Hedge Funds Increase Net Selling of U.S. Single Stocks, Technology Leads Declines

Hedge funds accelerated net sales of U.S. single stocks to a four-week high, with short positions exceeding long buys by a ratio of 1.7 to 1, according to Goldman Sachs' Prime Trading desk. Information technology was the most net sold sector, led by persistent selling in software, while energy experienced its quickest pace of buying since October but remains net sold year-to-date.

Key Points

Hedge funds sold single U.S. stocks at the highest rate in four weeks, with short sales exceeding long buys by 1.7 to 1.
Information technology was the most net sold sector; software experienced six consecutive weeks of heavy net selling before modest net buying on Thursday.
Energy saw the fastest buying pace since October driven mainly by short covering, but remains net sold year-to-date and underweight among hedge funds.

Hedge funds stepped up net selling of U.S. single stocks last week, marking the strongest pace of sales in four weeks, Goldman Sachs' Prime Trading desk reported. Short sales outnumbered long buys by a ratio of 1.7 to 1, underscoring a net selling bias among institutional traders over the period.

Information technology emerged as the sector with the largest net outflows. Goldman Sachs analysts Vincent Lin and Marco Laicini said software names were "heavily net sold" for a sixth consecutive week, though they noted a modest return to net buying on Thursday.

Looking within the broader technology grouping, the report singled out two subsectors that absorbed the most selling pressure in dollar terms: software, and tech hardware, storage & peripherals. By contrast, semiconductors & semiconductor equipment and IT services registered the largest net buying by dollar value within the sector.

The energy sector displayed a different pattern. Goldman Sachs' data showed the fastest buying pace in energy since October, a move driven primarily by short covering and further supported by long purchases. Despite that recent pickup in activity, the energy sector remained net sold for the year to date, with hedge funds keeping an overall underweight stance.

These flows reflect active repositioning by hedge funds across market segments rather than broad-based directional conviction. The Prime Trading desk data provide a snapshot of where institutional managers trimmed exposure and where they added, highlighting a continued tension between concentrated selling in parts of technology and opportunistic buying in energy.

Context and positioning

Short sales exceeding long buys by 1.7-to-1 indicates a near-term net selling tilt among hedge funds.
Software has been a repeated target of selling pressure for six weeks but showed slight buying on Thursday, per Goldman Sachs' analysts.
Energy saw its most rapid buying pace since October, largely due to short covering, yet remains net sold year-to-date with hedge funds underweight in the sector.

Goldman Sachs' Prime Trading desk provided the data cited in this report. The descriptions of subsector activity and relative buying and selling are based on that analysis.

Risks

Unclear durability of recent energy buying - although there was strong short covering and supplementary long purchases, the sector is still net sold for the year and hedge funds remain underweight.
Persistent selling in software - software names were heavily net sold for six consecutive weeks, introducing continued downside pressure for that subsector until net flows change.
Sector rotation uncertainty - divergent flows between technology (net sold) and energy (recent buying) create uncertainty about short-term positioning across market sectors.

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Key Points

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