Izzy Englander’s Millennium Management is pulling more than $1.5 billion of leveraged capital from two outside hedge funds. Both had investment losses, Hedgeweek reported from a Bloomberg story: Troluce Capital Advisors of Dorado, Puerto Rico, and Axebrook Capital, a credit firm in London. Troluce is event driven, trading around corporate events such as mergers. Millennium, a platform funding many trading teams, counts that capital as exposure, leverage included, not cash.

The coverage reads the pull as a stop loss, a rule that cuts a manager’s capital after set losses, aimed at small firms living on Millennium’s money. Troluce’s own filing, counted ten months before the pull, shows the bulk of its book in four funds it keeps in custody, leaving little room for Millennium’s account. That gap decides what a pull costs anyone invested beside the platform.

The closing chapters settle how often Millennium ends these accounts and what this one took from Troluce. The public documents lean toward a lost client; those chapters give our odds and the deciding number, the most Troluce ran outside its custody.

Troluce began inside another platform

I read every Form ADV, the registration form an SEC adviser files, that Troluce has filed since July 2024 in the SEC’s monthly adviser data. Its four own funds add up to its custody line, the client money the adviser itself holds, to the dollar.

Jared Dubin has run Troluce as managing member and chief investment officer since January 2021, according to its Form ADV. Its first entry in the SEC’s holdings record, a notice for the fourth quarter of 2021, names someone else.

That 13F notice says Troluce’s holdings were reported by ExodusPoint Capital Management, another platform that backs outside teams. Bloomberg reported in May 2021, in a story FA Mag carried, that Dubin had “recently set up Troluce Capital Advisors there to manage money for ExodusPoint”. Dubin told Bloomberg of Dorado: “There has been exceptional interest, in part because Dorado has access to fiber broadband.”

The same story said a platform’s pods, the independent teams of traders it allocates capital to, can set up as separate firms, “such as Dubin did with Troluce”, so Millennium was Troluce’s second platform.

Its filing lists about five employees, three doing investment work, in Dorado and New York. Its regulatory assets, the gross figure the form asks for, with no deduction for borrowing, went from $449 million in its July 2024 filing to $1.48 billion at its December 2024 count. At the December 2025 count they stood at $2.24 billion. More than half of that rise came before 2025, the year Millennium backed it, by Bloomberg’s account.

Millennium took back more than $1 billion of leveraged capital from Troluce, yet Troluce’s own filing puts almost nine tenths of its book in four funds it keeps in custody.

Those funds belong to allocators. Special Opportunities II held $1.27 billion for 62 owners, more than half of it through funds of funds. Nexus Fund LP held $645 million for three owners, 94% of it held outside the US.

Nexus’s Form D, the notice a private fund files when it sells interests, shows the same $420 million from two investors in March 2026 as in March 2025. No new money came into it between the two filings.

Troluce was an ordinary Millennium ticket. The ten live Millennium commitments the press has sized run from about $500 million to $3 billion, with a middle near $1.1 billion. They mix cash and exposure figures, and the money pulled from Troluce sat near that middle. The business it sat beside was already built.

Troluce’s filing leaves little room for Millennium

Millennium’s outside money goes into accounts the manager runs and the platform keeps. Scopia Capital’s account “was managed through a separately managed account”, Hedgeweek reported when Millennium ended it in March. On Form ADV, such an account counts in Item 5.D, among the pooled vehicles the adviser advises. Because the assets stay with the platform, it is missing from Item 9.A, the custody line of client money the adviser itself holds. So the gap between the two lines is a bound on such an account, the most it can hold.

At its count for 31 December 2025, Troluce answered seven pooled vehicles and six custody clients holding $1.98 billion.

The four funds sum to $1,981,233,917, the custody line exactly. The other two custody clients are feeders, funds that invest only through the Master Fund. Four funds and two feeders make the six custody clients, and all six sit among the seven pooled vehicles. Seven less six leaves one pooled vehicle Troluce advises but does not hold in custody, the position a platform’s account takes. Stargazer and Farpoint, two funds the latest filing also lists, first sold interests in March and August 2026, after that count.

The case against this reading is the date. The count is ten months older than the pull, so an account Millennium funded after 31 December 2025 would not be in it at all. Bloomberg’s account dates Millennium’s backing to 2025, so the account most likely sat inside the count; Troluce’s next annual filing settles it.

The filing does not name the vehicle. Schedule D, the tables attached to the form, has a section where a subadviser lists the funds it runs for others. Troluce’s miscellaneous page says “certain responses to Schedule D, Section 7.B.(2) have been omitted and are the subject of a request for confidential treatment”. The slot for a platform account exists, and the name stays out of it.

“Leveraged capital” is not a figure the filing uses. When Millennium and Engineers Gate, another outside manager, ended their account in March, Millennium “viewed the mandate as a $3.6bn exposure when accounting for leverage”, Hedgeweek reported. Engineers Gate “assessed the direct capital commitment at approximately $1.5bn”, so the two firms read one account 2.4 times apart. The headline figure on Troluce is Millennium’s own measure of exposure, and the filing counts assets at market value.

