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.
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.
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