Goldman Sachs Research
Hedge Fund Trend Monitor
Getting selective
In this report we analyze the holdings of 695 hedge funds with $3.1 trillion of gross equity positions at the start of 1Q 2025 ($2.0 trillion long and $1.1 trillion short).
The average US long/short equity hedge fund has delivered a +3% YTD return supported by both alpha and beta. Our basket of Hedge Fund Very Important Positions (GSTHHVIP) has returned 10% YTD and popular longs have outperformed concentrated shorts in most sectors. With the S&P 500 near its all-time high, hedge fund gross exposures register nearly the highest levels on record and net exposures sit at nearly the highest levels since early 2022. Hedge funds added to positions in domestic equity ETFs, boosting the ETF share of hedge fund long portfolios to the highest level since 2009.
The latest filings show hedge funds becoming more selective within popular sectors and themes. At the sector level, hedge funds rotated away from Financials, which has rallied +12% since the 2024 presidential election. However, at the stock level, COF and AJG entered our Hedge Fund VIP list of the most popular long positions and AJG, HOOD, and SF ranked among our Rising Stars list of stocks with the largest increases in hedge fund popularity last quarter. Hedge funds trimmed positions on net to most of the Magnificent 7 stocks, which have returned +164% in aggregate during the last two years, but TSLA screened as one of this quarter’s Rising Stars. Nonetheless, 6 of the Magnificent 7 stocks (excluding TSLA) still rank at the top of the Hedge Fund VIP list. Short interest for the median S&P 500 stock has also increased to the highest level since 2020, now at 2.0% of market cap.
Hedge funds searched for alpha in AI- and policy-exposed stocks. Funds incrementally added positions to the average AI Phase 3 (enabled-revenues) stock as well as firms potentially poised to benefit from deregulation. CRM and NOW ranked as AI Phase 3 stocks with the largest increase in hedge fund popularity last quarter. Popular potential deregulation beneficiaries included SF, TSLA, and WMB.

5 key points from the Goldman Sachs Hedge Fund Trend Monitor

This Hedge Fund Trend Monitor analyzes 695 hedge funds with $3.1 trillion of gross equity positions ($2.0 trillion long and $1.1 trillion short). Our analysis of positions at the start of 1Q 2025 is based on 13-F filings as of February 14, 2025.
  1. PERFORMANCE: Popular hedge fund long positions have supported US equity long/short hedge fund returns of +3% YTD. Our Hedge Fund VIP list of the most popular long positions (ticker: GSTHHVIP) has returned +10% YTD, outperforming the S&P 500 (+4%), the equal-weight S&P 500 (+3%) and the most shorted stocks (GSCBMSAL, +4%). Hedge fund VIPs have outperformed the S&P 500 by 11 pp during the last 6 months, the largest magnitude of outperformance since 2021.

  2. LEVERAGE AND SHORT INTEREST: Hedge funds have continued to lift gross and net leverage. Fundamental long/short hedge fund gross and net leverage now rank in the 100th and 73rd percentiles vs. the last five years. Funds continue to use macro products on both sides of their portfolios. Both the ETF share of the hedge fund long portfolio and hedge fund equity futures shorts are large relative to history.

  3. HEDGE FUND VIPS: The mega-caps continue to sit atop our list of the most popular hedge fund long positions. AMZN, META, MSFT, NVDA, GOOGL, and AAPL remain as the six most popular stocks. The VIP list contains the 50 stocks that appear most often among the top 10 holdings of fundamental hedge funds. The basket has outperformed the S&P 500 in 60% of quarters since 2001 with an average quarterly excess return of 52 bp. 13 new constituents: AER, AJG, BSX, CART, COF, CZR, DAL, EXE, HLT, PFE, RDDT, SGI, WDAY.

  4. THEMATIC ROTATIONS: Hedge funds participated in post-election rotations. During 4Q hedge funds lifted the average ownership of potential deregulation beneficiaries, stocks exposed to small businesses, and stocks with domestic sales. In contrast, funds reduced ownership of stocks exposed to China and tariffs. QRVO, a company exposed to supply chains in China, ranked among our list of Falling Stars with the largest decrease in hedge fund popularity. Hedge funds also rotated into companies with AI-enabled revenues. Funds boosted the weight of the Software industry in the hedge fund long portfolio to 11%, the largest weight since 3Q 2023. Semiconductors MU and AMD joined our list of Falling Stars.