Axebrook is an exempt reporting adviser, a manager excused from SEC registration that files only part of the form: its Form ADV lists funds and gives no total. Its own Credit Alpha Master Fund held $748 million for 80 owners at its March year end. It also subadvises three funds for other platforms, one for Lighthouse Investment Partners and two reported by Morgan Stanley AIP GP LP, and withholds more. Millennium’s account was one sleeve among several, a sleeve being one account inside a manager’s book.

Millennium’s side stays dark: its own Form ADV, filed on 25 August 2026, names none of the outside managers the press has reported.

Eight Millennium outside accounts have ended since 2024

How often this happens is a count anyone can rebuild from the trade press. Since January 2024, Hedgeweek, Private Banker International and Bloomberg have reported eight managers losing a Millennium account. That was seven endings, because Troluce and Axebrook went in one.

Losses explain one of the seven. Three were terms. Meridiem Capital Partners lost its account at the end of its lockup, the term its money was committed for, in January 2024. Modular Asset Management parted by mutual agreement in September 2025 after more than eight years. Engineers Gate went over liquidity terms in March 2026, when Hedgeweek put it down roughly 7% for the year.

Two were people: Scopia after “personnel changes” and other investors’ redemptions, and Atlantic Wolf when its founder, Aaron Weiner, went back to Coatue. Pamalican, another outside manager, saw the money leave eight months after it began trading, with no reason given.

Private Banker International wrote that the ending “allows Modular to diversify its investor base, reducing its dependency on a single large investor”, one that held a third of its assets, in its report. Pamalican was “planning to raise capital from new investors to replace the withdrawn allocation”, Hedgeweek wrote. Both describe a firm replacing one client.

Three explanations compete for this pull. A stop loss predicts endings soon after a manager’s drawdown, one manager at a time. Terms and people predict mutual endings at contract dates or staff changes, which is most of the record. Millennium’s own need to cut risk predicts several accounts across strategies cut at once.

The programme was still growing in June, which argues against a retreat. Millennium had at least 32 active outside allocations in June 2026, up from 24 a year earlier, With Intelligence counted, and that month it committed about $800 million to Mycor Capital Management.

Balyasny, the nearest peer, ended a $250 million account at Sparta within a year of funding it, after Sparta lost 8% in the first quarter of 2024. A year later With Intelligence found it had no active outside allocations.

This decision cut an event driven account and a credit account on the same day. That fits a stop loss on two managers and a cut across the firm equally well. On the record, its outside accounts end often, and mostly for reasons other than losses.

→ Millennium’s 1999 mutual fund timing, rebuilt from the SEC’s order, Trade File No. 7 on Patreon.

How much of Troluce did Millennium’s money really reach?

Below the paid line:

• A table of odds for the next 12 months, by number of endings, for any reason and after losses.

• Troluce’s custody line worked to its bound, with a placement table and a four line test for any adviser.

• Four dated checks, each with the filing or report that settles it.

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Qube Research & Technologies’ 2025 accounts, filed in September, split £2.92bn of revenue into two lines. For QRT, the London quant firm, the larger is its own costs coming back from its funds; the smaller is its performance fee.

So QRT earns one thing, a share of its funds’ gains, while the funds pay its bills through a monthly charge it calls the pass-through. Its profit is the fee it keeps, and the cost of its growth comes out of the returns its investors are shown.

No press report has printed that bill; the 2026 accounts test whether it tops the fee again.

The closing chapters settle whether 2025 was a single year or a pattern.

They give the odds, as a number, that the funds again pay more toward QRT’s costs than in fees, and name the deciding number in QRT Limited’s 2026 accounts.

Half the revenue is its own costs

The filer is QRT Limited, the UK group. I rebuilt QRT’s money from its own nine sets of accounts at Companies House, 2017 to 2025, and checked every year against its own profit line. Each one ties out, so the numbers below are the firm’s own.

What surprised me was note 4 of the 2025 accounts: the line for QRT’s own costs coming back from its funds, £1.48bn, is bigger than the performance fee, £1.44bn. Together they make the £2.92bn. Note 4 calls the larger line “other revenue” and says it “represents pass through revenue and the recharge of expenses”. I call it cost recovery.

The accounting policy, note 2.5, says how it works. “Pass through revenue is based on expenses incurred by QRT and recoverable from the Funds. Pass through revenue is recoverable on a monthly basis, when the costs are incurred by QRT”. The policy’s conditions are that QRT has incurred the cost and may recover it from the funds; none is about how the funds performed.

QRT pays its staff and its bills, and the costs are recoverable from its funds1 monthly, as they are incurred. In 2025 QRT recovered £1,476.1m of the UK group’s £1,518.4m of costs. That share, which I call coverage, was 97.2%. The funds pay nearly all of QRT’s running costs as they go.

