HF Highlights 2026.08.14

Weekly HF Highlights: HFs Recover Long Exp Across US Equities, First Signs of Long Demand in Global Memory After July Unwind

Prime Brokerage – Strategic Content Group

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This Week’s Highlights (as of Thursday, August 13th) HFs were buyers of global equities this week as lighter than expected inflation data (CPI, PPI) and AI Tech re-engagement steadied the tape and pushed equities back to record highs. The HF buying was driven largely by demand on the long side as HFs added to longs in ~3x what they added short. US equities accounted for almost the entirety of the demand while flows across most other regions were muted in notional terms. As a result of the broader re-grossing efforts post July-unwind, US L/S net leverage has now climbed ~11% off end-July troughs of 47% to 58%, now tracking in line with YTD highs. However, while HFs have consistently turned sellers upon reaching these levels for most of this year, the makeup of the portfolio has shifted meaningfully as exposures have continued to broaden – the L/S ratio across US equities outside of AI has now climbed to just north of 12m medians, a notable move off the trough levels that defined the barbell for much of the year. While HFs were also continuing to redeploy longs within the AI complex (concentrated in Semis and the higher-quality expressions of the trade like Hyperscalers), the more notable development was the return of long-side appetite in Global Memory on Thursday. The activity ultimately marked the first real sign of demand for the vertical (particularly from the Generalist / non-TMT L/S cohort) since the July unwind, after having been one of the few areas HFs did not redeploy capital through the re-grossing activity seen throughout August. Beyond AI, pockets of Health Care continued to see demand as Generalist L/S funds extended beyond the AI complex coupled with active buying from HC-dedicated accounts. GLP-1 beneficiaries (MSXXGLP1) captured much of the flow via sizable long additions. Pockets of Consumer also remained in demand, led by Leisure Travel (MSXXLEIS), followed by buying in Industrials that was more so driven by short covering in US Defense (MSXXDEFE). Software also accounted for a meaningful portion of the activity in what marked a relatively challenging week for the top 50 crowded shorts in the US (-2.4z short alpha) as they rallied nearly 4%. HFs unwound shorts in size across Software-as-a-Service names (MSXXSAAS) in particular, as net positioning has remained near longer term trough levels – less than 20% of the shorts added YTD within the SaaS complex have been unwound. Overseas, HFs were small net sellers of APAC as Korea continued to be net sold as supply persisted across Korea AI names (MSAPKRAI) for most of the week, followed by smaller supply in China. This selling activity was partially offset by smaller buying in Australia and Hong Kong. In Europe, flows were muted in net terms as HFs were sellers of Industrials and Financials, while demand in Tech was driven entirely via Software. From a PnL standpoint, August has gotten off to a strong start on the back of the market's recovery from July's volatility. The average global HF is up +2.0% MTD, while the average global L/S fund is up +2.4% – both lagging the MSCI World's +3.7%. The average US-based L/S fund is up +2.3% MTD, capturing just over half of the S&P's +4.2%, while the average EU-based L/S fund is up +1.8%, roughly in line with the SXXP (+1.7%). Asia-based L/S funds have led in absolute terms, up +3.2% MTD…