In a note to clients, Goldman Sachs stated that fresh data sparked concerns that the U.S. economy is slowing faster than anticipated. As a result, global hedge funds continued to add bearish equity bets to their portfolios in the week leading up to August 1.
Goldman noted that one long position was added for every 3.3 short bets, marking the third week in a row that hedge funds’ bets on stock declines outpaced long positions.
After economic data for two days in a row indicated a slower-than-anticipated slowdown, the Nasdaq Composite fell into correction territory on Friday.
Less positions than anticipated were added and producing action dropped. It ended down 2.43 percent. Seven out of the 11 global industries saw their exposure reduced by hedge funds. Real estate, energy, the industrial sector, and finance were among them.
Hedge funds have been withdrawing risk bets for a few weeks, and Goldman Sachs reported in a separate note that fundamental long/short hedge funds had their worst day since June 2022, with their performance falling 1.8 percent on average on Friday.
