The rise of technology stocks has temporarily paused, and hedge funds are starting to adjust their positions.
As the U.S. stock market rally expands and the Federal Reserve begins its interest rate cut cycle, fund managers are gradually withdrawing from growth stocks and shifting towards sectors that will benefit from lower interest rates.
Holding documents show that hedge funds reduced their positions in tech giants like Apple and Amazon in the third quarter. Arrowstreet Capital and Viking Global both sold over 5 million shares of Amazon; Buffett's Berkshire Hathaway further cut its position in Apple by about 25%, with a holding market value of $70 billion.
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According to Bloomberg's compilation, hedge funds overall reduced their holdings in Amazon by $11 billion, bringing the total market value of their holdings to $34 billion, mainly affected by net selling and a sharp decline in stock prices.
There are signs that the contribution of leading tech stocks to the stock market's rise is decreasing.
Thanks to strong earnings and an increasing expectation of a &#34;soft landing&#34; for the U.S. economy, the S&amp;P 500 index has risen 5.5% since the third quarter, while the equal-weighted S&amp;P 500 has nearly doubled its gains—by comparison, the Nasdaq 100 index, represented by tech stocks, recorded a 1.9% increase, and the Magnificent Seven has cumulatively dropped 4% from its peak in July.
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However, overall, technology stocks remain the top holdings for hedge funds, with a position of 21%, followed by the financial sector at 15%, which also saw the largest increase in positions in the third quarter.
Meanwhile, hedge funds are also increasing their holdings in Chinese stocks.
Michael Burry, the prototype character from the movie &#34;The Big Short,&#34; has further increased his positions in Alibaba, Baidu, and JD.com through his Scion Asset Management, while also purchasing corresponding put options.
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Wall Street Journal mentions that hedge fund mogul David Tepper, who is calling for &#34;buying China,&#34; has increased his positions in China by 12 percentage points to 38% in the third quarter, reducing his holdings in Alibaba while increasing his positions in Pinduoduo and JD.com

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In the third quarter, Berkshire reduced its position in Apple by about 25%, while Arrowstreet Capital and Viking Global both sold over 5 million shares of Amazon stock, leading to a total reduction of $11 billion in hedge funds' holdings in Amazon. However, technology stocks remain the top holdings for hedge funds, accounting for 21%, followed by the financial sector at 15%, with the largest increase in positions in the third quarter also being in financial stocks

- Hedge funds are adjusting their portfolios as the rally in tech stocks pauses, shifting focus to sectors benefiting from the Federal Reserve's interest rate cuts.  
- In Q3, funds reduced their positions in major tech companies like Apple and Amazon, with significant sell-offs reported by Arrowstreet Capital and Berkshire Hathaway.  
- Despite this shift, tech stocks remain the largest holdings for hedge funds at 21%, while investments in Chinese stocks are increasing, with notable moves by Scion Asset Management and Appaloosa Management.

Hedge Funds Q3 New Trends: Reducing Holdings in Technology Stocks