Hedge funds trim exposure to bank stocks after March buying spree – research

LONDON, May 10 (Reuters) – Hedge funds cut their exposure to financial stocks in April after buying discounted equities in the March market turmoil that followed the failure of Silicon Valley Bank and Signature bank, according to S&P Global Market Intelligence data.

Hedge funds reduced exposure to financial stocks including banks and trading companies by 1% after a March increase of 5.5%, the data showed.

“Many likely bought financial stocks as the sector was weakened by Silicon Valley Bank’s downfall and then, as the sector recovered, locked in short-term profits and began deploying capital into other sectors,” said Christopher Blake, executive director, issuer solutions, S&P Global Market Intelligence.

Still, overall hedge fund positions on stocks were bullish, said Blake.

Short-sellers were particularly active in European financial companies, according to a separate note to clients from Morgan Stanley. In a short position, speculators borrow stock hoping its price will decline.

Hedge funds turned bearish on European stocks as a whole by the end of last week, with the bulk of short positions added to European banks and capital markets firms, the note said.

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