Report published August 14, 2026
Morgan Stanley: Hedge Funds Recover Long Exposure Across US Equities & Global Memory (August 2026)
Source and citation context
- Issuer
- Morgan Stanley
- Report date
- August 14, 2026
- Analysis as of
- August 13, 2026
Authors / editors: Bill Meany, Ayman Jagani
Finvaulta summarizes Morgan Stanley's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Hedge funds resumed aggressive buying of US equities this week, lifting US L/S net leverage back to YTD highs of 58% while broadening exposure outside of AI. Long appetite also emerged in Global Memory for the first time since the July unwind, while short squeezes hit crowded Software-as-a-Service names.
Key Takeaways
- 1.Hedge funds were net buyers of global equities driven by US long additions (~3x shorts added), lifting US L/S net leverage from end-July troughs of 47% to 58% (in line with YTD highs).
- 2.Appetite for Global Memory returned on Thursday for the first time since the July unwind, while broader US non-AI equity L/S ratios climbed to just above 12-month medians.
- 3.Crowded US shorts rallied almost 4% (-2.4z short alpha), forcing hedge funds to unwound SaaS shorts in size, though less than 20% of YTD added SaaS shorts have been covered.
Table of Contents
- This Week's Highlights (as of Thursday, August 13th)
- Weekly Flows: Global Summary
- Weekly Flows: Sector Flows Summary
- Regional Leverage: US, Europe, and Asia
- Performance Highlights: MTD & YTD HF Performance Estimates
- Crowding Performance: Top 50 Crowded Longs vs. Shorts
- N. America Daily Crowding Perf: Top 50 Crowded Longs vs. Shorts
- Important Information and Qualifications
Report data
Gross Leverage By Region & Net Leverage By Region — as of August 13, 2026.
| Metric | Estimate | Context |
|---|---|---|
| US L/S Net Leverage | 58% | 86th percentile since 2010, up 11 percentage points from late-July trough of 47% |
| US L/S Gross Leverage | 209% | 93rd percentile since 2010 |
| Average Global Equity Long/Short Fund MTD Return | 2.41% | Versus MSCI AC World +3.65% USD |
| Average Global Equity Long/Short Fund YTD Return | 13.76% | Versus MSCI AC World +15.69% USD |
| Top 50 Crowded Longs vs Shorts Spread WTD (North America) | -1.77% | Top 50 longs +1.81% vs top 50 shorts +3.58% (shorts rallied -2.38z alpha) |
Reports in this series
Weekly HF Highlights is shown in chronological order through this edition, published on August 14, 2026.
Looking for the latest edition? HF Highlights 2026.08.28 (Aug 28, 2026)
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Authors / Editors
Reported Data Context
- US L/S Net Leverage: 58 % (As of 2026-08-13) · Source: Morgan Stanley Prime Brokerage
- US L/S Gross Leverage: 209 % (As of 2026-08-13) · Source: Morgan Stanley Prime Brokerage
- Average Global Equity Long/Short Fund MTD Return: 2.41 % (MTD through 2026-08-13) · Source: Morgan Stanley Prime Brokerage Proprietary Estimates
- Average Global Equity Long/Short Fund YTD Return: 13.76 % (YTD through 2026-08-13) · Source: Morgan Stanley Prime Brokerage Proprietary Estimates
- Top 50 Crowded Longs vs Shorts Spread WTD (North America): -1.77 % (WTD through 2026-08-13) · Source: Bloomberg, MSCI Barra, Morgan Stanley Prime Brokerage