SMCI - Hedge Funds Pile Into Commodity Stocks

2024-07-08 10:05:26 ET

According to U.S. investment bank %Gold manSachs (NYSE: ), hedge funds are buying stocks related to commodities at their fastest pace in five months amid rising prices for everything from %Gold to coffee beans.

Analysts at Goldman Sachs say hedge funds have become particularly enthusiastic about the energy sector and are buying stocks of U.S. oil and natural gas producers such as %Chevron (NYSE: ) and %DiamondbackEnergy (NASDAQ: ).

However, Goldman Sachs says hedge funds have also turned bullish on mining and metals as well as agriculture as prices for items such as copper and cocoa remain at elevated levels.

At the same time, hedge funds have been rotating capital out of technology and utilities to start the second half of 2024, dumping positions in high-flyers such as %Nvidia (NASDAQ: ) and %SuperMicroComputer (NASDAQ: ).

Hedge funds appear to be particularly keen on energy stocks right now as a resilient global economy and conflict in the Middle East push crude oil prices above $80 U.S. per barrel.

Metal and mining stocks are also proving to be popular as prices remain at 52-week highs. Industrial metals continue to rally due to demand driven by the global energy transition and the emergence of %ArtificialIntelligence (AI) technologies.

Goldman Sachs notes that copper prices have increased 19% and gold prices have risen 15% so far this year.

Hedge funds are also buying stocks outside the U.S. to start the year’s second half, putting money into shares of European and Asian companies, excluding China.