Hedge Funds Go All In: Fastest Stock Buying Since Nov 2024

• Hedge funds purchased global equities at the fastest pace since November 2024, with a strong focus on AI-related technology stocks in North America and Europe.
• The S&P 500 (SPX) and Nasdaq (COMP) posted significant gains of 6% and 9.6% in May, respectively, marking their best May performances since 1990 and 1997.
• European stocks (^STOXX) returned over 5% in May, with hedge funds heavily buying in Spain, France, and Germany, while targeting consumer discretionary, financials, health care, and communications sectors.

Hedge funds aggressively purchased global equities last week at the fastest rate since November 2024, according to a Goldman Sachs (GS) note cited by Reuters, coinciding with a robust May performance for major stock indices. The S&P 500 (SPX) surged 6% in May, marking its strongest monthly gain since November 2023 and the best May performance since 1990. Similarly, the Nasdaq (COMP) climbed 9.6%, its most significant monthly increase since November 2023 and the best May showing since 1997. This bullish sentiment extended globally, with hedge funds adopting a positive outlook across all regions, particularly in North America and Europe.

Technology stocks, especially those tied to artificial intelligence, drove the buying frenzy. The report notes that hedge funds accumulated the largest weekly net long positions in the tech sector in over five years, focusing on semiconductor manufacturers, technology hardware producers, and electrical equipment firms. North American technology companies led the charge, with European tech firms also seeing significant interest. This aligns with broader market trends, as AI-related innovations continue to reshape investment strategies, bolstered by advancements in chip design and data processing capabilities.

In Europe, the pan-European stock index (^STOXX) delivered a solid 5% return in May. Hedge funds purchased European equities for the third consecutive week, at the quickest pace in three months. The buying was concentrated in Spain, France, Finland, Germany, Sweden, and Denmark, while Ireland, the Netherlands, and Switzerland saw net selling. Sectors such as consumer discretionary, financials, health care, and communications attracted substantial hedge fund interest, reflecting confidence in diverse industries amid improving economic indicators.

Hedge funds primarily targeted individual stocks but also took long positions in stock indices, signaling expectations of rising asset prices. This strategic shift underscores a broader optimism in global markets, driven by strong corporate earnings and technological advancements. The data, reported by Reuters, highlights a pivotal moment for investors as they position for potential growth in key sectors and regions.

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