Divide cost recovery by the fee and the funds paid £1.02 toward QRT’s costs for every £1 of performance fee they were charged.2 I call that the ratio, and it last stood above £1 in 2019, when QRT employed 125 people. Above a pound, the funds pay more toward the firm’s costs than in performance fees. The margin is thin, £32.6m on £1.44bn of fees, but it points one way.

Half of what QRT calls revenue is its own costs coming back from its funds, and in 2025 that half was the bigger one. Those costs are charged to the funds as they arise, so they come out of the returns QRT’s investors are shown. QRT’s payroll reaches its investors’ returns as surely as its models do.

BDO, QRT’s auditor, named pass-through revenue as one of two areas it tested for fraud risk, beside management override. It checked “the existence and accuracy of pass-through revenue recognition” against the signed investment management agreement between QRT and its funds. Of QRT’s two revenue lines, the auditor chose the pass-through to test.

The press reads QRT through its returns. In January, Hedgeweek, citing Bloomberg, reported that QRT’s “flagship hedge fund delivered gains of around 30% in 2025”. The 2024 accounts got the same reading from eFinancialCareers, which wrote that “Revenue in the entity more than doubled to £2bn” and put pre-tax profit at £914m. About half of that revenue, £1.07bn, was cost recovery. The returns decide what QRT earns; they do not decide what its funds pay.

The funds pay for the growth

QRT’s board, led by chief executive Pierre-Yves Morlat, names one driver for both lines. Director Marcus Knight signed the 2025 strategic report on 23 April 2026. It reads, “As the investment manager of the Funds, the primary KPI for the Group is linked to the performance of the Funds, which drive the total revenues and expenses of the Group”.

The record bears out the revenue half of that sentence better than the expenses half. Take the net fee, what QRT keeps after its sister firms abroad, entities under common control that the 2023 accounts place in Hong Kong, Singapore and Dubai, take their share. In 2023 the net fee grew 4.3% while costs grew 59.6%. Since 2022, the returns drive the fee and the firm’s size drives the costs.

Two readings would shrink that finding, and the record rules out both. If cost recovery outgrew the fee because returns fell, the net fee would have shrunk; it grew in every year from 2021 to 2025. The 2024 accounts began showing fees before the sister firms’ share, and that change lowered the ratio, so the new presentation did not make the finding. Coverage holds no fee line, and it had already jumped under the old presentation.

The firm’s size is people. The UK group employed 1,336 people on average in 2025, against 343 in 2022, and its costs went from £357m to £1.52bn. QRT’s centralized allocation grew the firm; the accounts show who paid for the growth.

The charge itself is old.3 What changed is the share the funds carry. Coverage went from 58% in 2022 to 87% in 2023, and held between 97% and 99% in 2024 and 2025, as Exhibit 1 shows. The filings do not say why 2023 jumped. In 2025, with coverage near its peak, costs rose 40.9% against a net fee up 19.5%.

A peer says outright what a pass-through means for the investor. The brochure of Tudor Investment Corporation says the staff pay it passes through “accrues regularly and will be payable whether or not the applicable Tudor Hedge Fund experiences positive trading results”. QRT’s accounting policy is less blunt and names no condition on returns; the agreement that sets the terms is not public.

A prime broker has measured what such structures cost investors. BNP Paribas data, as Hedgeweek reported, found that investors in multistrategy funds “kept just 41 cents of every dollar earned” in 2023, down from 54 cents in 2021. QRT’s growth arrived as a bill on its funds, and in three of the last four years the bill grew faster than the fee.

The profit is the fee it keeps

Walk 2025 from revenue to profit, and the cost lines all but cancel against the cost recovery above them.

The sister firms took £336.5m. That left QRT a net fee of £1,107.0m, and profit before tax was £1,052.1m, 95% of it. Almost none of the cost bill reaches the profit line.

The directors lean on the same mechanism to call QRT a going concern. They expect adequate resources “based on the net current asset position as at the balance sheet date and the Company’s pass-through mechanism”. The funds’ payments are part of why the directors expect QRT to pay its way.

What reaches the owners is the fee. The UK group paid £499.0m in dividends in 2025, against £362.5m in 2024. A strong year for the funds is a strong year for QRT’s owners, and the funds carry most of a year of heavy hiring.

A performance fee is usually struck after costs. Where it is, and a fund sits above its high-water mark, the past peak it must regain before it earns a fee, investors bear 65–75p of each pound of pass-through cost at incentive fees of 25–35%. That is the range Hedgeweek reported in September 2025 for QRT’s staff share classes, “bringing them in line with external investors”. Most of each pound of cost is the investors’.

The claim stops at the UK group’s edge. QRT Limited is not all of QRT, because the sister firms keep their share outside it. The consolidated accounts of 1751 Capital Holding Ltd, the Guernsey parent, “can be obtained from their registered office”, and no public register holds them. So the claim is the UK group’s, and that group booked £2,895.7m from the funds in 2025, almost all of its revenue.