  5. SECTORS: Hedge funds flipped to underweight Financials during 4Q and lifted exposure to Health Care and Comm Services. The reduction in Financials net tilt followed sharp outperformance after Election Day. However, many Financials stocks entered our list of Hedge Fund VIPs and Rising Stars. Consistent with the theme of getting selective, Health Care and Comm Services are two sectors with high dispersion scores offering opportunities for stock-pickers.

Performance, leverage, and short interest

Following a strong 2024, hedge funds have started 2025 off with solid returns. Based on estimates from GS Prime Services, US equity long/short funds have returned +3% YTD, supported by the broader market and favorite long positions. Our Hedge Fund VIP basket of the most popular hedge fund long positions (ticker: GSTHHVIP) has returned +10% YTD, compared with +3% for the equal-weight S&P 500 and +4% for a basket of the stocks with the most concentrated short interest (GSCBMSAL).

Exhibit 1: Equity hedge funds have returned 3% YTD

as of February 14, 2025
1. Equity hedge funds have returned 3% YTD. Data available on request.
Hedge fund performance estimate represents a weighted average of fund performance derived from aggregated Goldman Sachs Prime Services client positions for an anonymized basket of Equity Long/Short funds.
Source: FactSet, Goldman Sachs Prime Services, Goldman Sachs Global Investment Research

Exhibit 2: Popular hedge fund positions have fared well YTD

as of February 14, 2025
2. Popular hedge fund positions have fared well YTD. Data available on request.
Source: Goldman Sachs Global Investment Research
Popular hedge fund long positions have outperformed both concentrated shorts and the broad equity market in most sectors YTD. The popular longs have lagged the most concentrated shorts only in Health Care, although the sector represents the largest hedge fund sector weight (Exhibit 21).

Exhibit 3: The most popular hedge fund long positions have outperformed in most sectors YTD

as of February 14, 2025
3. The most popular hedge fund long positions have outperformed in most sectors YTD. Data available on request.
Source: Goldman Sachs Global Investment Research
With alpha and beta contributing to hedge fund returns, net and gross exposures have continued to climb higher. Net exposures briefly fell during the final weeks of December, but are now back to post-election levels.

Exhibit 4: Hedge fund gross and net leverage

Aggregated data from Goldman Sachs Prime Services as of 13-Feb-25; should not be relied upon as a comprehensive view of the market
4. Hedge fund gross and net leverage. Data available on request.
Source: Goldman Sachs Prime Services, Goldman Sachs Global Investment Research

Exhibit 5: Hedge fund leverage relative to recent history

Aggregated data from Goldman Sachs Prime Services as of 13-Feb-25; should not be relied upon as a comprehensive view of the market
5. Hedge fund leverage relative to recent history. Data available on request.
Source: Goldman Sachs Prime Services, Goldman Sachs Global Investment Research
Short interest at the single-stock level has increased to the highest level since 2020, but remains low relative to history. The median S&P 500 stock carries short interest equivalent to just 2.0% of market cap, ranking in the 29th percentile relative to history. Among sectors, Consumer Staples, Utilities, and Health Care carry short interest above their respective 30-year averages.

Exhibit 6: Short interest for the typical stock remains low vs. history

6. Short interest for the typical stock remains low vs. history. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 7: Short interest is most elevated in defensive sectors

7. Short interest is most elevated in defensive sectors. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
The exhibits below show the stocks with the largest changes in short interest since Election Day in November. We screen for Russell 3000 stocks with market caps over $5 billion for the largest changes in short interest. For stocks with the highest level of short interest, rather than recent changes, see Appendix B.

Exhibit 8: Stocks with largest increases in short interest since Election Day

Russell 3000 stocks with market caps over $5 billion; short interest data reflecting positions as of January 31 published on February 11
8. Stocks with largest increases in short interest since Election Day. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 9: Stocks with largest decreases in short interest since Election Day

Russell 3000 stocks with market caps over $5 billion; short interest data reflecting positions as of January 31 published on February 11
9. Stocks with largest decreases in short interest since Election Day. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Concentration, crowding, and turnover

Concentration within the typical hedge fund portfolio and crowding across portfolios remained extremely elevated during 4Q 2024. The typical hedge fund holds 71% of its long portfolio in its top 10 positions. While concentration within hedge fund portfolios remained roughly unchanged, crowding across hedge fund portfolios increased.

