Software overweight positions hits lowest rate ever in Jefferies’ survey

At 19%, the percentage of institutional investors who are overweight software stocks is at the lowest rate ever in Jefferies’ positioning survey.

The rate has been moving down during 2024, starting at 51% in January, then whittling down to 28% in July before registering October’s result. The latest move is “interesting given the outperformance of Software so far in the 2H of 2024 and the price reaction the last 2 weeks,” Michael Toomey, head of Technology, Media, and Telecom equities trading at Jefferies, said.

Cloud computing software company ServiceNow (NOW) was the most crowded long for the second consecutive quarter, and data warehousing Snowflake (SNOW) stayed as the second most-crowded short for the third straight quarter. Jefferies surveys institutional investors ahead of earnings on positioning in various TMT subsectors.

“It’s also worth highlighting that respondents listed 54 different Software stocks as crowded shorts, down from 73 in our July survey,” Toomey said about its TMT Trading October 2024 Positioning Survey. “Adobe remains one of the most debated names within Software,” he said. The survey ran from September 30 through October 11.

• Crowded Longs – excluding Microsoft (MSFT)
• ServiceNow (NOW)
• Oracle (ORCL)
• Salesforce (CRM)
• SAP (SAP)
• Palantir (PLTR)
• Datadog (DDOG)
• Palo Alto Networks (PANW)
• CrowdStrike (CRWD)
• Adobe (ADBE)
• Workday (WDAY)
• Crowded Shorts – excluding Microsoft
• Adobe (ADBE)
• Snowflake (SNOW)
• Salesforce (CRM)
• MongoDB (MDB)
• Zscaler (ZS)
• CrowdStrike (CRWD)
• Palantir (PLTR)
• Atlassian (TEAM)
• Oracle (ORCL)

For investors interested in tracking software through ETFs, here are a few: (XSW), (IGV) and (IGPT).