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Hedge funds last week sold industrial stocks at some of the
highest levels seen in five years, the note released on Friday
said.
Bets were aimed against companies offering professional
services, ground transportation, machinery, and passenger
airlines despite a "modest" amount of buying in air freight and
defense stocks.
A short position or bet against a company stock, expects the
value of an asset to fall.
The shift from industrial stocks into energies reveals hedge
funds' early punts on which economic sectors might flourish on
an expected U.S. rate cut.
"Global growth will be better than expected if the Fed manages
to engineer a soft landing and that's probably why these traders
are making the switch," said Paul O'Neill chief investment
officer at wealth management firm, Bentley Reid.
Fed Chair Jerome Powell speaks in Jackson Hole on Friday and his
comments will likely be scrutinized for clues on the scale of
rate cuts in the months ahead.
Meanwhile hedge funds continued to snap up oil and gas company
shares.
Energy drew bids from hedge funds as the most net bought stock
sector on Goldman's U.S. prime brokerage book, which also lends
trading money and tracks hedge fund trading, the note said.
Hedge funds last week bought oil, gas and consumable fuels and
energy equipment and supplies companies for the fourth straight
week, the note added.
These speculators now hold the highest proportion of energy
stocks they've had all year, said the bank note.
These bets also mirror what analysts have dubbed the "Trump
trade."
Investors told Reuters in late July that hedge funds betting
that former President Donald Trump will regain the White House
in the November election had increased exposure to energy
companies, which they believe could benefit from a looser
regulatory environment.
But some stocks suffered, among them shares of European
carmakers, which could be hard-hit by potential tariffs on
foreign imports.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and
David Evans)
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