Hedge funds piled into stocks before sharp US sell-off

Goldman Sachs’ prime brokerage data showed hedge funds were net buyers of global equities in the week ending June 4, increasing long positions ahead of a sharp U.S. market decline at the end of the week.

Aggregate purchases reached the highest dollar amount recorded in the past four months and were driven mainly by additions to long positions that outpaced short-selling. Net inflows appeared across all major regions, with North American stocks and emerging Asian markets attracting the strongest demand. Funds increased exposure to both individual equities and macro-oriented trading instruments.

Nine of the 11 primary market sectors received net inflows from hedge fund clients during the reporting period. Consumer discretionary names were bought for a fifth consecutive week across all major regions. Technology had strong interest earlier in the rally but led the late-week retreat.

At the end of the week the Nasdaq Composite fell more than 4%, the S&P 500 declined about 2.6% and the Dow Jones Industrial Average was down over 1%.

Hedge fund buying came during an equity advance that began in March, supported by robust first-quarter corporate earnings and continued investor interest in artificial intelligence-related investment themes. The prime brokerage data provides a snapshot of flows and positioning for hedge fund clients during that period.