Exhibit 10: Hedge fund portfolio density remained elevated in 4Q

holdings as of December 31, 2024
10. Hedge fund portfolio density remained elevated in 4Q. Data available on request.
Source: Goldman Sachs Global Investment Research

Exhibit 11: Crowding across hedge funds increased in 4Q

holdings as of December 31, 2024
11. Crowding across hedge funds increased in 4Q. Data available on request.
Source: Goldman Sachs Global Investment Research
Portfolio position turnover increased last quarter. During 4Q, the average fund turned over 24% of its distinct equity positions and 12% of the largest quartile of positions.

Exhibit 12: Portfolio turnover increased in 4Q

holdings as of December 31, 2024
12. Portfolio turnover increased in 4Q. Data available on request.
Source: Goldman Sachs Global Investment Research

Exhibit 13: Portfolio turnover increased the most in Health Care

holdings as of December 31, 2024
13. Portfolio turnover increased the most in Health Care. Data available on request.
Source: Goldman Sachs Global Investment Research

Thematic and factor tilts

The latest hedge fund position filings revealed notable thematic shifts within portfolios related to [1] Post-election policies, [2] AI-exposed stocks, [3] the Magnificent 7 mega-caps, and [4] Cyclical vs. Defensives and Momentum factors.
1. Post-election policies: Shifts in 4Q hedge fund positioning reflected many of the consensus "Trump trades." Hedge fund ownership of potential deregulation beneficiaries, stocks with small business exposure, and domestic sales increased in 4Q relative to 3Q. Potential deregulation beneficiaries include COF, a new VIP, and the Rising Stars SF, TSLA, WMB. In contrast, hedge funds reduced ownership in stocks with exposure to China supply chains, international sales, and companies at risk to tariffs. Exhibit 15 below shows short interest data for constituents of a basket of stocks potentially at risk from government spending cuts (GSXUDOGE).

Exhibit 14: Hedge funds increased exposure to "Trump trades" during 4Q

14. Hedge funds increased exposure to "Trump trades" during 4Q. Data available on request.
Source: Goldman Sachs Global Investment Research

Exhibit 15: Short interest of US Government Exposure Risk constituents (GSXUDOGE)

15. Short interest of US Government Exposure Risk constituents (GSXUDOGE). Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
2. AI-exposed stocks: Hedge funds increased exposure to AI Phase 3 (enabled-revenues) stocks while holding exposure to AI Phase 2 (infrastructure) stocks constant. CRM and NOW, two Phase 3 AI-exposed stocks, ranked among 4Q's Rising Stars. At the industry level, funds continued to increase exposure to Software. WDAY joined the list of Hedge Fund VIPs as the only Info Tech addition. As a result of the rotation within the AI trade, funds were well-positioned for the breakthrough of DeepSeek in January. Since the start of the year, a basket of AI Phase 3 stocks (GSCBAIP3) has outperformed the equal-weight S&P 500 by 5 pp and a basket of AI Phase 2 stocks (GSCBAIP2) by 2 pp. NVDA remains well-owned by hedge funds and has been a member of our VIP list of favorite long positions since 3Q 2022.

Exhibit 16: Hedge fund ownership of select AI-exposed stocks in recent quarters

16. Hedge fund ownership of select AI-exposed stocks in recent quarters. Data available on request.
Source: Goldman Sachs Global Investment Research

Exhibit 17: AI Phase 3 (enabled-revenues) stocks have outperformed YTD

17. AI Phase 3 (enabled-revenues) stocks have outperformed YTD. Data available on request.
Source: Goldman Sachs Global Investment Research
3. The Magnificent 7 mega-cap tech stocks: Hedge funds trimmed positions on net in the Magnificent 7 during 4Q. Except for TSLA, which funds added to during 4Q, the Magnificent 7 still sit atop of our Hedge Fund VIP list of the most popular long positions.

Exhibit 18: Hedge funds trimmed positions on net in the Magnificent 7 during 4Q 2024

18. Hedge funds trimmed positions on net in the Magnificent 7 during 4Q 2024. Data available on request.
Source: Goldman Sachs Global Investment Research
4. Cyclicals vs. Defensives and Momentum: Hedge funds continued their trend towards Cyclicals and entered 1Q the most exposed to Cyclicals vs. Defensives since 2014. Cyclical stocks in Consumer Discretionary, Financials, Industrials dominated the new lists of Hedge Fund VIP additions and Rising Stars. The largest cyclical additions to our list of hedge fund favorites include AJG, COF, and HLT. Hedge funds also entered 1Q with a near-record tilt to Momentum as a result of a combination of strong factor performance and elevated crowding (Exhibit 11), which has been rewarded so far this year.

