At the end of the third quarter, hedge funds tracked by Goldman Sachs Group significantly added to their holdings of U.S. financial companies. The tracked hedge funds allocated 7.8% to financial companies. Although still underweight the financial sector compared with the Russell 3000 benchmark, the past two quarters have seen the underweight decrease by about 300 basis points. The sector now has the smallest underweight since 2013. Health care remains the largest overweight, while information technology remains the largest underweight.
Hedge funds warming up to financial sector, remain long U.S. equities
Short interest in S&P 500 stocks is at the lowest point in more than 15 years at 1.6% of outstanding market capitalization. Only the energy sector has a level of short interest above its long-term average. For the ninth straight quarter Amazon.com, Facebook, Microsoft, Alibaba and Alphabet remain the most widely owned among hedge funds.