Hedge funds snap up US tech stocks amid falling rates, says Goldman Sachs By Reuters

By Nell Mackenzie

LONDON (Reuters) – Hedge funds bought U.S. technology and media stocks at the fastest pace in four months last week, said a Goldman Sachs prime brokerage note to clients seen by Reuters on Monday, boosted by the expected cut interest rate by 50 basis points by the Federal Reserve. .

Lower rates are expected to rejuvenate industrial spending, making it easier for companies to borrow money at lower costs and for consumers to buy technology products, all of which could benefit the share prices of these companies.

The Fed’s first interest rate cut in four years lifted U.S. stocks last week, closing 1.15 percent higher on Friday as recession fears eased and investors digested the implications of easing monetary policy.

Hedge funds placed nearly three times as many long positions betting that information technology stocks would rise compared to those betting against them, the prime brokerage note said.

Buying of semiconductor and related equipment companies outpaced selling of technology hardware such as computer, monitor and hard drive makers, the Goldman Sachs note said.

Hedge funds also shed their short position and added long bets on interactive media and entertainment companies, the note said.

A short position expects the value of an asset to decrease.

The broader tech and media sector now accounts for nearly a third of the total net exposure of the US portfolio, it said.

In contrast, consumer staples were the top sellers in Goldman Sachs’ prime brokerage book, the note said.

Selling outpaced buying in US consumer discretionary stocks such as hotels and restaurants for the first time in four weeks, and the sector suffered its biggest net selloff in a year, according to the note.

Gross leverage, or hedge funds’ total borrowings and investments, reached about 278 percent, among the highest levels on record this year, it said.