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Hedge funds modestly increased short exposure in February while maintaining concentrated positions across a familiar group of sectors, according to Hazeltree’s latest Crowdedness Report.
Despite the shift towards short positioning, hedge funds continued to cluster around a consistent set of sector exposures globally. Information Technology, industrials, financials and consumer discretionary ranked among the most crowded sectors across the Americas, EMEA and Asia-Pacific regions on both the long and short side.
The pattern suggests that many managers are hedging risks within sectors rather than rotating capital into entirely new themes.
The report analyses anonymised positioning data from more than 600 hedge funds and around 16,000 securities on the firm’s securities-finance platform.
IT ranks highly
IT remained one of the most crowded sectors globally, with software & services dominating positioning in North America and technology hardware & equipment leading in Asia-Pacific.
In the US, hedge fund long crowdedness increased in large-cap names including Lam Research, Mastercard and Applied Materials. However, sentiment towards Microsoft weakened during the month as the number of hedge funds holding long positions declined and short activity rose amid broader pressure on software stocks.
Short positioning also intensified in several large-cap companies, with Oracle and Nebius Group emerging among the most crowded short trades.
In Europe, the Middle East and Africa, hedge funds increased long exposure to companies such as ABB, AIB Group and Centrica, while Marks & Spencer and Sodexo ranked among the most crowded shorts.
In Asia-Pacific, hedge funds boosted short exposure to several Japanese large-cap names including Panasonic, Toyota Motor and Ibiden, while long interest rose in smaller companies such as Dai-Dan and Bellevue Gold.
Overall, the data suggests hedge funds are maintaining strong sector convictions while increasingly using short positions to hedge market risks.