The carnival is coming to an end? Hedge funds are selling a record number of technology stocks to retail investors

Against the backdrop of the five major star tech stocks (Apple, Amazon, Microsoft, Nvidia, Google) taking turns to set new historical highs, the market generally believes that both hedge funds and retail investors are eagerly joining the "AI investment bubble". However, some analysts point out that this statement is not entirely accurate.

On Wednesday, June 26th, Eastern Time, Vincent Lin, the chief brokerage expert at Goldman Sachs, released a report revealing a new trend in market fund flows. The report shows that hedge funds have been heavily net selling TMT stocks in the past month, with semiconductors and semiconductor equipment stocks leading the way, including Nvidia (reversing the trend since the beginning of the year); in fact, as shown in the chart, this month hedge funds' net selling in the U.S. TMT sector hit a record high since Goldman PB records.

As retail investors flock into the most crowded stock market in history, hedge funds seem to sense that the market frenzy is coming to an end. Therefore, they are actively withdrawing from those excessively popular or overvalued stocks, significantly reducing exposure to the "Long Crowdedness" factor. This strategy change is very evident in risk exposure and fund flow data.

Retail investors flocking into the most crowded stock market in history

Beneath the surface calm of the market, a massive "asset reallocation" is actually taking place. Institutional investors ("smart money" in the market) are selling a large amount of tech stocks to retail investors, including the "Big Seven" U.S. stocks.

In stark contrast, retail investors are actively investing in mega-cap tech stocks like the "Big Seven". Especially in the semiconductor sector, such as Nvidia and triple long semiconductor ETFs, retail investors' buying activity is very active.

Furthermore, retail investors are increasing their investment in Nvidia by buying double long Nvidia ETFs, reflecting their preference for high-leverage products. The ETF's market value has grown to over $4 billion in just six months, showing retail investors' concentrated investment in this sector, a trend that has also caught the attention of short sellers.

Vanda predicts that unless small-cap stocks, cryptocurrency concept stocks, or other retail-favored sectors such as retail investor group stocks can continue to outperform the market, retail investors may continue to increase their holdings in large-cap tech stocks