Hedge Funds Raised Tech, Chip Bets in May, Hazeltree Finds

Hedge funds raised exposure to technology and semiconductor stocks in May, Hazeltree’s monthly Crowding Report shows. The change came as the MSCI World, S&P 500 and Nasdaq Composite extended a rally and finished the month close to record highs.

The report draws on anonymised positions from more than 600 funds using Hazeltree’s securities finance platform. Managers maintained a tilt to growth-oriented sectors despite ongoing concerns about inflation, geopolitical tensions and fiscal sustainability.

Within the group often called the “Magnificent Seven,” funds remained net long Alphabet and Apple while sentiment toward Meta Platforms weakened. Short positions increased in Amazon and Meta, and bullish exposure to Microsoft and Apple eased. Tesla registered the strongest bearish positioning in the group according to Hazeltree’s long-to-short fund ratios.

Semiconductor stocks attracted higher long participation as investors positioned for demand tied to artificial intelligence hardware. Sixty percent of companies in the PHLX Semiconductor Sector Index were net long in May, up from 57% in April. Nvidia was the most crowded long in the sector, followed by Broadcom and Applied Materials. ON Semiconductor was the most crowded short, with Monolithic Power Systems and Microchip Technology also drawing elevated short interest. Texas Instruments moved from net short to net long during the month.

NXP Semiconductors registered a notable shift in investor positioning. Hazeltree reported NXP’s long-to-short fund ratio rose from about 2:1 in April to roughly 4:1 in May. Long fund participation increased by more than 17% month-on-month, short interest fell, and the shares gained about 10% over the same period.

Regional positioning also changed. In North America, funds added long exposure to Brinker International, SSR Mining and Monday.com while short interest rose in ON Semiconductor, Omnicom and Hyatt Hotels. In Europe, managers increased long holdings in MG Critical Materials, Volex and 4imprint and added short exposure to Adyen. In Asia-Pacific, Kioxia, JTEKT and NTN saw higher long participation while Lasertec, Silex Systems, Kyoritsu, Ube and DroneShield recorded larger short positions.

The Crowding Report tracks long and short positions across about 16,000 securities in the Americas, EMEA and Asia-Pacific using aggregated, anonymised data from Hazeltree’s hedge fund clients to identify the most crowded investment themes.

Tim Smith, managing director of Data Insights at Hazeltree, noted hedge funds appeared confident the equity rally could continue despite macroeconomic uncertainty.