Key Takeaways
- • Walleye Capital, which manages over $17 billion, lost 5.9% in October 2026, its worst monthly performance since March 2020.
- • The firm will streamline its internal long/short equity business, parting ways with the management of that business and a significant portion of the internal long/short investment team.
- • Walleye will return some capital to investors, with the amount, timing, and method to be communicated individually to each investor.
- • The firm will not exit long/short equity, shifting that exposure to external managers and its most confident internal portfolio managers, who will report directly to founder-level leadership.
- • Resources are being reallocated toward the volatility, quantitative, and external investment businesses, with October 2026 reported as the best month in the history of the volatility business.
Summary
Walleye Capital, a hedge fund managing over $17 billion, is restructuring its internal long/short equity business following a difficult stretch for the firm and broader market turmoil. According to the firm's letter to investors, Walleye lost 5.9% in October 2026, its worst monthly result since March 2020. The loss came amid a sharp U.S. tech sell-off on November 5, when the Nasdaq Composite fell 5.5% and the S&P 500 dropped 4.4%. Chip stocks led the declines, with SanDisk down 22.3%, Micron Technology down 17.5%, AMD down about 17%, and NVIDIA down 9.3%. Investors were reassessing the impact of the U.S. midterm election results on AI data center construction and whether heavy AI investment would generate sufficient returns.
In the letter, Walleye said it would part ways with the management of its internal long/short equity business and a significant portion of the internal investment team. The firm described that strategy as its weakest performer since 2023, lagging its external long/short business significantly. Despite efforts that included bringing in new management, the firm said the results did not justify the opportunity costs and resources consumed. The company also acknowledged that its competitive advantage does not lie in replicating the traditional multi-manager long/short equity model.
Walleye stressed that it will not exit long/short equity. It will continue to access the strategy through external managers, provide seed funding for newly established external long/short funds, and gain exposure through its most confident long/short portfolio managers, who will report directly to the firm's leadership. Partners Tom, responsible for project sourcing and relationship management, and Chris, responsible for risk management, will resume managing the external long/short business with their teams.
The firm plans to increase investment in areas it considers to have durable advantages. Its volatility business had its best month in its history in October and is expected to post its strongest year in dollar profit and loss in 2026. The firm has hired nearly 20 volatility portfolio managers over the past two years. Quantitative investing, though weaker in 2026, remains a core focus through Quantic and the central quantitative team led by Rob. Smaller strategies including reinsurance, U.S. Treasury basis trading, and equity capital markets were also cited as supplements. Walleye said the decision followed ongoing discussions and feedback from several large partners, and that it still sees strong investor demand for volatility, quantitative, and external strategies.
In the letter, Walleye said it would part ways with the management of its internal long/short equity business and a significant portion of the internal investment team. The firm described that strategy as its weakest performer since 2023, lagging its external long/short business significantly. Despite efforts that included bringing in new management, the firm said the results did not justify the opportunity costs and resources consumed. The company also acknowledged that its competitive advantage does not lie in replicating the traditional multi-manager long/short equity model.
Walleye stressed that it will not exit long/short equity. It will continue to access the strategy through external managers, provide seed funding for newly established external long/short funds, and gain exposure through its most confident long/short portfolio managers, who will report directly to the firm's leadership. Partners Tom, responsible for project sourcing and relationship management, and Chris, responsible for risk management, will resume managing the external long/short business with their teams.
The firm plans to increase investment in areas it considers to have durable advantages. Its volatility business had its best month in its history in October and is expected to post its strongest year in dollar profit and loss in 2026. The firm has hired nearly 20 volatility portfolio managers over the past two years. Quantitative investing, though weaker in 2026, remains a core focus through Quantic and the central quantitative team led by Rob. Smaller strategies including reinsurance, U.S. Treasury basis trading, and equity capital markets were also cited as supplements. Walleye said the decision followed ongoing discussions and feedback from several large partners, and that it still sees strong investor demand for volatility, quantitative, and external strategies.
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