Exhibit 19: Hedge funds continued to shift toward Cyclicals vs. Defensives

holdings as of 4Q 2024
19. Hedge funds continued to shift toward Cyclicals vs. Defensives. Data available on request.
Source: Goldman Sachs Global Investment Research

Exhibit 20: Funds rotated sharply toward Momentum during 4Q

holdings as of 4Q 2024
20. Funds rotated sharply toward Momentum during 4Q. Data available on request.
Source: Goldman Sachs Global Investment Research

Sector positions

Health Care was the largest hedge fund net sector weight at the start of 1Q 2025 (17% of total net exposure) as well as the largest "overweight" relative to the Russell 3000 (+662 bp). Info Tech remained the largest underweight (-1,323 bp).

Exhibit 21: Hedge fund sector allocations relative to the Russell 3000 and large-cap mutual funds

holdings as of December 31, 2024
21. Hedge fund sector allocations relative to the Russell 3000 and large-cap mutual funds. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
Hedge funds lifted exposure to Health Care and Comm Services while cutting exposure to Financials. Notably, hedge funds flipped from 135 bp overweight Financials in 3Q to 41 bp underweight in 4Q. However, the net tilt in the sector still ranks in the 95th percentile vs. the past decade. The reduction in exposure to cyclical sectors followed sharp outperformance post-Election Day. Hedge funds increased existing overweights in Health Care (+135 bp) and Comm Services (+118 bp) during 4Q. Health Care is one of our recommended sector overweights, as it screens as attractive based on our macro model.

Exhibit 22: Changes in hedge fund sector tilts vs. Russell 3000 during 4Q

excludes ETF positions
22. Changes in hedge fund sector tilts vs. Russell 3000 during 4Q. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 23: Hedge funds rotated away from Financials

holdings as of 4Q 2024
23. Hedge funds rotated away from Financials. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
The rotation away from Financials was concentrated in just a few subsectors. The largest declines occurred in Diversified Banks (WFC, USB, BAC), Diversified Financials Services (APO), and Transaction & Payment Processing Services (PYPL). APO and PYPL, which also appeared on our list of Falling Stars (Exhibit 33), both dropped out of our Hedge Fund VIP list. In contrast, hedge funds rotated towards regional banks and brokers such as HOOD, which ranked on our list of Rising Stars (Exhibit 32), and AJG, which joined our list of hedge fund favorites (Exhibit 28).

Exhibit 24: Subsector tilts and changes in tilts

holdings as of December 31, 2024
24. Subsector tilts and changes in tilts. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
The tables below show the Financials stocks with the largest net increases and decreases in hedge fund popularity last quarter. These tables compare the number of funds establishing new positions or adding to existing positions in each stock versus the number of funds trimming or dropping their positions altogether.

Exhibit 25: Financials stocks with the largest net increases and decreases in hedge fund popularity last quarter

25. Financials stocks with the largest net increases and decreases in hedge fund popularity last quarter. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
The current hedge fund positions in Utilities rank near the largest tilts in recent history. The underweight in Info Tech is nearly the largest on record, exceeded only by funds' position during 2Q 2024.

Exhibit 26: Hedge fund net sector tilts relative to past decade

holdings as of December 31, 2024; excludes ETF positions
26. Hedge fund net sector tilts relative to past decade. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

The Hedge Fund VIP List: "The stocks that matter most"

Our Hedge Fund VIP list (ticker: GSTHHVIP) contains the top long positions of fundamentally-driven hedge funds. These "stocks that matter most” are the positions that appear most frequently among the top 10 holdings within hedge fund portfolios. For this analysis, we limit our universe to hedge funds with 10 to 200 distinct equity positions in an attempt to isolate fundamentally-driven investors from quantitative funds or funds that mirror private equity investments.
From an implementation standpoint, the Hedge Fund VIP list represents a tool for investors seeking to “follow the smart money” based on 13-F filings. By construction, the VIP list identifies the 50 stocks whose performance will largely influence the long side of many fundamentally driven hedge funds.
The Hedge Fund VIP basket has outperformed the S&P 500 YTD (+10% vs. +4%) and has outperformed the S&P 500 in 60% of quarters since 2001. The basket has been a strong historical performer at the cost of high volatility.
Our Hedge Fund VIP basket is not sector-neutral to the S&P 500. The VIP list contains stocks from 10 of the 11 sectors, with Real Estate absent. Info Tech (20%) represents the largest weight in the basket.
Turnover for the basket during 4Q 2024 was below the historical average, with 13 new stocks entering the list (26%). New constituents are listed in bold in Exhibit 28.

