Hedge Funds Are Buying Stocks Again: What It Means for Markets

• Hedge funds bought equities for a second straight week, with long buying outpacing short sales.
• The reversal came after a late-July AI-linked selloff, when funds cut risk and ended July down 0.8%.
• Traders now watch if the materials short-covering surge and long buying signal a real risk-on rotation.

Hedge funds are shifting back into global equities after sharply cutting risk in late July, with long buying exceeding short sales by a 1.4-to-1 ratio. Gross trading activity rose at the fastest pace in seven weeks, while single-stock positioning has turned net positive and materials are seeing heavy demand.

Hedge Funds Return to Equities

According to the latest Goldman Sachs prime brokerage data, hedge funds have shifted decisively back into global equities. They purchased shares for a second consecutive week through the period ending last Thursday. Gross trading v…

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