Hedge funds snap up tech stocks at fastest pace in five months

Global hedge funds this week bought U.S. information technology stocks, such as semiconductors and hardware, at the fastest in five months amid the start of the third-quarter earnings season, according to Goldman Sachs on Friday.

Outside the U.S., diverging reports from chipmaker Taiwan Semiconductor Manufacturing and chipmaking equipment supplier ASML Holding moved shares in opposite directions while investors await semiconductor companies such as Advanced Micro Devices and Nvidia to unveil their earnings as they seek a trend.

oldman Sachs’ prime brokerage unit, which provides services for hedge funds and tracks their positioning, said portfolio managers net bought U.S. information technology stocks for the third straight week. Hedge funds both covered short positions - bets stocks will fall - and snapped up long positions.

The bank said the only information tech subsector hedge funds sold was software.

Overall, information technology accounts for 16.1% of hedge funds’ U.S. exposure, down from roughly 22% it reached earlier this year.

On the flip side, hedge funds sold stocks in U.S. consumer sectors, from food products to beverages and restaurants for the fifth straight week, the bank said.

Data storage provider Western Digital must pay $315.7 million in damages for violating a patent owner’s rights in data security technology, a jury in California federal court said on Friday.

The jury determined that several Western Digital self-encrypting hard drive products infringe a SPEX Technologies patent covering data encryption innovations, a SPEX attorney said in an email.

San Jose, California-based SPEX sued Western Digital in 2016. SPEX said it bought the patent at issue from Spyrus, a cryptography company that developed the technology for encrypting sensitive communications.

Spyrus co-founder Sue Pontius said she was grateful to the jury for the verdict. SPEX’s lead attorney, Marc Fenster, said the verdict was “a vindication of Sue Pontius and her perseverance.”

A Western Digital spokesperson said the company disagrees with the verdict and plans to challenge it in post-trial motions and an appeal if necessary.

The lawsuit said Western Digital data storage devices including its Ultrastar, My Book and My Passport products infringed the patent. Western Digital denied the allegations.

In July, a different jury in the same Santa Ana, California, court said Western Digital owed more than $262 million to another company for infringing patents related to increasing hard drive storage capacity.

U.S. investors made large investments in equity funds in the week to Oct. 16, buoyed by strong third-quarter earnings from U.S. lenders and optimism over a potential Federal Reserve rate cut in November and signs of cooling inflation.

According to LSEG data, U.S. equity funds drew a sharp $20.08 billion in net purchases during the week, following about $3.98 billion worth of inflows in the previous week.

Strong earnings reports from mega-cap banks including Morgan Stanley, JP Morgan Chase and Goldman Sachs boosted investor sentiment, driving Wall Street’s major indexes to records this week.