Inside October's hedge fund bloodbath — and why the pain might not be over

• Many big-name managers lost money in a turbulent October.
• Hedge funds are shedding traders and senior executives as the pain mounts.
• Traders investing across asset classes have been affected, and the pain has continued into November.

Halloween has passed, but times have never been more frightening for the hedge fund industry's rank-and-file.

October was a brutal month for nearly every firm, regardless of strategy focus. Multi-strategy giants like Millennium Management and Balyasny Asset Management lost money, while macro superstars like Greg Coffey and credit wunderkinds like Hamza Lemssouguer made headlines for the wrong reasons. The carnage shows no signs of slowing, as artificial-intelligence-linked stocks tumbled Thursday following Democrats' dominance in Tuesday's midterm elections.

It's been a bloody stretch for an industry known for its insatiable demand for investing personnel, potentially justifying Elliott Management founder Paul Singer's view that the talent war has been "exaggerated" by "the non-stop bull market."

"The next serious bear market could lead to a comprehensive rethink of how investors determine excellence," he wrote in an investor letter from late January.

The consequences of these losses are no surprise for those familiar with the cutthroat nature of the industry: Nameplate changes. There is very little patience for people who aren't making money, especially at the sprawling multi-strategy funds which, on average, turn over 20% of their portfolio managers each year.

On the stock-picking side, Walleye Capital and Engineers Gate just cut senior leaders, including Anil Gondi and Mike Daylamani, respectively, and other equity-focused staffers, while Balyasny's Corbets unit shed investors in October, Business Insider reported. Funds had to battle a volatile market in October when several big-name tech stocks, such as Meta and Intel, sold off.

Macro traders meanwhile had to navigate the ripple effects of rising interest rates, war-driven oil price fluctuations, and an electoral surprise in Brazil.

It resulted in the worst month on record for Kirkoswald Capital, the firm run by Coffey, the macro investing legend nicknamed "The Wizard of Oz." The manager dropped more than 6%, though its year-to-date gains are still above 16%, a person close to the manager told Business Insider.

There's also been plenty of personnel departures from macro trading desks across the industry. ExodusPoint, the fixed-income-oriented multi-strategy fund, saw two pedigreed PMs leave its Dubai office less than a year after joining, and it also recently cut currency-trading legend Jim Leitner, a person close to the manager said.

In credit land, where a flood of corporate paper has distorted the market, Arini Capital's Lemssouguer has sold hundreds of millions of positions from his book in the midst of a drawdown — though the young founder is not hunkering down and licking his wounds. An attendee at Bank of America's recent industry conference in Miami said London-based Lemssouguer met with investors in Florida and spoke onstage about his market views.

Arini declined to comment.

Meanwhile, credit traders have been on the chopping block at well-known investing platforms. Manav Gupta, who joined Millennium earlier this year, has already departed Izzy Englander's fund. And Brevan Howard, the $35 billion manager, shed five credit portfolio managers as its credit-trading head, Andy Silver, transitions into an advisory role. Brevan's two largest funds — Alpha Strategies and its Master fund — are both roughly flat on the year.

In total, the onslaught of trading losses and pink slips has been stunning, even for grizzled veterans.

"It's definitely adult swim now," said one longtime portfolio manager, who told Business Insider that they'd survived "for now."

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