Global hedge funds increased their exposure to technology and semiconductor stocks in May, maintaining a preference for growth sectors despite ongoing concerns over inflation, geopolitics and fiscal sustainability, according to Hazeltree’s latest Crowding Report.
Based on data from more than 600 hedge funds, the report found managers remained broadly bullish on equities as major indices, including the MSCI World Index, S&P 500 and Nasdaq Composite, ended May near record highs.
Within the “Magnificent Seven”, hedge funds remained net long Alphabet and Apple, while sentiment weakened towards Meta, Amazon, Microsoft and Tesla, which continued to attract the strongest bearish positioning.
Semiconductors remained a key area of focus, with 60% of stocks in the PHLX Semiconductor Sector Index carrying net long positioning, up from 57% in April. Nvidia remained the sector’s most crowded long position, while ON Semiconductor was the most crowded short.
Tim Smith, managing director of Data Insights at Hazeltree, said hedge funds appeared increasingly confident that the equity rally could continue despite macroeconomic uncertainty. He highlighted NXP Semiconductors as one of the strongest improvements in investor sentiment during the month.
The report also showed regional shifts in positioning, with increased long interest in Brinker International, Volex and Kioxia across North America, Europe and Asia-Pacific, respectively, while short interest rose in companies including ON Semiconductor, Adyen and Lasertec.