Hedge funds dump utilities stocks, pile into power: Goldman Sachs

Investing.com -- Global equities experienced net selling for the second consecutive week, with an increase in gross trading activity driven by short sales surpassing long purchases, according to Goldman Sachs.

Regional trends in net flows showed divergence, with North America and EM Asia net sold, while Europe and DM Asia saw net buying. Notably, North America recorded its highest level of net selling in three months.

Both Macro (BCBA:BMAm ) Products and Single Stocks were net sold, collectively accounting for 80% and 20% of total notional net selling, respectively, with short sales leading in both categories.

By sector, US Utilities faced net selling for the third consecutive week, marking its largest net selling activity in two months, driven entirely by short sales. All subsectors, except Gas Utilities, were net sold during the week, with Electric Utilities, Multi Utilities, and Water Utilities leading the decline.

“Utilities is now among the most net sold US sectors so far in November, though still net bought on a YTD basis,” Goldman Sachs said in its weekly Prime Services report.

Gross and net allocations to the sector, as a percentage of total US exposure, remain high at 3.7% and 4.1%, respectively, ranking in the 96th and 99th percentiles over the past five years.

The most significant shifts in sector trading flows occurred in Energy, which experienced long purchases exceeding 2.44 standard deviations.

Meanwhile, US Materials emerged as the most net bought sector last week, driven almost entirely by long purchases. The sector has now seen net buying in three of the past four weeks and ranks among the most net bought US sectors on Goldman’s Prime book for November month-to-date, although it remains net sold on a year-to-date basis.

Most subsectors, except Containers & Packaging (NYSE:PKG ), were net bought during the week, with Chemicals , Metals & Mining , and Paper & Forest Products leading the inflows.

“All subsectors are now net bought so far in November,” the report states.

Despite this recent buying activity, the aggregate long/short ratio for US Materials remains near five-year lows, sitting in the 4th percentile.

Source: Investing.com