After Two Weeks Of Buying, Hedge Funds Are Again Shorting Stocks

After two consecutive weeks of furious hedge fund buying of single stocks (see "After 8 Weeks Of Selling, Hedge Funds Capitulate And Buy Stocks At The Fastest Pace Since 2021" from Oct 13 and "Hedge Funds Buy Most Stocks Since Dec 2023", from Oct 20), with stocks at new all time highs, the smart money is back to selling, and according to the latest must-read Goldman Prime weekly rundown (available to pro subs in the usual place), in the last week, hedge funds sold US equities and reversed 25% of recently initiated length, driven by short sales outpacing long buys ~2 to 1.

Macro Products (Index and ETF combined) accounted for nearly all of the US net selling and have been net sold in 3 of the last 4 weeks, driven by short sales outpacing long buys ~3 to 1. Last week’s notional short selling in Macro Products was the largest since early January (97th percentile five-year) and according to Goldman trader John Flood, points to increased hedging activity. However, single stocks were net bought for a 4th consecutive week, driven by long buys outpacing short sales 1.6 to 1.