Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Investing.com -- Hedge funds sharply reduced their Netflix (NASDAQ:NFLX) holdings in May while keeping large positions in Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) and adding significantly to Nvidia (NASDAQ:NVDA), Jefferies data shows.
The weight of Jefferies’ “Sweet 16” portfolio — a group of top large-cap stocks — climbed to 46.4% from 45.4% a month earlier. But with the S&P 500’s weight rising even more, the overweight narrowed to 9.5% from 10.5%.
“Last month, NFLX was the largest overweight, but Hedge Funds slashed their position to just 0.8% as of the end of May. MSFT and AMZN were each north of 10%,” Jefferies strategist Steven G. DeSanctis said in a note.
“Hedge Funds added exposure to the largest stock in the world currently, NVDA, by over 500bps,” he added.
Microsoft’s net weight climbed to 13.7%, making it the largest single position, while Amazon was at 10.3%. Nvidia’s weight reached 8.9%.
Apple (NASDAQ:AAPL) remained the biggest underweight, with funds holding a net short position of -4.0%.
Other notable overweights in the group included Meta Platforms (NASDAQ:META) at 8.7% and Broadcom (NASDAQ:AVGO) at 5.0%.
Overall hedge fund long exposure increased to 296% at the end of May, the highest since November 2022 and near the all-time high of 327%. As a result, short positions were pushed to -195.8%.
Cyclical exposure was boosted, mainly in consumer discretionary and financials, while energy remained net short.
Technology’s portfolio weight rose 2.5 percentage points to 27.6%, the highest since the start of the year, though still underweight versus the S&P 500 by 4 percentage points.
Communication services saw the sharpest drop, with a 10% cut to 13.3%, the lowest since November.
Health care became the largest sector overweight, rising 430 basis points to 25.8%, 16 percentage points above the S&P 500 weighting.
Staples stayed the most-shorted group, with a net position of -4.1%.
Jefferies noted that the top 10 long positions now make up 64% of hedge funds’ net portfolios, reflecting the strong concentration in a handful of large-cap growth names.