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HedgeCo.Net \u2014 Hedge funds took one of their broadest hits in more than six years on Thursday as a renewed selloff in large technology stocks swept through crowded AI-linked positions. Goldman Sachs’ prime brokerage desk told clients that all three of the broad equity strategies it tracks fell more than 1% on October 22, the first time that has happened on the same day since the Covid-19 pandemic. “If last Thursday felt bad, today has been worse,” the desk wrote, according to Reuters.<\/p>\n
The damage was spread across styles. Global fundamental long\/short managers lost 1.4% on the day, their worst session since July 16, with telecom, media and technology specialists down an average of 2.7%. Systematic long\/short managers fell 1.3%, their third-worst day since December 2023. Multi-strategy platforms, which are built to keep firm-wide drawdowns contained, slid 1.9%, their second-worst day since the April 2025 tariff selloff. Goldman estimated that more than two-thirds of the hedge funds in its prime book finished lower, as concentrated short positions were squeezed further in the second half of the session.<\/p>\n
The trigger was renewed doubt about the payoff from AI capital spending. Meta Platforms fell about 7%, its largest drop since July, after saying it would issue a new class of shares to help raise funds, while Nvidia dropped roughly 4% and the Nasdaq Composite lost 2.6%. Bloomberg reported that the Nasdaq 100 fell 2.9%, its biggest decline since June, with worries over oil-driven inflation adding to the pressure. Market participants told Reuters the losses forced deleveraging as managers cut exposure to crowded AI trades.<\/p>\n
October has now turned into a difficult month for equity managers. Goldman estimates global fundamental long\/short funds are down 3.8% month to date, though still up 8.8% for the year. Technology-focused and Asia-focused funds were among the weakest through October 22, down roughly 10% and 9% respectively, and Asia fundamental long\/short managers remain up about 14.2% year to date even after a 9.3% October decline.<\/p>\n
For allocators, the pattern matters more than the single day. Losses that hit fundamental, quantitative and multi-manager books at once point to shared crowding in the same AI-linked names rather than isolated stock-picking errors. With third-quarter earnings season still underway and U.S. midterm elections approaching, the next test is whether managers can rebuild gross exposure without being forced to sell into further weakness.<\/p>\n","protected":false},"excerpt":{"rendered":"
HedgeCo.Net \u2014 Hedge funds took one of their broadest hits in more than six years on Thursday as a renewed selloff in large technology stocks swept through crowded AI-linked positio\u2026 Continue reading