Exhibit 27: Hedge fund VIPs have outperformed by 52 bp on average each quarter since 2001 (95 quarters)

as of February 14, 2025
27. Hedge fund VIPs have outperformed by 52 bp on average each quarter since 2001 (95 quarters). Data available on request.
Source: Goldman Sachs Global Investment Research

GSTHHVIP: The 50 stocks that matter most to hedge funds

Exhibit 28: Very Important Positions (VIP) for hedge funds

new stocks in basket listed in bold; holdings as of December 31, 2024; pricing as of February 14, 2025; based on 507 funds with 10-200 distinct US equity positions
28. Very Important Positions (VIP) for hedge funds. Data available on request.
Source: Solactive, FactSet, data compiled by Goldman Sachs Global Investment Research

The most concentrated hedge fund positions

Since 2001, the strategy of buying the 20 most concentrated S&P 500 stocks has outperformed the broad index in 59% of quarters, with an average quarterly excess return of 137 bp per quarter. We define “concentration” as the share of market capitalization owned in aggregate by hedge funds. The High Concentration basket is not sector-neutral to the S&P 500, and the stocks tend to be mid-caps, at the lower end of the S&P 500 capitalization distribution.
New High Concentration basket stocks this quarter include CAH, HSIC, MHK, MOS, NCLH, TPR.

Exhibit 29: The most concentrated stocks have outperformed the S&P 500 by 4 pp YTD

as of February 14, 2025
29. The most concentrated stocks have outperformed the S&P 500 by 4 pp YTD. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Goldman Sachs S&P 500 hedge fund concentration baskets

Exhibit 30: The 20 S&P 500 stocks with the most concentrated hedge fund ownership <ticker: GSTHHFHI>

holdings as of December 31, 2024; pricing as of February 14, 2025; new constituents in bold
30. The 20 S&amp;P 500 stocks with the most concentrated hedge fund ownership &lt;ticker: GSTHHFHI&gt;. Data available on request.
Source: FactSet, data compiled by Goldman Sachs Global Investment Research

Exhibit 31: The 20 S&P 500 stocks with the least hedge fund concentration <ticker: GSTHHFSL>

holdings as of December 31, 2024; pricing as of February 14, 2025; new constituents in bold
31. The 20 S&amp;P 500 stocks with the least hedge fund concentration &lt;ticker: GSTHHFSL&gt;. Data available on request.
Source: FactSet, data compiled by Goldman Sachs Global Investment Research

Rising and falling stars

Changes in hedge fund popularity can be signals for future stock performance. Historically, stocks with the largest increase in the number of hedge fund investors ("Rising Stars") have typically gone on to outperform sector peers during the quarters following their rise in popularity. "Falling Stars" with the largest decline in owners have subsequently underperformed peers on average. For details, see Hedge Fund Trend Monitor, Nov. 2018.
The tables below show our new lists of Rising and Falling Stars based on the most recent position filings. No stock in these lists screened into the same list last quarter.

Exhibit 32: Rising stars: Russell 1000 stocks with the largest increase in number of hedge fund owners during 4Q 2024

32. Rising stars: Russell 1000 stocks with the largest increase in number of hedge fund owners during 4Q 2024. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 33: Falling stars: Russell 1000 stocks with the largest decrease in number of hedge fund owners during 4Q 2024

33. Falling stars: Russell 1000 stocks with the largest decrease in number of hedge fund owners during 4Q 2024. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

ETF ownership

The ETF share of hedge fund long portfolios surged in 4Q. The current share of 4.8% is the highest since 1Q 2009. Compared to the list from 3Q holdings, hedge funds increased gross ETF exposure to domestic equities (SPY, QQQ, IVV, IWM) and bitcoin (IBIT, FBTC).
The $202 billion of ETF shorts accounts for 67% of gross hedge fund ETF exposure. Funds use ETFs more as hedging tools than as directional investments. In contrast, single-stock shorts constitute just 33% of gross single-stock positions.

