The rapid unwinding of positions has severely hit equity long-short strategies, with Goldman Sachs reporting that tech-focused funds slid over 4 percent in a single Thursday to erase peak gains of 24 percent from June. In response, multi-strategy firms are taking drastic operational steps to preserve capital and restructure underperforming divisions. Walleye Capital has already moved to scale back its internal equity team and issue capital returns to investors following its toughest month since early 2020. This contraction is compounding industry-wide vulnerability as managers exit shared positions simultaneously.
Key points
Repeated whipsaws following the post-U.S. midterm rally caught funds off-guard, forcing t…: Repeated whipsaws following the post-U.S. midterm rally caught funds off-guard, forcing them to quickly sell off recently acquired hyperscaler assets.
Large multi-manager hedge fund platforms are lowering leverage and actively dismissing lo…: Large multi-manager hedge fund platforms are lowering leverage and actively dismissing loss-making teams to stem further financial fallout.
Significant portfolio overlap among the ten largest multi-strategy funds increases the co…: Significant portfolio overlap among the ten largest multi-strategy funds increases the collective systemic risk of simultaneous position liquidations.
Sources checked by our analysis pipeline: 1
HONG KONG, Nov 6 : A brutal global equity selloff led by technology stocks has wiped out year-to-date gains at many hedge funds, while forcing some managers to cut risks and reduce investment teams.
The post-midterm relief rally proved short-lived. Thursday's market rout compounded losses across the industry, with tech-focused funds bearing the brunt.
Equity long-short funds that primarily invest in tech fell more than 4 per cent on the day, leaving returns for the year "roughly flat", Goldman Sachs estimates showed.
That compares with a peak gain of 24 per cent in June before the AI-driven selloff.
Global fundamental long-short managers were down 1.3 per cent on average, while multi-strategy managers dropped 1.4 per cent on Thursday, according to the bank.
At the center of the industry's latest pain is $17 billion hedge fund Walleye Capital.
The New York-based multi-strategy fund said in an investor letter on Thursday, seen by Reuters, that it would trim its internal equity long-short business and reduce a substantial portion of its equity investment team.
"Following our worst month since March 2020, in an…
Shares of the biotechnology company are facing negative momentum during active trading as market participants evaluate current movements. The equity experienced an immediate downward trajectory, marking a retreat from its previous price levels. Observers are tracking the shift closely as the company navigates this downward pressure in the financial market.
Market participants are observing downward movement in shares of the financial technology company during the current session. The sudden retreat has drawn attention across the exchange as investors track the performance of the payments firm. Further information regarding the precise causes behind the decline is still emerging.
Shares of the precision oncology company are facing downward pressure as investors react to ongoing trading momentum. The movement reflects an immediate shift in market sentiment surrounding the equity during the current session. Stakeholders are closely monitoring the decline to determine whether broader sector trends or internal factors are driving the sell-off.