An analysis by U.S. investment bank Goldman Sachs (GS) has found that hedge funds have become net sellers of the so called “Magnificent Seven” technology stocks.
After adding to their positions throughout 2023, the top hedge funds in America have now begun to unwind their positions in popular mega-cap technology companies that include Alphabet (GOOG/GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA).
The selling in these tech stocks comes even though they continue to outperform the broader market.
Together, the Magnificent Seven stocks have generated an 8% return so far this year versus a 5% gain in the benchmark S&P 500 index.
However, Goldman Sachs notes that hedge fund managers are now concerned about a “violent unwind” in the tech stocks if the market plunges or investor sentiment shifts.
The selling among hedge funds has led Goldman Sachs to place Microsoft on its “Falling Stars” list of stocks that have seen the largest drops in their popularity with hedge funds.
The investment bank also notes that Amazon is the only Magnificent Seven stock that continued to be added to hedge fund portfolios in recent weeks.
Instead, hedge funds are now shifting capital into industrial stocks and the manufacturing sector on the back of strong economic data in the U.S.
Stocks that hedge funds are buying now include industrial conglomerate General Electric (GE) and railway company Union Pacific Corp. (UNP), said Goldman Sachs.
The stock of Goldman Sachs has risen 6% in the last 12 months to trade at $384.52 U.S. per share.
