Hedge funds have accelerated their selling of U.S. financial stocks, marking the sector as one of the most net-sold in the week of December 1-7, according to a recent note from Goldman Sachs (NYSE:GS) Prime Brokerage.
This trend has persisted, with U.S. financials experiencing net selling in 10 of the last 14 weeks. The latest bout of selling, primarily driven by long sales, was notably the fastest pace in a month.
As a result, hedge funds' net exposure to financial stocks is now at its lowest level since March 2020.
“The sector now makes up 10.1% of overall US Net Exposure, which is at the lowest level since March ’20,” according to analysts from Goldman’s Sales Trading unit.
The note from Goldman Sachs also highlighted a shift in speculators' positions, with the abandonment of long positions in insurance stocks. Concurrently, hedge funds reduced buy positions and increased short bets on financial services and banks.
Job cuts within prominent financial institutions, including Goldman Sachs and Morgan Stanley (NYSE:MS), have also contributed to the negative sentiment surrounding financial stocks.
Elsewhere, hedge funds affiliated with Goldman Sachs' prime brokerage turned long, with net buying in macroeconomic products reaching the highest level in nearly five months.
Geographically, North America emerged as the most net-bought region, while developed markets in Asia experienced the most net-selling activity.
In terms of global sector trends, technology, financials, and staples were the most net-sold sectors, according to analysts.
Conversely, consumer discretionary, commercial services, and real estate stood out as the most globally net-bought sectors.