The smart money is turning bearish on stocks.
According to a report from U.S. investment bank Goldman Sachs (GS), hedge funds around the world are selling stocks at the fastest pace in a year and ramping up their bets that the stock market will decline further in coming months.
Analysts at Goldman Sachs say that hedge funds are growing increasingly pessimistic about the market’s direction and that the negative sentiment is spreading across all geographic regions, from the U.S. to Europe and Asia, and can be seen in all company sectors except for communications services.
Growing Uncertainty
The investment bank adds that the gloomy mood at hedge funds is due to growing geopolitical uncertainty that has resulted from the threat of trade tariffs, signs of a slowing U.S. economy, and sticky inflation in many parts of the world.
The selling of stocks by hedge funds has become particularly acute in the healthcare sector, with net selling at the highest level in more than five years. Bets that U.S.-listed exchange-traded funds (ETFs) will also fall, including those focused on large and small-cap stocks, rose 5.4% in the past week, says Goldman Sachs.
Additionally, hedge fund exposure to the Magnificent Seven group of U.S. technology stocks is at the lowest level since April 2023, indicating hedge funds’ have soured on that group of equities. GS stock has risen 63% in the last 12 months.
Is GS Stock a Buy?
The stock of Goldman Sachs has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on 11 Buy and four Hold recommendations assigned in the last three months. The average GS price target of $680.36 implies 9.33% upside from current levels.
