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Hedge Fund Ownership

Sit down, Energy sector. It's not your turn yet

August 17, 2021

It's not that fund managers are shy about rotating out of Information Technology, Health Care and Consumer Discretionary, they just don't see a compelling case to go anywhere else yet. For years, there's been talk about the rebounding Energy sector, but neither the hedge fund universe nor the broader market is buying. After a half year or more of inching up their Energy holdings, according to 13-F filings, hedge funds have started trimming their exposure again. It's now back down to 2.43%.

Financial Services names account for 12.05% of hedge funds' exposure, a tad above the broader market's. Still, fund managers are backtracking on their holdings in that sector as well. So if funds are reducing their Energy stocks -- which is what you do ahead of a recession -- and they're also reducing their Financials -- which is what you do once an expansion is well underway -- where on the business cycle are we?