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Hedge funds have been moving out of most stocks, but the few stock purchases they are making are increasingly concentrated among the big American and Chinese tech names.

Bloomberg’s Lu Wang and Melissa Karsh write that Goldman Sachs data shows “the top 10 holdings on average made up 70 percent of a fund’s long portfolios, the highest since at least 2002.”

The narrow band of stocks being traded by the hedge funds are highly correlated and basically constitute one trade. If the sector is hit, the lack of diversification could send hedge funds reeling. Wang and Karsh write:

As a group, hedge funds have been backing away from the stock market even as its dramatic rally added trillions of dollars to share values since Christmas. But one aspect of their faith is rising: the belief that the stocks they do own are the right ones.

It’s visible in a measure of concentration that plots how much of the average hedge fund portfolio is dominated by its biggest holdings. According to quarterly filings compiled by Goldman Sachs, the top 10 holdings on average made up 70 percent of a fund’s long portfolios, the highest since at least 2002.

The five stocks that appeared most frequently among the top 10 holdings of hedge funds are: Amazon, Microsoft, Facebook, Alphabet and Alibaba, data from Goldman Sachs showed.

“Many hedge funds have found that a majority of their performance is driven by their best ideas, which is causing them to increase the concentration in these names,” said Don Steinbrugge, managing partner of consulting firm Agecroft Partners. “Some managers have begun offering a best idea strategy, which is highly concentrated and only includes five to 10 stocks.”

Read more here.