With energy stocks trading near all-time highs and oil climbing as well, hedge funds think they’ve found a trade to capitalize: Sell the shares and pour the profits into buying more crude.
Hedge funds have been selling US energy stocks for three straight weeks, according to prime brokerage data from Goldman Sachs Group Inc. The net allocation to energy also is well below historical levels, with energy now making up just 2.2% of overall US net exposure on Goldman’s prime brokerage book. And the sector’s long-short ratio has fallen to a five-year low.