Hedge funds unwound their stock positions last month at the fastest pace in over a decade, according to Wall Street Journal Markets. The mass liquidation reflects deepening market stress as funds race to reduce exposure and preserve capital amid widening selloffs. Stock-picking funds led the retreat, cutting both long and short positions across sectors. The pace of deleveraging surpasses levels seen during the 2020 pandemic crash and the 2011 European debt crisis.
Some firms are also cutting staff as assets under management shrink and performance fees evaporate. Prime brokers report elevated margin calls and reduced risk limits, accelerating the feedback loop. The unwind has hit crowded trades in technology, consumer discretionary, and healthcare particularly hard.
Analysts warn the selling may not be over, with Q2 redemptions looming and volatility metrics still elevated.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing