Hedge funds reduced exposure to financial stocks including banks and trading companies by 1% after a March increase of 5.5%, the data showed. "Many likely bought financial stocks as the sector was weakened by Silicon Valley Bank's downfall and then, as the sector recovered, locked in short-term profits and began deploying capital into other sectors," said Christopher Blake, executive director, issuer solutions, S&P Global Market Intelligence.
Still, overall hedge fund positions on stocks were bullish, said Blake.
Short-sellers were particularly active in European financial
companies, according to a separate note to clients from Morgan
Stanley. In a short position, speculators borrow stock hoping
its price will decline.
Hedge funds turned bearish on European stocks as a whole by
the end of last week, with the bulk of short positions added to
European banks and capital markets firms, the note said.
(Reporting by Nell Mackenzie
Editing by Mark Potter)