Marshall Wace, the London peer, shows the other model. It kept a management fee, and its LLP booked £658.8m of “management fees and other income” beside £755.5m of performance fees in its year to 28 February 2025. Its other income includes research costs its funds pay. Both firms collect money their funds pay in any year; Marshall Wace books most of it as a management fee, QRT as its own costs coming back.

→ QRT’s 2024 Darktrace short, rebuilt from the regulator’s filings, Trade File No. 6 on Patreon.

Will QRT’s 2026 accounts show its funds paying more toward its costs than in fees for a second year?

Below the paid line:

• A five row replay of QRT’s own years, with our odds on a repeat as a number.

• A nine year record table of QRT’s accounts, with the ratio counted two ways for the last three years.

• A four line test for any manager’s UK accounts, run next on Marshall Wace.

• Three dated checks, each with the line that settles it.

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On 22 July 2026, Aston Martin announced new loans led by HPS, the BlackRock-owned private lender. “This new £550m debt financing,” said Doug Lafferty, its finance chief, “significantly strengthens our liquidity.” The loans effectively bypassed existing bondholders, including a creditor group led by Arini Capital Management, Bloomberg reported, and Arini’s flagship fund lost about 8% that month.

Through 23 October the flagship was down about 26% for the year, Bloomberg reported. Bloomberg and FT headlines framed a rout: a “Star Trader’s Woes,” a “bloodbath” for credit investors.

The next suspect is leverage. Yet Sona Asset Management, a credit peer with a larger flagship, shares four of Arini’s five prime brokers, the banks that finance its trades. Sona files about the same gross assets, everything held before debts, per dollar of reported capital, and it was about flat in mid-October. What separated the two sat under that ratio: in what each fund held, and, the evidence suggests, in derivatives the filing does not count. That matters to everyone who holds the same bonds.

• Aston Martin’s July loans put new secured debt ahead of Arini’s bondholder group on some assets; Aston Martin’s notes kept falling, and Arini is preparing a claim.

• Arini and Sona sat on the same lender committee at Altice International, the telecom group, and in the US junk index, Janus Henderson found, cable and telecom drove much of the selloff in CCC, junk’s lowest rating band.

• Margin calls, banks’ demands for more collateral, made Arini sell its more liquid holdings, the WSJ reported, and some investors now hesitate to buy debt it holds in size, Bloomberg reported.

• The firm is sturdier than its flagship: money in its CLOs, loan pools funded by bonds, stays for each deal’s life, and investors added to the flagship.

• Below the paid line, both flagships’ filed ratios and a month by month split of the loss against the market.

• Then a model of when the flagship’s investors are made whole, with my odds.

Aston Martin went around them

I set Arini’s flagship beside Sona’s on their SEC filings, read Arini’s three years of audited UK accounts and Aston Martin’s own bond announcements, and split the loss month by month against index data anyone can download.

A falling US junk market explains much of Arini’s loss at the ratio on file. The rest came in two quiet months that only its names explain, and Aston Martin is the name with the clearest paper trail.

On 13 July, DCM Insider reported that BlackRock, Sculptor and Arini had formed a creditor group holding more than half of the carmaker’s 2029 notes, to guard against a liability management exercise. The notes then traded near 70 cents on the dollar.

Such an exercise moves value away from existing creditors: new debt ranked ahead of them, or assets moved into a unit they cannot claim.

Aston Martin is one of several losing names: its 2029 notes come to about $1.8bn after two more placings in 2024, against a flagship of roughly $8bn in January. They date from 13 March 2024, when Aston Martin priced $960m at 10.000% and £400m at 10.375%, both senior secured, backed by pledged assets.

On 22 July it announced a £450m term loan, borrowed for a fixed term, and a second, £100m loan, both led by HPS. They are secured on “certain of the Group’s assets situated in a newly incorporated subsidiary, together with certain other assets.” Of the money, £190m repaid two existing loans that already ranked ahead of the notes.

In early August, creditors owed £1.3bn, the 2029 noteholders among them, threatened to unwind the HPS deal and block a sale of 50.1% of the non-automotive branding rights to Authentic Brands, the FT reported. Arini is gathering evidence in New York for a UK claim, Just Auto reported, and Aston Martin’s lawyers argue the deal is lawful.

Bloomberg put the notes at about 55 cents at the start of October and 47 cents on 28 October, the day Aston Martin reported a narrower third quarter loss. At 47, the dollar notes’ 10% coupon, their annual interest, alone yields about 21%: the price assumes heavy losses for holders who now stand behind HPS’s secured loan.

The seat Sona shared

Sona sat on the same Altice committee as Arini and was down about 0.5% for the year in mid-October; Arini was down more than 21%. Neither fund had ever had a losing calendar year, the FT and Bloomberg reported.

Altice International is Arini’s other large fight. The telecom group’s drop-down in late November 2025 moved assets away from its secured lenders, and in December 2025 Octus, a credit research firm, listed Arini and Sona among the eleven funds leading them. The FT reported that Altice was the flagship’s largest loss in July.

