By Nell Mackenzie
LONDON, April 13 (Reuters) – Hedge funds last week piled into bets that stocks would rise, on expectations of a ceasefire in Iran, said two Goldman Sachs client notes on Saturday and seen by Reuters on Monday.
Their bets were wagered just before global markets were whipsawed on Monday after the U.S. threat to impose a blockade nL6N40V09S on Iranian shipping.
The majority of hedge fund stock trades, as of Friday, were long for the first time in eight weeks, as hedge funds ditched short positions and entered into long wagers, the Goldman notes showed.
A short position expects asset prices to fall, while a long position anticipates a rise.
Here are some key takeaway from the two Goldman notes:
• Systematic hedge funds such as CTAs (commodity trading advisors), were expected to buy an estimated $40 billion of S&P 500 stocks this month.
• Traders that take only long positions re-entered the markets “after staying on the sidelines since the war started.”
• While broader macro hedging positions turned long, hedge funds were still short on single stocks.
• Hedge funds sold the largest amount of tech stocks in five years.
• Software made up 60% of the selling.
• Stocks were bought globally, led in dollar terms by Europe and emerging markets in Asia.
• Global stock picking hedge funds returned 4% during the week to last Friday.
(Reporting by Nell Mackenzie; editing by Dhara Ranasinghe)
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