Hedge Funds Pivot to Stock Picking as Momentum Trade Stalls

The shift is evident in the data. Goldman Sachs reports that hedge funds are nearing a five-year peak in short positions, signaling a defensive posture. At a recent investor conference in New York, Bayberry Capital founder Angela Aldrich unveiled a new short-only strategy, specifically targeting Coca-Cola Consolidated. This pivot reflects a broader move away from thematic investing toward the traditional stock-picking discipline that defined the industry's origins.

Firms are now scrutinizing individual company mechanics rather than betting on general market trends. Maverick Capital is bucking the broader tech sentiment by betting on Intel’s manufacturing capabilities to drive long-term value, moving away from the AI-focused hype that dominated the first half of 2025. This strategy aligns with the view that alpha is no longer found in momentum-driven ETFs, which have dropped more than 7% since July. As BlackRock’s Raffaele Savi noted, the pursuit of returns now requires constant discipline to find divergent opportunities, as the era of easy, broad-market gains faces significant headwinds from rising interest rates and fiscal instability.