Last week Goldman's portfolio strategy research team released two of the bank's most widely read research reports - the HF Trend Monitor and Mutual Fundamentals (both available to pro subscribers, here and here). There are numerous interesting observations here, but one aspect that is especially notable is where fast money and real money agree/disagree from a positioning perspective on a sector and single stock basis.
As Goldman trader John Flood notes, throughout the second quarter, hedge funds diversified their cyclical exposure, adding to Fins and Industrials while selling Consumer. HFs lifted Financials to an overweight vs. the Russell 3000 for the first time since 2010, as over 20 funds initiated new positions in CFG, GPN, WFC, and FDS, the latter of which joined the bank's list of Rising Stars with the biggest increases in hedge fund popularity last quarter. Among Industrials, ETN, PCTY, and SRCL ranked as Rising Stars. Balancing out the cyclical additions to Fins and Industrials, hedge funds cut positions in Consumer sectors and increased their overweight in healthcare.
Alternatively, the average mutual fund is now most overweight Financials (+147 bp) and Industrials (+137 bp), while MFs are most underweight Info Tech (-358 bp), the lowest tilt during the past 10 years (yes, concentration restrictions are at play here). The average mutual fund across all core, growth, and value styles added to Healthcare and Communication Services but cut exposure to Materials.
