Hedge funds including Engineers Gate, Samlyn Capital and Walleye are cutting staff and unwinding equity teams after an AI-driven technology rout triggered steep October losses and the deepest industry deleveraging in more than a decade. Engineers Gate eliminated the majority of its Synthesis unit, which combined quantitative and fundamental stock analysis, while Samlyn sold nearly all of its equity holdings outside financials and let go of senior analysts. Walleye also dismissed equity personnel and began returning capital to clients.
More than 40% of stock-picking hedge funds were flat or down for the year through October, and over half of 46 major funds tracked by Bloomberg finished the month with losses. VARA fell 33% in October, Tiger Global dropped 8.5% to erase its gains for the year, and Lone Pine slid to a 7.5% year-to-date loss after gaining 40% in the first half. In credit, losses at Arini’s main hedge fund deepened in late October to 32% for the year, with most of its exposure in CCC-rated debt and its top five positions accounting for about two-thirds of net asset value.