A significant shift is underway in the energy investment strategies of hedge funds.
A recent analysis by Bloomberg Green has revealed a move away from shorting oil stocks and a reduction in short positions against solar energy companies. This reversal marks a departure from trends that have dominated the sector since 2021.
Equity-focused hedge funds have predominantly held short positions in oil stocks from the beginning of October through the second quarter of 2025. This trend is according to a Bloomberg Green analysis of global indexes for oil, wind, solar, and electric vehicle sectors.
This contrasts sharply with the prevailing strategy since 2021, where shorting oil was a common bet. The Bloomberg data is based on fund disclosures to Hazeltree, an alternative-investment data specialist.
Concurrently, the analysis indicates that these same hedge funds have been unwinding their short bets against solar stocks during this period. The Bloomberg Green analysis encompassed approximately 700 hedge funds, representing around $700 billion in gross assets, and also showed that portfolio managers maintained a net long position in wind energy investments.
The analysis highlights that, on average, more hedge funds held net short positions in the S&P Global Oil Index than net long positions for seven out of the nine months starting in October 2024. In stark comparison, net long positions exceeded net short positions in all but eight of the 45 months spanning from January 2021 through September 2024.
Several factors are contributing to this shift in sentiment. An increase in oil supply, as some OPEC member nations aim to protect their market share, coupled with evidence of an economic slowdown in major economies like the U.S. and China, has led to growing skepticism about the oil sector’s prospects for the remainder of 2025.
According to the Bloomberg analysis, investors will be closely monitoring upcoming monthly market analyses from OPEC, as well as updates from the US Energy Information Administration and the International Energy Agency, for further insights into the evolving supply-demand dynamics in the global energy market. This Bloomberg analysis underscores a notable pivot in hedge fund strategies, reflecting a potentially changing landscape for both traditional and renewable energy investments.
