Hedge Funds’ Holdings in “ 7 Sisters” Hit Record Level, Good For New High of $SPX?

Data released by Goldman Sachs this week showed that a measure it created to track the concentration of hedge funds in U.S. stocks reached its highest level on record. On average, a hedge fund's top ten holdings account for 70% of a long portfolio.

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The above statistics from Goldman Sachs have a 22-year record. This data includes position data of 735 hedge funds. According to statistics released by them on 13F, the total long stock positions of these hedge funds are US$1.6 trillion and the total short positions are US$797 billion.

The most popular bets by hedge funds remain on large-cap technology stocks, including $Microsoft(MSFT)$ , $Amazon.com(AMZN)$, $Meta Platforms, Inc.(META)$ , $Alphabet(GOOG)$, $NVIDIA Corp(NVDA)$, and $Uber(UBER)$ .

The average share of the seven technology companies known as the "Seven Sisters" in hedge funds' long positions is about 13%, twice as much as at the beginning of this year. The vast majority of these stocks are still the most closely held by hedge funds. In addition, diet pill big winner $Eli Lilly(LLY)$ has also received special favor from hedge funds.

Goldman Sachs noted that rising hedge fund concentration as investors chase trends and strong performance from popular stocks have supported returns this year, but at the same time pushed the crowding index to a record high.

In most industries, the most popular long positions outperform the most popular short positions. Hedge funds' short positions in stocks are near record lows.

Analysts said data from Goldman Sachs showed that as U.S. economic growth slows at the end of the Federal Reserve's interest rate hikes, market enthusiasm for technology stocks that are profitable and have stable businesses is rapidly recovering.

However, the financial blog Zerohedge poured cold water and commented: "Everyone is doing long, so who will take over?"

Within those key names here reaching a record, it begs a question of, what is going to be the catalyst next year that either keeps this intact or actually breaks some of this thinking apart?

SEANA SMITH, co-host at Yahoo Finance: There are also some top positions outside of tech in the healthcare and consumer goods sectors. as well

After experiencing three consecutive months of decline, the $NASDAQ 100(NDX)$ rebounded rapidly in November, rebounding approximately 14% from its stage low in late October.