Hedge funds cut exposure to bank stocks in April, data shows

Signage is seen outside the Blackstone Group headquarters in New York City·Reuters
Nell Mackenzie
Updated 1-min read

By Nell Mackenzie

LONDON (Reuters) -Hedge funds cut their exposure to financial stocks in April after buying discounted equities in the market turmoil that followed the March failures of Silicon Valley Bank and Signature bank, according to S&P Global Market Intelligence data.

Hedge funds reduced exposure to financial stocks including banks and trading companies by 1%, or $1.3 billion, after an increase of 5.5% in March, the data showed.

"Many likely bought financial stocks as the sector was weakened by Silicon Valley Bank's downfall and then, as the sector recovered, locked in short-term profits and began deploying capital into other sectors," said Christopher Blake, executive director of issuer solutions at S&P Global Market Intelligence.

Still, overall hedge fund positions on stocks were bullish, Blake said.

Short-sellers were particularly active in European financial companies, according to a separate note to clients from Morgan Stanley. In a short position, speculators borrow stock hoping the price will decline.

Hedge funds had turned bearish on European stocks as a whole by the end of last week, with the bulk of short positions added to European banks and capital markets firms, the note said.

(Reporting by Nell MackenzieEditing by Mark Potter and Paul Simao)