Hedge funds restructure and cut teams following October losses

Several hedge funds have implemented significant restructuring and staff reductions following losses driven by a pullback in technology and AI-related stocks during October.

Walleye Capital, which manages approximately $17 billion in assets, reported a 5.9% loss in October, its worst monthly performance since March 2020. In response, the firm is restructuring its internal equity long/short business, which includes the departure of division head Anil Gondi and a substantial reduction of the internal investment team. CEO and CIO Will England stated that previous investments in internal stock-picking capabilities did not yield expected results relative to the resources consumed. Walleye intends to continue equity investing through direct reporting lines and external managers.

Engineers Gate also reported a loss of 5.5% as of late October, leading the firm to dissolve most of its Synthesis equity team. Other major multi-strategy platforms, including Millennium, Marshall Wace, ExodusPoint, and North Rock Capital, also recorded monthly losses. Goldman Sachs data indicates that hedge funds net sold approximately $20 billion in technology stocks over a two-week period, with short bets approaching five-year highs.