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Hedge funds increased exposure to energy stocks in March as geopolitical tensions in the Middle East drove volatility across global markets, according to Hazeltree’s latest Crowdedness Report. Drawing on anonymised positioning data from more than 600 hedge funds and approximately 16,000 securities, the report highlights a sharp shift towards energy as the standout trade of the month.
Energy emerged as the dominant long position, with 55% of companies in the sector seeing increased hedge fund interest and 44% recording double-digit growth in long positioning. The move reflects rising expectations around oil and liquefied natural gas prices amid supply concerns linked to regional instability.
Among individual names, EQT Corp. stood out as a high-conviction position. Long positions in the company rose by 24%, while short interest fell by 36%, resulting in a long-to-short ratio of roughly three to one.
Tech, industrials, financials remain crowded
Despite this rotation into energy, overall hedge fund positioning remained concentrated in a familiar group of sectors. Technology, Industrials and Financials continued to rank among the most crowded areas globally on both the long and short side, suggesting that managers are maintaining core exposures even as they add tactical trades.
At the same time, short positioning broadened beyond the software sector into Industrials and consumer-facing companies, indicating a more diversified bearish stance.
The data points to a market environment shaped by geopolitical shocks, where hedge funds are seeking opportunities in energy while maintaining established sector bets and expanding hedging strategies across a wider range of industries.