Hedge Funds Ramp Up U.S. Stock Purchases at Fastest Rate in Six Months

PE Newswire Published: June 2, 2026 | Updated: June 1, 2026 3 minutes read

Hedge funds purchased U.S. equities at the fastest pace in six months last week, as the S&P 500 extended its historic winning streak, according to Goldman Sachs Group Inc.’s prime brokerage desk.

The surge in buying was driven by long purchases and short covering, particularly in index and exchange-traded fund products, Goldman’s traders said in a client note. Short positions in U.S.-listed ETFs fell for a second straight week, declining 0.6%.

Sustained investor optimism around artificial intelligence infrastructure spending and a robust corporate earnings season have fueled a powerful rally in U.S. stocks. The S&P 500 has now recorded nine consecutive weeks of gains — the longest such streak since 2023. The tech-heavy Nasdaq 100 Index is up more than 20% year-to-date.

The latest data reflects a notable shift in hedge fund behavior. Just weeks earlier, in mid-May, funds had taken profits on semiconductor stocks and added macroeconomic shorts amid rising bond yields and hotter-than-expected inflation data.

Financial Stocks Lead the Rotation

Financial stocks emerged as the biggest beneficiary of last week’s activity, attracting the strongest net buying in nearly six months. Long purchases in the sector outpaced short sales by a ratio of roughly 6.5 to 1, led by payment companies and, to a lesser extent, banks. Selling in consumer finance and capital markets partially offset the gains.

Despite the recent inflows, hedge fund allocations to financials remain extremely low. “Gross and net allocations in financials as a percentage of total U.S. Prime book are still essentially at their respective 5-year lows in the 1st percentiles,” Goldman’s desk noted.

The renewed interest in financials stood in sharp contrast to continued selling in the industrials sector, which has been net sold in seven of the last eight weeks. Short exposure in industrials has climbed to the 90th percentile on a one-year basis.

Rising Risk Appetite

Leverage metrics pointed to increased risk appetite among hedge funds. U.S. long/short net leverage rose to 55.3%, reaching the 89th percentile on a one-year basis. The U.S. Fundamental long/short ratio increased by 1.4% and now sits in the 99th percentile.

The Goldman note indicated relatively balanced activity in individual stocks, with long sales largely offset by short covering.

The strong buying comes as the S&P 500 continues to hover near record highs, supported by enthusiasm for AI-related investments and resilient corporate earnings.

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