Hedge funds have also started protecting their profits and year-end bonuses.
According to Morgan Stanley data, hedge funds’ cumulative active position reduction has reached about 8%—the biggest de-grossing (reduction in total portfolio exposure) since 2016, pushing exposure below its lowest level in the past decade.
Goldman Sachs data shows that TMT hedge funds lost about 12% in October, with losses concentrated mainly in crowded tech stocks.
The brutal sell-off over the past week or two may well have been driven by this wave of concentrated position cuts. To protect profits from the first half of the year, funds are selling long positions, covering shorts, and reducing total portfolio exposure. After all, a stock like Intel, with a market cap of hundreds of billions, can drop 30% in a single day—which has understandably made everyone a little nervous.
The more tech stocks fall, the greater the volatility and risk-control pressure, triggering further position cuts. This ultimately creates a cascade of forced selling, amplifying losses in crowded names such as Amazon, Google, and Intel.
Quote: https://x.com/i/web/status/2116493846745887217
According to Morgan Stanley data, hedge funds’ cumulative active position reduction has reached about 8%—the biggest de-grossing (reduction in total portfolio exposure) since 2016, pushing exposure below its lowest level in the past decade.
Goldman Sachs data shows that TMT hedge funds lost about 12% in October, with losses concentrated mainly in crowded tech stocks.
The brutal sell-off over the past week or two may well have been driven by this wave of concentrated position cuts. To protect profits from the first half of the year, funds are selling long positions, covering shorts, and reducing total portfolio exposure. After all, a stock like Intel, with a market cap of hundreds of billions, can drop 30% in a single day—which has understandably made everyone a little nervous.
The more tech stocks fall, the greater the volatility and risk-control pressure, triggering further position cuts. This ultimately creates a cascade of forced selling, amplifying losses in crowded names such as Amazon, Google, and Intel.
Quote: https://x.com/i/web/status/2116493846745887217
