Key Takeaways
- • Goldman Sachs prime brokerage data from October showed hedge fund short exposure near a five-year high, as managers shift toward stock-specific selection rather than broad macro bets.
- • Bayberry Capital founder Angela Aldrich unveiled a short-only strategy alongside her flagship long-short fund at Robinhood's closed-door New York investor conference in October, pitching a short on a North Carolina Coca-Cola bottler, according to two attendees.
- • Maverick Capital co-CIO David Tykocinski argued Intel could reach a $1 trillion market cap based on its chip manufacturing position rather than AI use cases or rate views.
- • BlackRock's momentum-factor ETF rose more than 55% from the start of 2025 through Q2 2026 but has lost more than 7% since early July, pressuring crowded AI-linked positions.
- • BlackRock systematic investing head Raffaele Savi wrote that "there is no permanent source of alpha," framing the current environment as a test of hedge fund fee justification.
Summary
Hedge funds that profited from a strong equity run are now being tested on their ability to separate winners from losers, Business Insider reports. After a period in which broad market exposure drove gains, managers are returning to fundamental, company-level analysis as some of the market's dominant technology names slow.
Short interest has risen sharply. According to an October report from Goldman Sachs' prime brokerage desk, hedge fund short positions were close to a five-year high. At Robinhood's closed-door investor conference in New York that month, Bayberry Capital founder Angela Aldrich, a former Blue Ridge Capital alumnus, revealed plans for a short-only strategy to complement her flagship long-short fund. According to two attendees, she pitched a short position in a publicly traded North Carolina-based Coca-Cola bottler; Coca-Cola Consolidated declined to comment, and Aldrich did not respond to requests for comment.
Long-biased managers are also emphasizing stock selection. Maverick Capital co-chief investment officer David Tykocinski, speaking at the same conference, said Intel could reach a $1 trillion market capitalization, with his thesis resting on the chipmaker's manufacturing specialization rather than on AI adoption forecasts or interest-rate views.
The momentum trade has reversed. From the start of 2025 through the second quarter of 2026, BlackRock's momentum ETF gained more than 55%, with holdings including AI-linked names that helped drive large returns at funds such as Leopold Aschenbrenner's Situational Awareness. Since early July, however, the trade has lost investors more than 7%, with semiconductor makers AMD and Micron among the largest holdings. Business Insider attributes the shift to rising interest rates and fixed-income volatility driven by a surge in issuance from large technology companies and fiscal stress in countries such as France.
JPMorgan's head of positioning intelligence, John Schlegel, said on a podcast earlier in October that hedge funds generally generate more alpha in down markets, though he cautioned that net returns may be negative when managers run long exposure while still protecting capital reasonably well. BlackRock's Raffaele Savi, in a recent report from the $15.5 trillion asset manager, wrote that hedge funds "don't necessarily need markets to go up. Or down," and that ongoing discovery of new edges is essential.
Short interest has risen sharply. According to an October report from Goldman Sachs' prime brokerage desk, hedge fund short positions were close to a five-year high. At Robinhood's closed-door investor conference in New York that month, Bayberry Capital founder Angela Aldrich, a former Blue Ridge Capital alumnus, revealed plans for a short-only strategy to complement her flagship long-short fund. According to two attendees, she pitched a short position in a publicly traded North Carolina-based Coca-Cola bottler; Coca-Cola Consolidated declined to comment, and Aldrich did not respond to requests for comment.
Long-biased managers are also emphasizing stock selection. Maverick Capital co-chief investment officer David Tykocinski, speaking at the same conference, said Intel could reach a $1 trillion market capitalization, with his thesis resting on the chipmaker's manufacturing specialization rather than on AI adoption forecasts or interest-rate views.
The momentum trade has reversed. From the start of 2025 through the second quarter of 2026, BlackRock's momentum ETF gained more than 55%, with holdings including AI-linked names that helped drive large returns at funds such as Leopold Aschenbrenner's Situational Awareness. Since early July, however, the trade has lost investors more than 7%, with semiconductor makers AMD and Micron among the largest holdings. Business Insider attributes the shift to rising interest rates and fixed-income volatility driven by a surge in issuance from large technology companies and fiscal stress in countries such as France.
JPMorgan's head of positioning intelligence, John Schlegel, said on a podcast earlier in October that hedge funds generally generate more alpha in down markets, though he cautioned that net returns may be negative when managers run long exposure while still protecting capital reasonably well. BlackRock's Raffaele Savi, in a recent report from the $15.5 trillion asset manager, wrote that hedge funds "don't necessarily need markets to go up. Or down," and that ongoing discovery of new edges is essential.
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