said.

While the total value of deals globally rose by around a fifth, the number of M&A deals fell by 25% for the year to June 25, LSEG data shows.

Hedge funds made modest net purchases in consumer finance, the Goldman Sachs note said.