Hedge Funds Navigate Software Stock Sell-Off Amid AI Fears

The recent software stock sell-off, fueled by concerns that artificial intelligence (AI) could render software businesses obsolete, has impacted the $5.2 trillion hedge fund industry. Stocks of companies like Salesforce, Oracle and Workday have collectively lost trillions of dollars in market capitalization. While the extent of losses for individual funds remains largely undisclosed, regulatory filings reveal which managers had the most significant exposure to the sector at the beginning of 2026.

Fernbridge Capital’s Significant Bets

Brennan Diaz’s Fernbridge Capital, a stockpicking fund with approximately $2 billion in assets, stood out with substantial investments in Salesforce and Workday. As of the start of 2026, Salesforce comprised over 22% of the firm’s portfolio, its largest position. Workday represented nearly 15% of the portfolio, making it the second-largest bet. Both stocks had declined by more than 25% year-to-date as of publication.

Diaz founded the fund in 2019, following a role at Junto Capital, and previously served as a portfolio manager at Viking Global, according to his LinkedIn profile.

Other Funds’ Positions and Strategies

Contour Asset Management, led by David Meyer, initiated new positions in both Salesforce and Workday during the fourth quarter of 2025. Salesforce was the firm’s third-largest holding at the beginning of 2026. ValueAct, a long-running activist fund, maintained Salesforce as its largest position, accounting for over 11% of its portfolio, and increased its stake in the fourth quarter. Mason Morfit, ValueAct’s chief investment officer, also serves on Salesforce’s board of directors.

Sean Ma, formerly of Snow Lake Capital, launched M37 Management to focus on AI and infrastructure investments. His firm acquired 100,000 shares of Oracle in the fourth quarter, making it the second-largest holding at the start of 2026.

Betting Against Oracle

Kirkoswald, managed by Greg Coffey, took a contrarian approach, establishing a significant short position in Oracle. The firm purchased put options on Oracle worth approximately $400 million in the fourth quarter. Put options allow investors to profit from anticipated declines in a stock’s price by enabling them to sell shares at a predetermined price.

The duration of Kirkoswald’s options contracts and any subsequent position adjustments remain undisclosed. The firm declined to comment.

None of the mentioned managers responded to requests for comment.