Wall Street Buys While Investors Sell Amid Historic Tech Stock Selloff

Wall Street's big players are buying back stocks while investors are selling, sparking a historic wave of sales. Over three days ending July 28, hedge funds made their largest sell-off of global tech stocks since records began in 2016.

The total reduction in equity exposure has reached its highest level since November 2022, with North America leading and Europe following. The selling pressure spread across all sectors.

However, retail investors are also selling off, with a net outflow of $243 million on U.S. stocks, the largest daily sale since March 2020. This type of movement is characteristic of a 'de-grossing phase', where hedge funds reduce their long and short positions to decrease overall risk.

Citadel Securities, led by Ken Griffin, has been buying back part of the liquidated portfolio of Situational Awareness fund, which was forced to sell off due to excessive leverage. Citadel's investment in AI-related stocks is seen as a vote of confidence, but it also has significant exposure to crypto, investing $400 million in Crypto.com and €200 million in Kraken exchange.