US stock market plunge may stem from hedge fund liquidations, with market expectations that multiple funds are undergoing thorough liquidation.

BlockBeats news, November 6 - In response to yesterday's sharp decline in US stocks, most Wall Street traders and analysts believe the main reason is not deteriorating fundamentals but hedge fund liquidations. Noel Smith, co-chief investment officer of Kai Asset Management, said: "A decline of this magnitude without major market news is extremely rare. It smells like liquidation."

In addition to last night's Bloomberg report that multi-strategy hedge fund Walleye Capital will streamline its internal equity long-short business, the market widely expects that several funds are undergoing complete liquidation, or that "pods" (independent investment teams) within multi-strategy funds are being forced to close out/reduce positions.

According to a list published this morning by the well-known financial research community Special Situations, multiple hedge funds are facing difficulties, including Axebrook, Walleye, Engineers Gate, Lone Pine, Millennium internal pods, Verition pods, and Samlyn, mainly involving large redemptions, closure of internal teams, or replacement of PMs.

It is worth noting that during the major US stock market turmoil in July this year, AI hedge fund Situational Awareness also encountered a similar event, with fund assets shrinking by 67%, and subsequently reached an emergency exit transaction with Citadel, selling most of its public stock holdings at a discount.