Hedge fund Walleye hands back capital as it slims down equity business

Live updates

1. 2h ago

   Walleye returns capital, cuts equity team after 5.9% October loss

   Walleye Capital is returning capital to investors and shrinking its internal equity long/short operation after losing 5.9% in October, its worst month since March 2020. The hedge fund, which manages over $17 billion, will part ways with equity management and part of its internal long/short investment team while continuing to invest through external managers and its highest-conviction portfolio managers. It plans to direct more resources toward volatility, quantitative strategies and external investing rather than exit equity long/short entirely.

   Why it matters

   Walleye said its internal equity long/short strategy has been its weakest since 2023 and lagged its external long/short business. Attempts to improve the strategy through new management did not produce expected results and consumed too many resources. The move comes as a tech selloff pushes hedge funds to protect gains, cut positions and reduce staff.

   What is confirmed

   • Walleye Capital manages over $17 billion.
   • The fund lost 5.9% in October, its worst monthly performance since March 2020.
   • Walleye told investors it will return some capital and streamline its internal equity long/short business.
   • Walleye will part ways with related management and a significant portion of its internal long/short investment team.
   • Walleye said internal equity long/short has been its weakest strategy since 2023 and significantly lagged its external long/short business.
   • Walleye is not exiting equity long/short and will keep investing through external managers, seed new external long/short funds and use its most conviction-driven portfolio managers.
   • Walleye will direct more resources to volatility, quant and external investing.
   • Walleye's volatility strategy had its best month ever in October and is on track for its best year in 2026.

   Still unconfirmed

   • ZeroHedge described Walleye's capital return and equity leadership change as following its worst month since the Covid crash.
   • MarketWatch said the year's most successful stock-market trades were unraveling, perhaps permanently.

   What to watch next

   • Details on the size and timing of Walleye's capital return to investors.
   • Whether external long/short funds and seed vehicles replace the internal team at comparable scale.
   • Further staff or leadership changes at Walleye as the tech selloff tests hedge-fund risk controls.
   Sources used for this update (12)

   1. WSJ — Exclusive | Hedge Funds Dump Positions and Cut Staff as Selloff Deepens
   2. Yahoo Finance — 'They're shooting the generals': AI trade stocks drop as hedge funds rush to protect 2026 gains
   3. MarketWatch — The year’s most successful stock-market trades are unraveling — perhaps for good
   4. Financial Times — Hedge fund Walleye hands back capital as it slims down equity business
   5. Barron's — Hedge Fund Liquidations Could Explain Today's Carnage
   6. 247wallst.com — Banks Pulled Back From Lending to Mid-Sized Companies. These 3 Stocks Stepped In, and $105,000 Pays $12,137 a Year
   7. www.businessinsider.com — Walleye Capital Parts Ways With Former Stock Picking Head ...
   8. www.zerohedge.com — Hedge Fund Walleye Returns Capital, Fires Head Of Equities ...
   9. www.htx.com — Walleye Capital, a hedge fund managing over $17 billion ...
   10. www.globalbankingandfinance.com — Tech Selloff Wipes Out Hedge Fund Gains, Triggers Layoffs ...
   11. finance.yahoo.com — A $17 Billion Hedge Fund Is Handing Back Cash After Its Worst ...
   12. www.kucoin.com — Walleye Capital Reports Its Worst Monthly ... - KuCoin
   confidence 88%