Hedge funds that suffered significant losses from the recent decline in U.S. tech stocks are reducing their investments, which may increase the influence of retail investors in the tech market.
According to a report by Bloomberg on August 5, Nikolaos Panigirtzoglou, a strategist at JPMorgan, estimated that hedge funds focused on technology, media, and telecommunications experienced losses exceeding 10% last month. This figure is based on preliminary data from hedge fund analytics firm PivotalPath.
However, this estimate does not include 'Situational Awareness,' a fund that was forced to sell most of its publicly traded stocks due to a sharp decline in semiconductor shares. This fund saw its value plummet by 67% last month and transferred a significant portion of its holdings to investment firm Citadel.
Concerns about the sustainability of large-scale investments in artificial intelligence (AI) infrastructure led to a sharp drop in semiconductor and memory-related stocks last month. The Philadelphia Semiconductor Index fell 21% over the month, marking its largest monthly decline since 2008.
JPMorgan noted that other tech-focused hedge funds likely rushed to sell their holdings to mitigate losses, which may have exacerbated the decline in tech stocks.
The bank anticipates that hedge funds suffering significant losses will reduce their investments in specific sectors and strengthen their risk management criteria. Financial firms that lend money and stocks to hedge funds may also cut back on funding for tech investments.
As a result, JPMorgan predicts that the capacity of hedge funds to invest in tech stocks will structurally decrease, while the share of trading in tech stocks by retail investors may increase.
Panigirtzoglou pointed out that if leveraged exchange-traded funds (ETFs), options, and stock trading using borrowed money lead the market, even small changes in investor sentiment could cause significant fluctuations in tech stocks.
* This article has been translated by AI.
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