Engineers Gate cuts majority of fundamental equities team after October losses

Engineers Gate, a New York-based multi-strategy hedge fund manager, has cut most of its Synthesis fundamental equities team following a difficult October, according to a report by Bloomberg. The dismissals include the team's head, Mike Daylamani, and followed a review of performance. Synthesis accounted for approximately 14% of the firm's gross market value at the end of October, and five fundamental portfolio managers remain at Engineers Gate.

Chief executive Greg Eisner told investors that the team's performance had fallen short of the standards required to maintain its existing structure. A person familiar with the firm's results said Engineers Gate was down 5.5% for October through 23 October, as sharp reversals in AI and technology stocks triggered losses across multiple hedge fund strategies. Per the opalesque account, the firm said in a letter to clients that the team's performance after the AI and tech stock downturn was insufficient.

The restructuring extends beyond Synthesis. Engineers Gate is also exiting or reducing capital allocations to a small number of lower-conviction portfolios, and it is scaling back allocations to external China-focused managers as it develops internal investment capabilities in Asia.

The changes come amid a broader reassessment of risk across the hedge fund industry following October's volatility, in which technology-driven losses and macroeconomic shocks led managers to reduce exposure and revisit capital allocations. Investing.com grouped the Engineers Gate exits with Walleye's equity long/short overhaul as part of the same AI-driven shakeout. Open questions include how the remaining fundamental books will be sized, whether shifting Asia exposure from external to internal managers improves risk-adjusted returns, and where the freed gross market value is redeployed.