Key Takeaways from the GS Positioning Recap

1. CTA positioning: near-term selling bias, but not large unless market falls

  • Over the next 1 week, CTAs are expected to be net sellers in all market scenarios:

    • Flat tape: -$6.55B globally, including -$5.19B from the US

    • Up tape: -$3.15B globally, including -$2.43B from the US

    • Down tape: -$29.94B globally, including -$10.66B from the US

  • The near-term flow risk is therefore asymmetric to the downside, but the base-case selling magnitude appears modest.

  • Over the next 1 month, the picture becomes more directional:

    • In an up tape, CTAs could turn into buyers of +$28.41B globally.

    • In a down tape, CTAs could sell heavily: -$141.37B globally, including -$52.15B from the US.

SPX pivot levels:

  • Short term: 7378

  • Medium term: 7104

  • Long term: 6678

2. Prime Brokerage: major de-risking, especially in US Tech

The GS Prime Brokerage data points to a clear reduction in risk across hedge fund books.

Overall leverage

  • Gross leverage: down 2.1 pts to 313.5%

    • Still high at the 87th percentile over 1 year.

  • Net leverage: down 2.1 pts to 80.1%

    • 67th percentile over 1 year.

  • Overall long/short ratio: down 1.1% to 1.687

    • Low at the 25th percentile over 1 year.

Fundamental L/S books

  • Gross leverage: down 7.2 pts to 199.2%

    • A 1-year low.

  • Net leverage: down 4.0 pts to 55.2%

    • 37th percentile over 1 year.

  • US L/S gross leverage fell for a second consecutive week by 5.9 pts, the largest weekly drop since mid-March.

  • US L/S net leverage fell 2.7 pts, the largest weekly decline in three months.

Interpretation: Fundamental hedge funds are meaningfully cutting exposure, with gross leverage now at a 1-year low.

3. Global equities saw the largest net selling in 3 months

  • Global equities experienced the largest percentage net selling in 3 months, at -2.9 standard deviations versus the past year.

  • Selling was driven by both:

    • Short sales

    • Long sales

  • The ratio of short to long sales was 1.7 to 1, meaning the selling was more heavily driven by new or increased shorts.

Regional picture

  • All major regions were net sold.

  • Selling was led in dollar terms by:

    • North America

    • Developed Market Asia

Sector picture

  • 7 of 11 global sectors were net sold.

  • Most net sold:

    • Information Technology

    • Communication Services

    • Industrials

  • Most net bought:

    • Consumer Staples

    • Utilities

    • Energy

4. Tech selling was extreme

This was one of the most important points in the recap.

  • US Information Technology saw the largest net selling in more than 10 years, both in dollar and percentage terms.

  • The move registered a -4.0 z-score, indicating an unusually large outflow.

  • Globally, the combined percentage net selling across Info Tech and Communication Services was the largest in more than 10 years.

However, positioning remains mixed:

  • Despite the selling, Semis & Semi Equipment net exposure remains very elevated:

    • 98th percentile versus the past five years.

  • This suggests investors reduced exposure, but the sector remains crowded.

5. Mag 7 exposure is approaching multi-year lows

  • Mag 7 stocks were net sold for a fifth consecutive week.

  • Gross exposure is now near a 3-year low:

    • 4th percentile

  • Net exposure is also near a 3-year low:

    • 6th percentile

Interpretation: Hedge funds have materially reduced exposure to the Mag 7 complex, even as semiconductor exposure remains elevated.

6. Buyback support is fading due to blackout windows

Corporate buyback activity remains strong versus prior years but is now contracting week over week.

  • Current buyback volumes are:

    • 1.5x 2025 YTD ADTV

    • 1.5x 2024 YTD ADTV

  • Activity is skewed toward:

    • Technology

    • Consumer Discretionary

    • Financials

However:

  • Around 88% of corporates are now estimated to be in blackout ahead of Q2 earnings.

  • The blackout window is expected to run through the end of July.

  • Most current activity is coming from 10b5-1 plans, which represent roughly 75% of total desk buyback flows.

Interpretation: A key source of equity demand is weakening seasonally, reducing a major support for the market into earnings season.

Overall Read-Through

The positioning backdrop looks more fragile than outright bearish.

Constructive points

  • CTA selling over the next week is expected to be modest unless the market declines.

  • One-month CTA flows could become positive in an up-tape scenario.

  • Buybacks remain elevated versus prior years, even though they are now constrained by blackout windows.

  • Hedge fund performance was positive over the cited period, supported by alpha.

Cautionary points

  • Prime Brokerage data shows broad de-risking.

  • Global equities saw the largest net selling in three months.

  • US Tech selling was extreme, with the largest net selling in more than a decade.

  • Mag 7 exposures are near multi-year lows.

  • Buyback support is fading as blackout restrictions broaden.

  • CTA flow risk becomes meaningfully negative in a down-tape scenario.