Exhibit 34: Hedge fund ETF long exposure

holdings as of December 31, 2024
34. Hedge fund ETF long exposure. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 35: Hedge fund positions in sector ETFs

holdings as of December 31, 2024
35. Hedge fund positions in sector ETFs. Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research
The table below shows the top 20 ETFs based on hedge fund gross exposure at the start of 1Q 2025.

Exhibit 36: Top 20 ETFs by hedge fund ownership (long and short)

holdings as of December, 2024; pricing as of February 14, 2025
36. Top 20 ETFs by hedge fund ownership (long and short). Data available on request.
Source: FactSet, Goldman Sachs Global Investment Research

Appendix A: Hedging the Hedge Fund VIP List

Our Very Important Short Position list (ticker: GSTHVISP) is designed as a short hedge for the Hedge Fund VIP List long portfolio. The equal-weighted basket consists of 50 S&P 500 constituents with the highest total dollar value of short interest outstanding. The VISP basket excludes companies in our long VIP List and stocks with more than 10% of float-adjusted shares held short to allow for sufficient liquidity.
Constituents of this basket are not based on 13-F holdings and these are not stocks with the highest percentage of short interest. See Appendix B for screens of stocks with the largest outstanding short interest as a share of market cap.

Exhibit 37: Our Very Important Short Positions (VISP) basket

new stocks in basket listed in bold; short interest as of January 31, 2025; pricing as of February 14, 2025
37. Our Very Important Short Positions (VISP) basket. Data available on request.
Source: FactSet, data compiled by Goldman Sachs Global Investment Research

Appendix B: Hedge fund data tables

Change in popularity: Largest increase and decrease in number of hedge fund owners

Exhibit 38: Change in popularity during 4Q 2024

38. Change in popularity during 4Q 2024. Data available on request.
Source: FactSet, compiled by Goldman Sachs Global Investment Research

Concentrated shorts: Highest short interest outstanding as a percentage of market cap

Exhibit 39: Highest short interest: Stocks over $25 billion in market cap

39. Highest short interest: Stocks over $25 billion in market cap. Data available on request.
Source: FactSet, Compiled by Goldman Sachs Global Investment Research

Exhibit 40: Highest short interest: Stocks over $1 billion in market cap

40. Highest short interest: Stocks over $1 billion in market cap. Data available on request.
Source: FactSet, Compiled by Goldman Sachs Global Investment Research

Appendix C: 100 largest hedge funds in our analysis ranked by equity assets

Data available on request.
Source: FactSet, data compiled by Goldman Sachs Global Investment Research

Appendix D: Drawbacks of our hedge fund holding analysis

Data limitations

One weakness of our analysis is that it excludes any synthetic positions that hedge funds may create through the use of derivative contracts (options, swaps, futures). Such financial instruments are not required to be disclosed in public filings.
We track both natural and leveraged long positions based on filings of hedge fund holdings. However, a hedge fund could offset a long position that we are able to monitor with a synthetic short position in options or futures on the underlying stock or an index of similar stocks that we currently are not able to monitor because the data on such trades and positions is not disclosed. These positions could either magnify or reduce the conclusions of our Hedge Fund Trend Monitor.

Lack of international holdings

Hedge funds are not required to include foreign holdings in their 13-F filings. Consequently, our analysis may not capture all the long equity positions of hedge funds. While we do not believe this lack of data significantly affects our analysis of holdings by sector and capitalization size, we may overestimate the “density” of hedge fund portfolios.

Incomplete reporting of short positions

Our data is limited to publicly disclosed short interest statistics released by the exchanges. Only US broker-dealers are required to report short positions to these exchanges, so we miss any shorts held in overseas accounts. Swaps and other derivatives are also not captured in this analysis. We assume that hedge funds account for 85% of all short interest in the market and that the short side of hedge fund portfolios mirrors the overall short market in terms of sector allocation.

Timeliness

Another potential weakness of our analysis relates to the timeliness of the reported data. For example, the equity holdings for the 695 hedge funds we studied were based on 13-F filings of positions owned as of December 31, 2024, although these filings were not made public until mid-February 2025.
Importantly, we believe our analysis of hedge fund holdings based on 13-F filings with 45-day delays is generally more reflective of actual current holdings than many market participants are inclined to believe.
Hedge fund holdings turnover is lower than most expect. On average, 76% of stocks that were in hedge fund portfolios on December 31, 2024 also appeared in portfolios on September 30, 2024. Because the overall holdings picture was surprisingly constant, we think it is reasonable to believe that the most recent holdings data remain relevant today.

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html.