Key facts
- Hedge funds are increasing short bets to near a five-year high.
- Bayberry Capital is launching a short-only strategy.
- Maverick Capital is betting on Intel's AI chip specialization.
- The momentum trade in AI stocks has lost over 7% since July.
Hedge funds are adapting to a rapidly changing market by increasing their focus on stock selection and short-selling. Goldman Sachs reported that hedge funds' short bets are nearing a five-year high, indicating a strategic shift. Bayberry Capital's founder, Angela Aldrich, is launching a short-only strategy, signaling a move towards more defensive positioning. This comes as the momentum trade, which had previously fueled significant gains in AI-related stocks, has faltered since the third quarter. Funds are now emphasizing deep-dive fundamental analysis to identify specific winners and losers, moving away from broad macro themes. Maverick Capital, for instance, is backing Intel's specialized chip manufacturing for AI applications, highlighting a return to traditional stock-picking methods.