Goldman Sachs sees return to the markets: Hedge funds are stocking up on bank shares

• Hedge funds are investing more heavily in bank and financial stocks after a prolonged period of restraint • Major US banks score with strong quarterly figures • Financial stocks reach the highest hedge fund holdings in two years

Bank stocks are back in high demand – at least among hedge funds. After many of these institutional investors consistently sold off financial stocks over the past two months, a recent report from Goldman Sachs , cited by Reuters, shows a clear reversal: Recently, banks were again among the most-purchased stocks, right behind real estate stocks.

The analysis is based on internal data from Goldman Sachs. As Reuters reported, US financial companies in particular—including major banks such as JPMorgan , Morgan Stanley , and Wells Fargo —recorded increased investor interest following convincing quarterly figures. While JPMorgan and Morgan Stanley reported record revenues , Wells Fargo reported increased client fees.

These positive signals have apparently convinced many investors to abandon their caution toward the financial sector. According to Goldman Sachs, hedge fund positions in bank stocks are currently at a two-year high—a clear sign of growing confidence in the sector's profitability.

Furthermore, the Goldman Sachs report reveals that most hedge funds are currently back to long positions—i.e., betting on rising prices. In five of the last seven weeks, purchases using this strategy dominated, while covering short positions—i.e., betting on falling prices—played only a minor role.

In general, an upward trend was observed in the sector, supported by improved fundamentals and a more optimistic market environment.

Editorial team finanzen.net