Many hedge funds were able to ride the market to big gains. Now they need to pick winners and losers.

Hedge funds that were able to ride the market to large gains are now shifting back to fundamental stock selection, on both the long and short sides. According to the story's publisher summary, broad exposure to AI winners is no longer paying off, and managers are required to differentiate among individual companies rather than relying on sector-wide or index-level momentum.

The shift is occurring as interest rates rise and bond markets are rattled by heavy issuance from technology companies and fiscal problems in countries such as France. Bayberry Capital is cited in the story's commentary on this transition, though the full attribution is not available in the material provided. For institutional allocators, the implication is that manager dispersion and stock-level research capability are likely to matter more in the period ahead than exposure to a single theme.