Hedge Funds Ramp Up Bearish Bets on Consumer Stocks in August 2024
Hedge Fund Strategies and Market Trends in August 2024
LONDON, Sept 16 (Reuters) - Hedge funds increased bets against consumer-focused companies in August and cut some of their bets against AI-related stocks, but turned more bearish towards Alphabet, according to a report on Wednesday from data platform Hazeltree.
Last month, as the war in the Middle East intensified, oil prices and global bond yields rose, leaving consumers facing higher fuel prices and borrowing costs.
Performance of Consumer Discretionary Stocks
Consumer discretionary stocks are the worst-performing sector on Wall Street this year, with a drop of around 5%, compared with an 11% gain in the S&P 500.
Most-Shorted U.S. Consumer Companies
• Kimberly-Clark, the maker of Kleenex and Huggies diapers, entered the list of most-shorted large U.S. companies, along with food delivery service DoorDash and soda maker Keurig Dr Pepper.
AI-Related Stocks and Short Positions
Dominance of the AI Theme
• The AI theme continued to dominate short positions, or bets that a share price will fall, in August. Chipmaker Super Micro Computer, AI infrastructure firms Coreweave and Nebius Group and GE Vernova, which supplies data centres and other customers with equipment including gas turbines, remained in the top 10.
Consumer-Focused Stocks in North America and Europe
• Of the 20 most-shorted North American stocks spanning large and mid-cap companies, nine were consumer-focussed, compared with just four in July.
• In European large caps, consumer-exposed stocks such as automaker BMW, drinks groups Diageo and Pernod Ricard and luxury retailer Kering, which owns Gucci, were among the most shorted, according to the data.
Alphabet's Position and Investor Sentiment
Shift in Alphabet's Long and Short Positions
• Google parent Alphabet, one of the five hyperscalers behind the AI build-out, dropped out of Hazeltree's list of most-crowded long positions in August, as the number of funds shorting the stock overtook the number of funds with long positions for the first time this year.
Market Interpretation and Funding Concerns
• "With no deterioration in reported fundamentals, the selling appears to reflect the funding question rather than a view on the underlying business's strength," Hazeltree said.
• With billions of dollars in borrowing and spending pouring into AI, investors are paying close attention to how companies are funding those investments.
(Reporting by Amanda Cooper. Editing by Mark Potter)
