Hedge-Fund Leverage Fell 5% as Retail Investors Bought $1.86 Billion in Nvidia

U.S. long-short hedge-fund net leverage fell 5% on Nov. 5, its fifth-largest one-day decline since 2010, while retail investors later net bought $1.86 billion in Nvidia shares over five sessions.

The measures cover different periods: the leverage decline was recorded Nov. 5, while the Nvidia purchases ran through Nov. 12. Morgan Stanley Derivatives posted Nov. 6: “Net leverage is now in the bottom decile since 2010.”

Long-short funds’ active gross flow since June was down 10.7% relative to end-June gross market value. The funds were underweight artificial intelligence stocks relative to market-cap weights, with AI stocks making up 32% of their absolute exposure.

Retail investors net bought $111 million of Nvidia shares in the first 30 minutes of U.S. trading Nov. 12, more than 40 times a typical opening period. Their net purchases totaled $473.8 million for the full session.

Over the five sessions ending Nov. 12, net retail purchases of Nvidia reached $1.86 billion, at the 99th percentile of the stock’s historical flow. The purchases represented 34.1% of aggregate market net retail inflows, while Nvidia shares fell 8.6% over the same period.