I might’ve mentioned this last week. I honestly can’t remember. And no, any recollection failure in this case wouldn’t be attributable to all the years I spent drowning my synapses in delicious brown liquor. Rather, I now write so much during any given week that by Friday (let alone by the following Monday) I genuinely can’t remember sometimes what I have and haven’t mentioned.

Anyway, hedge funds and mutual funds cut exposure to the “Magnificent 7” headed into 2024. Whether that’s new (or news, with an “s”) to you depends on i) whether I mentioned it last week and you read it here, and/or ii) if somebody else mentioned it last week and you read it there. Either way, I’m mentioning it here (maybe again) because news flow was a little sparse on Monday, and a cursory examination of last week’s coverage reveals that at the very least, I didn’t make a headline out of it.

This mildly interesting tidbit comes from Goldman’s quarterly hedge fund monitor, timestamped February 20. The latest installment showed, among other things, that hedge funds and mutual funds both pared Magnificent 7 positions in Q4.

I should quickly note that more timely data from the bank’s prime desk suggests hedge funds bought tech stocks ahead of Nvidia’s results, but sold them on net for four straight sessions last week through Thursday. Long-only funds, though, facilitated a late-session uptick in buying during Nvidia’s record-shattering rally, according to the same note, which also flagged bombed-out skew, a critical point discussed here on several occasions of late, including on Sunday.

Coming quickly back to the comprehensive review of hedge fund positions as they stood when the new year dawned, the figure below shows hedge funds on net pruned their positions in every Magnificent 7 stock besides Amazon over the course of Q4.

Microsoft landed on Goldman’s “Falling Stars” list, a compendium of stocks that saw the biggest drop in hedge fund ownership.

As for mutual funds, the typical fund is now 672bps underweight the group. Goldman noted that even as funds added to their Tesla and Amazon positions, all seven of the anointed are in Goldman’s basket of mutual fund underweights.

Of course, the group still accounts for a huge share of hedge fund longs — 13%, in fact, on Goldman’s tally. That’s a record. Tesla’s the only Magnificent 7 member not on the bank’s hedge fund “VIP” list (a widely-cited inventory of the most popular hedge fund longs). The updated directory is shown below.

Tesla is, however, on Goldman’s hedge fund very important shorts list. In fact, it’s at the top, followed by Exxon and Chevron at the number two and three slots.

Other notables from the update included the observation that both hedge funds and mutual funds increased their underweights in Info Tech which, despite accounting for 21% of total net hedge fund exposure, is still the biggest underweight versus the Russell 3000, at -587bps, and record-high hedge fund crowding due to funds’ “record tilt toward Momentum.”

As Goldman’s David Kostin wrote, in a separate note summarizing the longer report, “During the two previous periods of comparable crowding (2020 and 2016), the equity market was experiencing a major downturn.” “The current episode,” he went on, “is unusual because the S&P 500 is near its all-time high.”

Long/short funds are up around 4% in 2024, according to Goldman’s prime desk. The VIP list is up 10% YTD, outstripping the S&P 500 by 300bps and the equal-weighted index by 8ppt. And yet, despite heavy ownership of its largest and only constituent, the VIP list is trailing the “S&P One” by 54ppt as of this writing.