A report from Goldman Sachs shows that banks, insurance companies, and trading companies are once again favored by hedge funds, which have been purchasing stocks of these companies at the fastest pace since June 2023.

According to the report released last Friday, financial stocks have become the most popular stocks in Goldman Sachs' institutional brokerage trading department, with seven out of the past eight weeks seeing net selling. Goldman Sachs' institutional brokerage trading department provides loans to hedge funds and tracks their transactions.

The report states that these bets are almost all long positions.

In the week ending last Friday, the pan-European STOXX 600 banks index rose by about 1.9%, while the Dow Jones banks index fell by 1.6%.

The report states that hedge funds' buying power is mainly focused in North America and Europe. Hedge funds hold long positions in banks, insurance, and capital market companies that facilitate trading.

Goldman Sachs also moderately sold stocks of consumer finance companies and mortgage trust companies.

The report further adds that overall, hedge funds increased their sell positions in the stock market at the end of last week. They sold global equities for the ninth consecutive week at the fastest pace in five months.

The bank stated that the weekly return of stock-picking hedge funds was 0.42%, partly due to the general rise in the stock market. Last week, the S&P 500 index rose by over 4%, while the broadest European stock index rose by 1.85%.

The report stated that in the week ending September 13, the performance of systematic stock traders was negative 0.18%.

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