Hedge funds reduced exposure to financial stocks including banks and trading companies by 1%, or $1.3 billion, after an increase of 5.5% in March, 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 of issuer solutions at S&P Global Market Intelligence.
Still, overall hedge fund positions on stocks were bullish, Blake said.
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 the price will decline. Hedge funds had 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 and Paul Simao)
