Goldman Sachs Sees Continued US Software Stock Recovery
Goldman Sachs says the recovery in US software stocks may continue despite record shorting. Hedge fund bets against the sector hit an all-time high this week.
The prime brokerage division of The Goldman Sachs Group, Inc. has indicated that the recent recovery in software and IT services stocks may persist, even as hedge fund sentiment reaches historic lows. According to a research note sent to clients, these sectors were the most heavily shorted industries in the United States as of February 24. Short positions, which profit from falling prices, have climbed to their highest levels since the bank began tracking the data in 2016, while long positions have simultaneously dropped to a record low. The S&P 500 software and services index has faced significant pressure this year, declining by more than 18% and erasing approximately $1.2 trillion in total market value. However, the index showed signs of a turnaround this week, gaining more than 4%. Goldman Sachs analysts noted that this recent bounce is likely to continue, suggesting that the extreme bearish positioning by institutional investors may have reached a tipping point.
