Episode summary
Why Goldman's Prime Desk Says Smart Money is Fleeing the Mag Seven
Summary
The host focuses on a Goldman Sachs Prime Services note showing hedge funds dumping tech equities at the fastest pace since Goldman began tracking the data in 2016. He says the selling was heavier than August 2024, when the Nasdaq 100 fell into correction territory, and that it was the biggest US stock selling overall since the April liberation day sell-off. The core signal, in his view, is that the market’s leadership is starting to crack beneath the surface.
He says hedge fund exposure to the Mag Seven — Apple, Google, Amazon, Meta, Microsoft, Nvidia and Tesla — has fallen to about 14.5% of total US hedge fund exposure, roughly the lowest level in three years and down about seven percentage points since the start of the year. He argues that the biggest names tend to break first, then the selling cascades into smaller tech names as liquidity and sentiment deteriorate.
The host frames this as a trading and valuation environment where the easy gains of the rally are gone, though he does not say the bull market is over. He says he and others are trimming strength, and expects more opportunities to emerge later in tech if the sector continues to weaken.
Key takeaways
- The host says Goldman Sachs Prime Services saw hedge funds sell tech equities at the fastest pace since 2016.
- He says Mag Seven exposure has fallen to about 14.5% of total US hedge fund exposure, down about seven percentage points since the start of the year.
- He argues that the largest tech names usually get sold first, then the weakness spreads to smaller tech stocks.
- He says his own portfolios have been trimming or closing positions after big gains, because strength is the place to sell.
- He expects tech bargains to emerge in the coming months if the selloff broadens beyond the biggest names.
Notable quotes
“hedge funds sold more tech equities at the fastest pace since Goldman's began taking data on this in 2016”
“exposure to those stocks have fallen to 14.5% of total US hedge fund exposure, which is about the lowest level in 3 years”
“the way this generally works is the big companies sell off first and then that second wave there's the massive liquidity in that”
“I like to sell them when other people want them. You know, it's like a bidding war”
How the episode opens
Good morning. This is Dylan Jovine with Behind the Markets. Happy Thursday.
Wow, it's Thursday. Thursday, July 2nd. What a great day it is to be alive.
Today, I'd like to talk about a note out from Goldman Sachs Prime Services Group, which is their division, part of the Speer Leeds Kellogg division that I used to know a bunch of people that worked out that they acquired in 2000. But, it's the part of the Goldman Sachs company that basically services hedge funds. They provide trade execution, settlement, securities lending, margin, liquidity, etc., etc., portfolio risk management, and all these other things.
So, you know, they represent a lot of the biggest hedge funds, the biggest investors in the world. A lot of that goes through their desk. So, they get a bird's-eye view on a lot of smart money.
And they came out with a note last week, this morning actually. I'm seeing it this morning. Maybe it was out last night.
Basically, the headline is I have the notes here. Hedge funds are making a big move out of tech. Last week, hedge funds sold more tech equities at the fastest pace since Goldman's began taking data on this in 2016.
The selling was even heavier than August 2024, when the Nasdaq 100 fell more than 10% into correction territory. And they're saying it's basically sold the most US stocks overall since April of 2025, the so-called liberation day sell-off. And you know, they're also in the note, they're also pointing out that the Mag 7 are also losing their grip on hedge fund portfolios.
Apple, Google, Amazon, Meta, Microsoft, Nvidia, Tesla. I guess SpaceX is part of it. But, you know, also exposure to those stocks have fallen to 14.5% of total US hedge fund exposure, which is about the lowest level in 3 years.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- hedge fund selling
- mag seven rotation
- tech equities exposure
- market correction comparisons
- rotation into defense and tech
Companies and tickers mentioned
- AAPL
- GOOGL
- GOOG
- AMZN
- META
- MSFT
- NVDA
- TSLA
- KTOS
- AVAV
- Goldman Sachs
- Apple
- Amazon
- Meta
- Microsoft
- Nvidia
- Tesla
- Kratos
- AeroVironment
Watch the episode
Watch “Why Goldman's Prime Desk Says Smart Money is Fleeing the Mag Seven” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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