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Hedge funds pile into banks, dump green energy post US election, Goldman Sachs says
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Hedge funds pile into banks, dump green energy post US election, Goldman Sachs says
Nov 11, 2024 4:52 AM

LONDON (Reuters) - Hedge funds snapped up bank stocks at the quickest clip in three years while taking bets against renewable electricity producers last week, a Goldman Sachs ( GS ) note showed, as investors reacted to Donald Trump's win in the U.S. presidential election.

Financial stocks, such as banks and trading companies, were the most popular and most net bought sector on Goldman Sachs' ( GS ) prime brokerage trading desk last week, the note from Friday and seen by Reuters on Monday showed.

While the note did not specify which region's banks attracted the most attention, a second note also sent from Goldman Sachs' ( GS ) prime brokerage the same day said U.S. banks would benefit.

Financial stocks are expected to get a boost from a lighter regulatory touch which many believe will come with the new Trump term, the second note said.

Finance companies were also seen benefiting from expected tax reform, it added.

"There is scope for U.S. Financials positioning to rise further," the second Goldman note said, adding that current hedge fund positioning in this stock sector remained on the lower side, historically.

U.S. bank stocks rose as much as 11.1% on Nov. 6, from the previous day's close after the news of Trump's election win.

Prime brokerage desks lend to and arrange trades for hedge funds.

Long stock bets, expecting rising prices, were led by banks as well as companies offering consumer finance, capital markets and financial services, the first note said.

Bullish bets centered on U.S. stocks but included equities in developing markets in Asia. In Europe, hedge funds exited short positions and added long ones. A short bet anticipates the value of an asset price will fall.

Utilities companies were net sold for the first time in four weeks, "driven almost entirely by short sales," Goldman Sachs' ( GS ) first note said.

Independent power and renewable electricity producers were the most sold, with hedge fund bets against U.S. utilities companies numbered at two shorts for every long position, the bank said.

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