Sona’s October losses included Virgin Media O2 and new Paramount Skydance debt, the FT and Bloomberg reported. Arini lost in July on equity tranches of credit default swaps providing protection against losses on Virgin Media debt, Bloomberg reported. A credit default swap insures against a borrower’s default; an equity tranche of a pool of such swaps takes the pool’s first losses. The WSJ’s account of Arini’s losses named Brightspeed and Optimum, two US telecom and cable borrowers.

Distressed debt like this trades in or near CCC and below, and that band fell. The ICE BofA US CCC and lower index lost 6.9% in total return from 31 December to 23 October, almost all of it from September; the broad euro high yield index lost 1.6%. Bloomberg reported European CCC spreads, the extra yield those bonds pay, at their highest since March 2020.

Janus Henderson wrote on 15 October that, in the US high yield index’s CCC bucket, the cable and satellite sector “is dominated by CSC Holdings, a subsidiary of Optimum,” and the wirelines sector by Altice. The two sectors were “responsible for much of the spread widening within CCC,” it wrote.

Diameter, another credit hedge fund, also slipped into loss in October.

The selloff explains October’s timing, when all three lost. In the first half of October the US CCC index fell 1.84%: Sona lost about 1.7 times that, Arini about 3.8 times. What the selloff cannot explain is a twenty-point gap for the year between two funds on the same committee.

Too big to sell

Hamza Lemssouguer, a former Credit Suisse high yield trader, founded Arini in 2021 and is its chief investment officer. His method is the large stake and the lead seat. A Bloomberg headline of 10 September 2025 read “Ex-Credit Suisse Prodigy Is Dominating Europe’s Distressed Scene.” In one such fight, lending to keep a company alive at Kem One, Arini was a rescue lender.

A lead seat buys control of a restructuring, and its price is a large share of the debt, which a fund cannot sell in a hurry. Some investors have become reluctant to buy debt in which Arini holds large stakes, Bloomberg reported. A seller the whole market can see gets a lower bid, and that bid then sets the value of the rest of the position.

Concentration has cost the fund in calm markets before. In March 2024 it lost 6.6%, Bloomberg reported from its letter, which blamed “significant moves in three very large capital structures”; the US CCC index rose 1.3% that month. It also lost in each of the last four months of 2025, Bloomberg reported, while the index moved -0.1%.

Leverage turns the problem into cash. The WSJ reported on 30 October that Arini had sold about $800m of debt in recent weeks after margin calls from its banks. The calls were tied to credit default swap indexes, traded baskets of those swaps, and to other leveraged positions. Arini met them by selling its more liquid holdings.

The liquid bonds go first, so what stays is the paper buyers avoid, in the names that caused the loss. Arini had earlier sold its Intrum and Ritz-Carlton Yacht Collection investments and had recently left Pathway Vet Alliance, the WSJ reported. In late October Bloomberg put the yacht debt below 75 cents; it had been above 92 at the end of September. Lemssouguer has reportedly cut new purchases to manage the positions he has. A Bloomberg headline on 30 October said Pimco and Oaktree had bid for Arini’s junk debt.

Arini’s own account is that the losses are marks, not a broken thesis, and its investor letter, as the FT and Bloomberg reported it, says why. “We do not believe it is an indicator of soured investments, but rather part of the process – being contrarian is a necessary condition for this opportunity set.” That view does not change what the fund must do while its banks want collateral.

Each forced sale sets a price for everyone else in those seats, from BlackRock and Sculptor in Aston Martin’s group to PGIM, Invesco, King Street, BlueBay and Fidelity on Altice’s committee.

The firm outlives the fund

From June on, each report found the flagship deeper in loss:

The firm is sturdier than that table. Arini managed $22bn at 31 August, its release of 21 October says, and much of that is money that cannot leave in a hurry.

Arini’s Form ADV, the adviser filing the SEC requires, lists 19 CLOs with $9.2bn of gross assets. Each CLO’s loans are financed by bonds sold to investors, so its money stays for the life of the deal.

On 21 October Arini held the final close of its first direct lending fund, with the money it has lent approaching $2bn.

Against the firm, the flagship’s loss is survivable. Bloomberg put the flagship at $7.5bn at the end of July, down about 7% for the year, by my count. The FT put it at around $7.3bn after a 15.7% loss to September. Together they imply about $8.0bn to $8.7bn at the start of the year, depending on whether the FT’s figure includes October’s new money. A 26% loss on that is about $2.1bn to $2.3bn, about a tenth of the firm.

Investors still added money. By early October Arini had raised $1.5bn of new commitments, promises to invest, for the strategy, Bloomberg reported. More than $400m arrived at the start of the month, about $425m by the FT’s count, and the rest comes by February. That money buys in at the flagship’s lower October value. The fund has climbed back before: after a drawdown, a fall from a peak, in early 2024 it gained roughly 29% over the next twelve months, the FT reported. Gavin Yates, Arini’s former US head, left in August and is expected to build a distressed team at Citadel, the WSJ reported.

