Secrets from Goldman Sachs' trading floor
Part 2
Are technology stocks moving again?
Special update from Goldman Sachs' TMT desk
Peter Bartlett, one of the senior traders on Goldman Sachs' Technology, Media, and Telecom (TMT) desk, reveals what is happening beneath the surface
And his message is clear: they are buying mega-tech again, but cautiously.
Buying, but with less enthusiasm. The desk recorded several exceptionally large buy orders two days ago, some for amounts over $100 million, from Long Only investors. (That is, institutional investors who only take long positions, such as pension funds or mutual funds).
This is particularly significant given the last month, during which the number of buyers of mega-cap technology stocks finally began to increase.
Who is the target audience this time? The buyers this time are mainly from the US, and they are the "heavy" institutional community, which tends to act cautiously and with a long-term perspective.
In contrast, Goldman reports that the major sellers of the recent period, primarily wealthy international entities (such as sovereign wealth funds and large hedge funds), have stopped selling.
Supply is shrinking, and that changes the dynamic.
Despite signs of renewed interest in large technology stocks (Megacap Tech), Goldman reminds us that in the last quarter, tech was among the most sold sectors in the US, a sell-off primarily driven by short selling that was stronger than long buying.
Long-term investors are starting to return to technology, but they are doing so cautiously and with the understanding that the market has not yet decided if the rallies are here to stay.
Is this the beginning of a new wave in technology, or a temporary correction?
We will probably find out soon.