In the second quarter, hedge funds made strategic adjustments to their portfolios, particularly in the technology sector, as they navigated the evolving landscape of the artificial intelligence market. While increasing their positions in notable companies such as Apple Inc., funds chose to trim holdings in Nvidia Corp., a move reflective of their response to the AI boom that had been propelling the US stock market.
Apple Inc. experienced a significant surge in market value during this period, prompting hedge funds to collectively acquire over 8.5 million shares. Janus Henderson Group Plc and Third Point LLC were among the funds that bolstered their positions in Apple. Concurrently, hedge funds also boosted their investments in other AI-related entities like Amazon.com Inc. and Taiwan Semiconductor Manufacturing Co Ltd. However, hedge funds reduced their exposure to Nvidia Corp., a favored AI stock, and Microsoft Corp.
Scion Asset Management, led by Michael Burry, notably increased its stake in Alibaba Group Holding Ltd. amidst a broader restructuring of its equity portfolio. The reshuffling of hedge fund holdings occurred against the backdrop of positive market trends, characterized by a 3.9% climb in the S&P 500 Index during the second quarter.
Yet, as market conditions shifted in July, hedge funds began reallocating their assets, moving away from large-cap stocks and towards smaller and riskier sectors. A global market downturn at the start of the month spurred concerns about a potential US economic slowdown and an AI market bubble. Bloomberg’s analysis of 13F filings from 674 hedge funds revealed a combined holdings value of $443.46 billion, reflecting a modest increase from the previous quarter.
Technology remained the most heavily weighted sector in hedge fund portfolios at 27%, followed by Consumer Discretionary at 16%. However, the value of investments in Communications experienced a notable decline while Technology holdings saw the most significant uptick.
Throughout these adjustments, hedge funds made notable transactions, such as Trian Fund Management LP’s reduction in Walt Disney shares and Tairen Capital Ltd’s substantial increase in Apple shares. Microsoft’s placement as the most valuable overall holding at $26.24 billion underscored its significance in hedge fund portfolios.
With evolving market dynamics and a continued focus on strategic positioning, hedge funds adapted their portfolios to capture opportunities amidst shifting market conditions.
