By Sam Boughedda
Jefferies analysts said in a note to clients on Thursday that hedge funds leaned more towards secular growth in January.
"They increased weight to nearly 65% of portfolio, an OW of 21.8%, up from 17.1% last month," the analysts wrote, with the firm having assessed MSCI Hedge Fund data.
"Much of the increase in OW occurred in Tech, as it stood at 10% vs. 4.7% the previous month," they added. "Hedge Funds also bumped up their OW to Comm Services to 14% vs. 10.1% one month ago. As for Health Care, it moved from UW to OW, at 1.8%."
However, they revealed that the investors are slightly underweight towards the firm's Sweet 16, Jefferies' version of FAANG+, which includes names such as Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Meta Platforms (META), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Netflix (NASDAQ:NFLX), Tesla (NASDAQ:TSLA), and NVIDIA (NASDAQ:NVDA).
"We found that Hedge Funds were marginally UW this group, by just 1.2%. However, all of this is due to the net short position in AAPL. Over the last three months, these stocks have been slightly OW/UW by this investor base," they explained.
The analysts concluded: "As we moved through January, we found that Hedge Funds increased their Net Long position to 265%, which is above its long-term average. With this increase, we saw the Net Short position rise to -165%, hence the ratio stood at 1.6x."