•Charlie Moon• 🌛

Yesterday’s hedge fund rumors are confirmed by WSJ and Bloomberg, and the details hurt. Per Morgan Stanley, October saw the largest active reduction of positions by stock pickers in over a decade. More than 40% of them were flat or down YTD, while the indexes were still positive. And of the 46 major funds tracked by Bloomberg, more than half finished October in the red. The damage: - Lone Pine: +40% in H1, now -7.5% YTD. Caught on both sides, on its AI longs and on its shorts against companies threatened by AI, which went up. - VARA: -33% in October - Arini: -26% YTD, forced to dump over $2B of assets in a week under margin call pressure. Rivals are now shorting its biggest positions. - Tiger Global: -8.5% in October, back to flat YTD - Kirkoswald: worst month in its history - Millennium: -2.3% in October, with several internal pods reportedly shutdown - Engineers Gate: shutting most of its human-plus-quant strategy, keeping only 5 PMs. The head of the unit is leaving. - Samlyn: dropping everything except financials. Other sector heads and senior analysts are out. - Walleye: head of equities and a large part of the long/short teams let go, and capital going back to clients Thursday made it worse. Per Goldman Sachs, tech funds lost more than 4% in one session, wiping out YTD gains that had reached 24% before the summer. The Nasdaq lost $2.5T, to the point that Dan Loeb (Third Point) joked on X: “Hug your hedge fund manager.” The problem is that everyone holds the same names: funds, retail and leveraged ETFs. Hedges stop working, and every sale drags down everyone else’s positions. $SOXL lost 39% in one session, and volatility-control funds could still liquidate up to $135B of futures. But forced selling always stops at some point, and the rebounds that follow can be violent. On Wall Street, an old rule says to wait three sessions after a shock before deciding anything. $QQQ $SOXX