Hedge Funds Getting Burned as Growth Stocks Trounced by Value
- Worst day since 2010 for investors long momentum, short value
- Hedge funds’ growth-stock exposure highest since at least 2016
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A hedge-fund favorite is rapidly losing ground in the stock market just as one of the industry’s least-loved sectors picks up.
Growth stocks, generally companies that are seeing rapid profit increases, have dropped in seven of the past eight days as measured by Bloomberg’s Pure Growth Portfolio. Meanwhile, a similar measure of value shares, those with the cheapest valuations, are staging a big comeback. The turnaround is so extreme that a Morgan Stanley strategy that’s long the best-performing stocks and short the worst dropped 5.9% as of 1:30 p.m. in New York, poised for the biggest loss since May 2009.