Hedge Fund Collective Liquidation May Be One of the Main Drivers of the Market's Accelerated Plunge
Odaily reports: US stocks suffered a violent sell-off yesterday, with the Nasdaq 100 just posting its largest single-day decline since the 2020 pandemic, and the S&P 500 shedding $3 trillion in market value today.
Multiple analysts said one of the reasons for the accelerated market decline may be a wave of collective liquidations hitting several hedge funds.
An investor letter obtained by Bloomberg shows that Walleye Capital, a hedge fund with over $17 billion in assets under management, is planning to return some cash to scale down its internal equities business after losing 5.9% in October—its worst month since March 2020.
People familiar with the matter revealed that due to the October performance slump, Anil Gondi, Walleye Capital's head of equity investments, has agreed to part ways with a "substantial portion" of the equities team, with the firm set to focus going forward on core strategies such as volatility, quantitative strategies, and external business.
In addition, market rumors suggest that hedge fund Millennium has withdrawn more than $1.5 billion in leveraged capital from two external portfolio managers, while another hedge fund, Lone Pine, is also facing rumors of outright bankruptcy—though these claims have not yet been confirmed.
