--- title: "Hedge Funds Buy US Stocks for Five Consecutive Days; Short Squeeze in Tech Sector Drives Second-Fastest Buying Spree of the Year" type: "News" locale: "en" url: "https://longbridge.com/en/news/296170481.md" description: "Goldman Sachs Prime Brokerage report shows that the Information Technology sector saw the largest net inflow last week (+1.2 standard deviations). Buying was driven by both long positioning and short covering, with a ratio of approximately 2:1. Software stocks triggered massive short covering due to Workday merger news, with net allocation rising from 1.3% to 4.5%. ETF short positions fell another 3% last week, bringing the cumulative monthly decline to 12%, marking the sixth consecutive week of net reduction" datetime: "2026-08-18T03:11:39.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296170481.md) - [en](https://longbridge.com/en/news/296170481.md) - [zh-HK](https://longbridge.com/zh-HK/news/296170481.md) --- # Hedge Funds Buy US Stocks for Five Consecutive Days; Short Squeeze in Tech Sector Drives Second-Fastest Buying Spree of the Year Driven by broadly mild inflation data and a strong rebound in the technology sector, US stocks continued their upward trend, prompting hedge funds to launch the second-fastest concentrated buying campaign of the year. On August 17, according to the latest weekly report from Goldman Sachs Prime Brokerage, **hedge funds net bought US stocks every trading day last week, with the buying speed reaching the second-fastest level in the past year (+2.1 standard deviations)**. The buying was primarily driven by long positioning in individual stocks, combined with short covering in macro products. **The Information Technology sector became the single largest sector for capital inflows**, with short covering in software stocks being particularly prominent—this sector had previously been the most heavily shorted target in the first half of 2026. Meanwhile, **ETF short positions have net decreased for the sixth consecutive week, indicating a continuous contraction in overall market shorting sentiment.** This buying spree exhibited **clear pro-cyclical** characteristics: 8 out of 11 sectors recorded net buying, with **Information Technology, Communication Services, Healthcare, Financials, and Consumer Staples leading the gains**, while Real Estate, Energy, and Utilities faced net selling. Last week, US stocks continued to rise against the backdrop of mild readings in CPI, PPI, retail sales, and the University of Michigan Consumer Sentiment Index, approaching historical highs. Goldman Sachs' Delta-One trading desk pointed out that the market is entering the final stage of the Q2 2026 earnings season this week, with only about 3% of S&P 500 components yet to report results, mainly concentrated in the consumer sector. **The July FOMC meeting minutes and preliminary PMI data will be the main catalysts**, as the market looks for further clues on the Federal Reserve's policy path. ## Short Squeeze in Software Stocks Ignites Tech Buying, Workday Merger News Acts as Trigger The Information Technology sector saw the largest net inflow last week (+1.2 standard deviations), with buying driven by both long positioning and short covering, at a ratio of approximately 2:1. **Short covering in the software sub-sector was one of the core drivers of this tech buying spree.** According to the Goldman Sachs report, following the announcement of the Workday merger, there was widespread short covering of software stock baskets and related ETFs. The software sector had previously been the most concentrated short direction in the first half of 2026. This short squeeze pushed hedge funds' **net allocation to software stocks up from the year-to-date low of 1.3% to 4.5%, though still far below the 7.0% level at the start of the year**, suggesting that the short covering rally may not yet be complete. The semiconductor and semiconductor equipment sub-sectors also recorded significant net buying, primarily driven by long positioning, benefiting from positive signals in the storage industry released during SanDisk Investor Day. Goldman Sachs reported that hedge funds' **net allocation to the semiconductor sector is currently 10.4%, lower than the year-to-date high of 14.1%, but significantly higher than the 6.8% level at the start of the year.** The communication equipment sub-sector also recorded net buying, primarily driven by long positioning. ## Individual Stock Longs Dominate, ETF Shorts Contract for Sixth Consecutive Week In terms of capital structure, individual stocks accounted for about 70% of the total net buying volume last week (+2.1 standard deviations), with **the ratio of long positioning to short covering reaching as high as 7.6:1**, indicating that capital was primarily actively going long rather than simply forced short covering. Macro products (indices and ETFs combined) accounted for about 30% of the total net buying volume (+1.0 standard deviations), with a ratio of short covering to long positioning of 1.4:1. **Short positions in US-listed ETFs fell another 3% last week, with a cumulative monthly decline of 12%, marking the sixth consecutive week of net reduction**. Covering was mainly concentrated in small-cap ETFs, tech ETFs, and large-cap ETFs, partially offset by new short positions in real estate, Latin America, and healthcare ETFs. Regarding leverage data, **the total leverage ratio of US long-short strategy funds decreased by 0.7 percentage points to 203.5%**, standing at the 4th percentile over the past year; the net leverage ratio decreased by 2.3 percentage points to 51.3%, standing at the 13th percentile over the past year. **The fundamental long-short ratio (by market cap) decreased by 2.2% to 1.674**, standing at the 66th percentile over the past year. Overall, leverage levels remain relatively low, indicating that institutional positions are not overly crowded. ## Real Estate Sector Reverses, Recording Net Selling for First Time After Eight Weeks of Net Buying The Real Estate sector was the most prominent contrarian signal this week. After recording net buying in seven of the previous eight weeks, the sector turned into the largest net seller this week (-0.4 standard deviations), with **a ratio of short selling to long buying of 1.3:1**. Specialized REITs, retail REITs, and industrial REITs were the sub-sectors with the largest net selling, while healthcare REITs and diversified REITs recorded slight net buying. **The current long-short ratio for US real estate stocks is 1.70**, standing at the 82nd percentile over the past year and the 78th percentile over the past three years, suggesting that relatively crowded valuations may be an important background for profit-taking. Energy and Utilities sectors also faced net selling, forming a sharp contrast with the strength of growth and pro-cyclical sectors such as Information Technology and Communication Services, further confirming the pro-cyclical direction of hedge fund rebalancing in this round. ### Related Stocks - [WDAY.US](https://longbridge.com/en/quote/WDAY.US.md) - [IGV.US](https://longbridge.com/en/quote/IGV.US.md) - [XSW.US](https://longbridge.com/en/quote/XSW.US.md) - [IXN.US](https://longbridge.com/en/quote/IXN.US.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) - [SNDK.US](https://longbridge.com/en/quote/SNDK.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [W4VR.SG](https://longbridge.com/en/quote/W4VR.SG.md) ## Related News & Research - [BREAKINGVIEWS-Vibe coding is a low-key threat to software firms](https://longbridge.com/en/news/296255412.md) - [Deutsche Bank Just Downgraded Workday Stock. Here's Why.](https://longbridge.com/en/news/296245093.md) - [NewEdge Advisors LLC Grows Holdings in Workday, Inc. $WDAY](https://longbridge.com/en/news/296077988.md) - [EXCLUSIVE-Silver Lake in talks to buy Workday, sources say](https://longbridge.com/en/news/295833138.md) - [Workday buyout may restore confidence in battered software valuations, analysts say](https://longbridge.com/en/news/295956730.md)