UBS: selling nearly complete, recommends buying high momentum stocks on dips.

UBS trading department said that the sharp sell-off of momentum stocks may be coming to an end, providing investors with an opportunity to rebuild positions in artificial intelligence and semiconductor stocks. According to UBS's prime brokerage data, hedge funds have started unwinding long positions in momentum and semiconductor stocks, representing about 5% of total market value, one of the largest reductions on record. This has led to net positions in semiconductor and software stocks falling back to levels seen in April. Despite the market pullback, Michael Romano, head of stock derivatives sales at UBS hedge funds, said in a report to clients that the improving fundamentals of AI are signaling a buy-the-dip opportunity. However, he advised investors to gradually build positions instead of rushing to buy all at once. The core of momentum strategy is to buy the best performing stocks while shorting the worst performing ones. Romano wrote, "De-risking the momentum strategy has been and remains a steadfast conviction. Gradual position building is a prudent approach." UBS's momentum stock basket includes companies like SanDisk, Broadcom, Oracle, KKR & Co. Inc., Datadog Inc., and Microsoft.