Below the line I date when the flagship regains its high-water mark, the level a fund must recover before it can charge performance fees again, and put my odds on it. The split rests on the ratio on file, which about matches the flagship’s loss as a multiple of the CCC index’s fall in the weeks it fell; the date rests on where the flagship stands.

→ Credit default swap tranches, as in Arini’s July loss: Paulson & Co.’s 2007 ABACUS protection, rebuilt from the SEC’s complaint, Trade File No. 5 on Patreon.

How long does a fund down a quarter, and still holding the names that sank it, take to climb back?

Below the paid line:

• A month by month table of the loss against the lowest-rated bond index, rebuilt from public data.

• The two flagships side by side: gross assets and banks from their SEC filings, set against capital as reported.

• A three-outcome model of the recovery, with the odds I would bet at.

• Arini’s London company’s audited accounts, read for what they show, and four dated checks.

Read more

Kevin McGurn, Trump Media’s interim chief executive, told CNBC on 24 August that its feed gives buyers “a 50-millisecond advantage.” Donald Trump’s posts are public the instant he makes them, so what is Jump Trading, a buyer Reuters named, paying for? I read both firms’ filings, the court briefs and the research on speed races.

A buyer gets time: up to about 50 milliseconds to read each post before slower readers can. The meaning still decides the trade; the head start decides who trades first, against the quotes slower readers leave resting. Trump Media’s report due by 9 November will test whether buyers pay its price. Anyone quoting futures when the president posts stands on one side of the head start; Jump, a market maker too, could stand on both.

Six chapters make the case:

• Trump Media sells the fast road, up to about 50 milliseconds ahead of ordinary web delivery by its own estimate, and charges a toll for it.

• Fifty milliseconds is a hundred times the longest gap one study allowed between two firms’ responses to the same news.

• Jump, a buyer by Reuters’ account, could stand on both sides, and fast readers can earn from slow ones when a post moves prices.

• What the head start is worth to buyer and seller, with our odds on Trump Media’s next report.

• Where the toll could fail.

• What it changes for a desk that quotes when he posts.

Trump Media sells the fast road

On 1 August 2026, Trump Media & Technology Group, which owns Truth Social, switched on Truth API, a paid, licensed, machine-readable feed of posts from the ten top Truth Social accounts, the president’s included, as the government later put it in court. The launch release promised to “deliver Truth Social posts to our customers in milliseconds” for “high-frequency and algorithmic trading firms that require a low-latency, machine-readable feed”. The reader it was built for is a machine.

The second-quarter call, filed 11 August, counted “more than 10 customer agreements to date, primarily high-frequency trading firms, at rates generally in the range of $60,000-$100,000 a month.” Reuters reported on 28 October, citing people with direct knowledge, that the buyers include Bloomberg and two trading firms, Susquehanna International Group and Jump Trading. All three declined to comment, and Trump Media said the report rested on “misleading information being peddled by anonymous sources”.

The common reading is written into a suit The Intercept and the Freedom of the Press Foundation filed on 12 August against the president and White House officials. Their complaint begins: “President Donald Trump is charging $100,000 per month for advance access to his official government announcements”. They asked for a preliminary injunction; Judge J. Paul Oetken heard it on 7 October and reserved decision, and the government moved to dismiss on 30 October, the docket shows.

Trump Media’s spokesperson to the Wall Street Journal, 22 July 2026 (court exhibit): “Truth API is designed to deliver posts the instant they are made public to everyone, not before.”

McGurn on CNBC, 24 August 2026, in a transcript Trump Media filed with the SEC: “We give a 50-millisecond advantage in that post, but that’s the internet delivery.”

They agree on the instant a post is published and part on who can act on it first. A firm quoting S&P 500 futures, Treasuries or oil when he posts now quotes against machines that read him sooner.

Trump Media’s amicus brief of 29 September, filed as a friend of the court, sets the order: “Truth Social sends each new Truth into the public feed before it sends the same content through Truth API. The milliseconds Plaintiffs emphasize arise afterward, because machines process structured data faster than humans load and read webpages.” It says which copy is sent first, never which arrives first, and a trading machine acts on arrival.

So the record supports “faster”, not “advance”. The milliseconds can still cost someone: whoever has quotes resting when a post moves the price and the paid machines arrive. The government, defending the president, used the seller’s number in its opposition of 24 September: “at most, a subscriber to Truth API receives a 50-millisecond advantage”. It called that “a fraction of a second, and thus entirely negligible”.

Trump Media’s brief calls the feed a “response to unauthorized scraping”. McGurn told CNBC that when scrapers were offered “a product they can pay for and do it in a legal way, all of these customers came and signed up.” The complaint quotes him on the other half: “We’re going to create a lot of friction for those folks that aren’t coming to us directly.”

