The death of the cheap-money era is redrawing Corporate America’s earnings map — upending a decade of Wall Street wisdom over which stocks are the bargain buys or the high fliers of tomorrow.

Q4 2022 hedge fund letters, conferences and more

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As Big Tech grapples with a slowdown in revenue and a new commodity cycle rages, Faang members Amazon.com Inc. and Netflix Inc. are suddenly morphing into value stocks while Exxon Mobil Corp. attains the coveted growth-equity halo.

With all bets off on the inflation-lashed economic trajectory, gone are the days when the tech mega caps easily fall into the category of fast-growing corporations while oil shares trade at cheap valuations. Now growth-fund managers, who rode the bull market by simply gorging on the tech superstars, are increasingly buying shares traditionally seen as value bets. And vice versa.

As the lines blur between two of the most popular stock investing styles, the largest index managers are far apart on classifying the likes of Amazon and Exxon. That’s making life even harder for stock managers reshuffling their holdings like never before.

Take Stephen Yiu, who amassed $1 billion in less than five years by betting on the tech boom. These days, the manager of the £735 million Blue Whale Growth Fund is trying to explain to clients why he sold off all his shares in Meta Platforms Inc. and Alphabet Inc.

“We’re now trying to tell people we’re not a tech fund, and so hopefully people will understand, but some of them still have this perception, like ‘why are you getting into energy? That’s not tech,’” Yiu said.

In a bid to bounce back from a 28% loss in 2022, the London-based investor is now touting new picks in old-economy sectors like energy and railroad — traditionally seen as value bets in the days of low interest rates.

Differences on how to define investing styles like value and growth are par for the course for both discretionary and quant managers. Yet the scale of the current divergence in view is notable — and index classifications matter given about $800 billion of cash is tracking these strategies in the exchange-traded fund world alone.

Read the full article here by Lu Wang, Justina Lee, Advisor Perspectives.