Crowded Trades Persist as Hedge Funds Boost Short Activity

Hedge funds globally are showing a modest shift toward the short side of the market as volatility increases across asset classes, according to the latest Crowdedness Report from Hazeltree. 

The February 2026 report found that securities-lending utilization has risen over the past six months across most regions, signaling that hedge funds are increasingly using short positions as part of broader hedging strategies. 

Despite the move toward greater short exposure, sector positioning remains concentrated. Across the Americas, EMEA and APAC, hedge funds continued to cluster their bets in a similar group of sectors on both the long and short side, including Information Technology, Industrials, Financials and Consumer Discretionary. 

Technology remained one of the most crowded sectors globally. In North America, hedge funds increased long positioning in companies such as Lam Research, Mastercard and Applied Materials. Meanwhile, sentiment toward Microsoft weakened slightly as long fund participation declined and short activity increased across the broader software sector. 

On the short side, Oracle and Nebius Group emerged as leading large-cap short positions. 

“The month of February brought unprecedented market volatility that rippled through financial markets,” said Tim Smith, Managing Director of Data Insights at Hazeltree. “While the war in Russia and Ukraine raged on, a new war front opened in the Middle East between Iran, Israel and the U.S., along with an increasing spike in redemptions in private credit from asset managers such as Blue Owl Capital and Blackstone.” 

Hazeltree’s analysis draws on anonymized positioning data from more than 600 hedge funds and approximately 16,000 securities tracked through its securities-finance platform.