So the feed is a data licence, sold beside promised friction for anyone scraping the free copy, which is how a licence becomes a toll. The government’s brief adds the president’s side, a “Social Media 6-Hour Exclusive”, “an agreement in which the President commits, with some exceptions, to first post on Truth Social”. The first copy appears on one site, and its fast copy is for sale.

Fifty milliseconds is a head start

Eric Budish, a University of Chicago economist, and two coauthors timed latency races in London Stock Exchange messages for FTSE 350 stocks, August to October 2015. A latency race, as Aquilina, Budish and O’Neill define it, is two or more traders acting on the same stock, side and price at essentially the same moment, some trying to trade against a resting quote and, often, others trying to cancel it.

Races came about once a minute in the average FTSE 100 stock and held about a fifth of volume. “In the modal race, the winner beats the first loser by just 5-10 microseconds”; call that the race margin. The top six firms took about 80% of the liquidity taken in races, and firms outside them provided about 58%, so on net the outsiders’ resting quotes pay for the races.

For their baseline count the authors “place an upper bound on the information horizon of 500 microseconds”, the longest gap between two firms’ messages that they still treat as responses to the same news; call it the cap. Past it, they write, the assumption that firms react to the same information becomes strained.

To a person at a screen, the feed’s twentieth of a second is negligible, as the government says. In the study’s units it is no race at all: up to 50 milliseconds is 100 times the cap, and 5,000 to 10,000 times the race margin.

It is also longer than prices take to start moving on scheduled economic news. In S&P 500 futures and the SPY exchange-traded fund, prices respond to economic surprises “within five milliseconds”, Chordia, Green and Kottimukkalur found in the Review of Financial Studies. Up to 50 milliseconds is ten times that, though a release with a forecast to beat is quicker to read than a post. Against anyone reading the web copy, the feed works as a head start, step by step.

1. The president posts, and Truth Social puts the post in its public feed.

2. Truth API sends the same post to subscribers as structured data, up to about 50 milliseconds ahead of ordinary web delivery.

3. Subscriber machines race one another to the exchange, and the race margin decides the winner.

4. The prize is every stale quote, meaning a bid or offer priced before news its owner has not yet read.

5. Slower readers see the post later, and their cancels arrive after their quotes are gone.

Below, the seller’s 50 ms sits beside the published clocks of fast trading (µs is microseconds, ms milliseconds).

Source: Aquilina, Budish and O’Neill (working paper, 2021); Budish, Cramton and Shim (working paper, 2013); Chordia, Green and Kottimukkalur (Review of Financial Studies, 2018); McGurn on CNBC, 24 Aug 2026 · as of 1 Nov 2026

Budish, Cramton and Shim found the historical twin in the same pair: the arbitrage between S&P 500 futures and the SPY lasted “a median of 97 ms in 2005” and “a median of 7 ms in 2011”. Over those years “median profits per contract traded have remained steady at around 0.08 index points”. Speed shrank the window and left the prize with whoever got there first.

Against that 2005 window, 50 milliseconds would look like half a race, but that window is gone. Budish, Cramton and Shim’s rule still holds: “only the first message to reach the exchange matters – liquidity providers usually lose the race”. Among subscribers that race is run in microseconds; between subscribers and everyone else the lead is open, and Trump Media charges for it.

Jump could stand on both sides

Jump Trading, LLC, the group’s larger US broker-dealer, says in its audited statement for 31 December 2025 “All trading activities are proprietary … no customer accounts are maintained,” and “The Company is also a market maker at certain exchanges.” So Jump Trading, LLC trades only its own money and, on some exchanges, keeps quotes resting for others to hit.

Source: Jump Trading, LLC’s audited statements, 2024 and 2025 · as of 31 Dec 2025

Read each row across: assets rose 37.9%, and rebates receivable, mostly liquidity rebates exchanges still owed it at the year end, rose 73.7%. Exchanges pay those rebates when resting quotes are filled, so the rise points to more resting quotes filled around the year end, and more resting quotes are more to lose in the milliseconds after a post, which is the defensive reason to buy the feed.

Neither Jump’s statement nor Susquehanna Securities’, the other trading firm Reuters named, shows revenue to set the feed against.

Jump also pays for speed: “over 100 co-located compute environments near global exchanges”, its site says. Its resting quotes can be picked off in races, and its machines are built to win them. McGurn told Axios in October that “the high-frequency trading platforms came to us over the last 18 months with demand”; Jump’s place among them rests on Reuters alone.

The rare post that pays

JPMorgan, as investingLive reported in February 2025, found that of “126 posts on trade and economics … only 10% of them triggered notable currency fluctuations”. Our count of the archive that Queensland University of Technology (QUT) researchers publish finds about 17.5 posts a day from 20 January 2025 to 8 April 2026. About a quarter of them landed in New York Stock Exchange hours, which cover about 19% of the week, so more of his posts land while markets are open than the clock alone would give. A buyer pays every month and collects only on the rare post that matters.

