Hedge funds accelerate commodity sector buys at fastest pace since February ’21 – GS’ Prime Brokerage

[hedge fund]
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Hedge funds have dramatically increased their net buying of commodity sensitive sectors, combining materials (NYSEARCA:XLB [https://seekingalpha.com/symbol/XLB]) and energy (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]) at the fastest pace since February 2021, according to Goldman Sachs’ Prime Brokerage, which services hedge funds.

The purchasing was driven “almost entirely by long buys” across both sectors, the Prime Book data showed.

The materials sector (NYSEARCA:XLB [https://seekingalpha.com/symbol/XLB]) experienced broad-based buying across nearly all regions except developed markets in Asia, with North America and Europe leading the charge.

Also, net buys in metals and mining (XME [https://seekingalpha.com/symbol/XME]) and in chemicals outpaced selling in construction materials (ITB [https://seekingalpha.com/symbol/ITB]), indicating selective positioning within the materials space.

Energy sector (NYSEARCA:XLE [https://seekingalpha.com/symbol/XLE]) buying was primarily concentrated in North America. Both oil, gas, and consumable fuels (XOP [https://seekingalpha.com/symbol/XOP]), (OIH [https://seekingalpha.com/symbol/OIH]), (SP500-101020 [https://seekingalpha.com/symbol/SP500-101020]), and energy equipment (MLPX [https://seekingalpha.com/symbol/MLPX]), (XES [https://seekingalpha.com/symbol/XES]) were net bought, suggesting investors are making comprehensive bets across the entire energy value chain rather than targeting specific segments.

The Prime book now stands significantly overweight in materials vs. the MSCI World Index (XWD:CA [https://seekingalpha.com/symbol/XWD:CA]) by +1.6%, representing an extreme positioning in the 97th percentile compared to the past year and the 99th percentile vs. the past five years.

Meanwhile, the energy (XLE [https://seekingalpha.com/symbol/XLE]) underweight has narrowed to -0.4% from -0.7% in the previous week, placing it in the 36th percentile vs. the past year and 34th percentile compared to the five-year historical range.

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* XLE Still Primed For Breakout [https://seekingalpha.com/article/4817464-xle-etf-still-primed-for-breakout]
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* Trump administration moves to reopen Alaska's Arctic National Wildlife Refuge for drilling [https://seekingalpha.com/news/4508420-trump-administration-moves-to-reopen-alaskas-arctic-national-wildlife-refuge-for-drilling]