Hedge funds around the world are loading up on bank stocks to begin the year’s fourth quarter, according to an analysis by U.S. investment bank Morgan Stanley (MS).
According to Morgan Stanley, hedge funds have been allocating capital to stocks of banks and insurance companies on expectations that the financial services sector will rebound in coming months.
European bank stocks fell by 4% in September, while U.S. banks ended the month down 3%, presenting buying opportunities amid depressed prices.
Hedge funds began adding to their positions in European banks, insurance companies and U.S. financial institutions in August, reaching a 12-month high by September 21, said Morgan Stanley.
Other areas where hedge funds have been adding positions include stocks of industrial and energy companies, mainly oil producers.
As one of the biggest providers of lending and trading services to hedge funds, Morgan Stanley can track their investment moves.
Morgan Stanley’s own stock is down 6% this year and trading at $80.41 U.S. per share.
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