On 9 April 2025 he posted a 90-day tariff pause at 1:18 p.m. New York time. Within seconds the Dow “surged more than 2,000 points”, CNBC reported. Every bid and offer resting at 1:18 was priced for a world without the pause, and the first machines to read the post could trade against them. Truth API did not exist yet.

QUT’s Graham, Chorazy and Harrington found 15 events of unusual trading in oil-linked markets among 1,341 posts in early 2026; on some of those days “the price had already moved sharply in the minutes before he posted”, in work not peer reviewed. Where the price moves first, the head start reaches only what is left.

David Boole of the options brokerage BayCrest told the Journal on 22 July: “It’s a defensive cost, not even necessarily alpha.” Boole is right about defence and may be too modest about offence: a market maker such as Jump could use the feed to cancel its own stale quotes in time, and the same feed would let it take slower firms’.

The meaning still picks the side: buyers, McGurn says, “start to look at context to figure out what their trades can be”. Boole also names who pays: “Retail won’t be able to act fast enough to matter.”

→ Pershing Square’s 2020 credit hedge, rebuilt from its own letters and filings, Trade File No. 4 on Patreon.

What is the head start worth to the firms that buy it, and what must Trump Media’s report due by 9 November show?

Below the paid line:

• The verdict and our odds on Trump Media’s next report.

• A buyer’s year of the feed in measured profits on economic releases, and Trump Media’s revenue table.

• Two dated checks, the first by 9 November.

Read more

Meiji Yasuda’s president, Hideki Nagashima, and Man Group’s chief executive, Robyn Grew, announced an expanded partnership on 26 October. Bloomberg’s headline that day read: “Meiji Yasuda Commits $1.25 Billion to Man Group.”

In other words, a Japanese life insurer plans more money for Man’s funds and Man shares bought on the market. The money is the smaller half of what Man sold. The larger half is a channel into the insurer, Man’s products and know-how one way and its yen the other, and a planned shareholder whose purchase pays Man nothing. That shareholder would take more of Man off the market than this year’s buyback has.

Dai-ichi Life, another Japanese life insurer, used the same template at M&G, the London asset manager, in 2025. The test for Man is whether a holding notice, the filing owed once a holder reaches 5% of Man’s votes, appears by 30 April 2027.

I read both companies’ announcements, Man’s latest results and trading statement, every holding notice Legal & General (L&G) has published since 2024 and M&G’s first notice on Dai-ichi, and rebuilt the arithmetic from Man’s own tables, reproducing its stated fee margin and voting-share count.

• The headlines read the sum, about $1.25bn over three years, mostly for private credit.

• The 2025 plan, as Nikkei reported it, weighed ¥150bn over about ten years, so the pace changed more than the sum.

• The shares pay Man nothing, because the 57.1m shares the stake needs would come from other holders.

• Meiji Yasuda did this at L&G, holding 5.000045% of L&G’s votes on the day it announced, with a bank’s swap behind them.

• The paid chapter settles what the commitment is worth in Man’s own fees, how the deal compares with Dai-ichi’s at M&G term by term, and our odds that the stake is built.

Source: Man Group Q3 2026 trading statement, 16 Oct 2026; H1 2026 results, 28 Jul 2026; Man Group and Meiji Yasuda releases, 26 Oct 2026.

The last row is a three-year intention, set against a book that held flat in the third quarter.

The headlines read the sum

Man’s announcement put the money first: “Meiji Yasuda intends to increase its capital commitment to Man Group’s investment strategies to JPY 200 billion (approximately $1.25 billion) over the next three years, with a particular focus on private credit.” That yen is the commitment, what Meiji Yasuda says it will invest in and entrust to Man over three years, an intention rather than money that moved on Monday, 26 October.

The rest of the release describes a relationship. Man becomes “a preferred asset management partner” and the two “will also work together to develop new products for the Japanese market”. “The financial terms of the transaction are not disclosed.” The release names Antoine Forterre, Man’s chief financial officer and chief operating officer, as the person responsible for it.

Meiji Yasuda’s own release says the partnership of February 2025 worked “primarily in private assets” and now goes “beyond private assets”, to “quantitative methods and AI” and “personnel exchanges”, including “the secondment of Meiji Yasuda employees.” Its release of that February had already promised joint research on AI and quantitative methods, so what widens now is money, products and staff more than ideas.

Nagashima, its president and group chief executive, gave his reason in Man’s release: “Man Group is an important partner for Meiji Yasuda, with extensive expertise in quantitative investment management, AI utilization, private assets, and other areas.” His list opens with Man’s quant side, while the money, by Man’s own sentence, goes mostly to private credit. Knowledge travels to Tokyo; the yen travels to London.

The photograph in Meiji Yasuda’s release places Corin Robertson, Britain’s ambassador-designate to Japan, between the two chief executives. Her line in the release was that the UK “is committed to remain a partner of choice for Japanese capital and investment.”

Hedgeweek headlined the sum, “Man Group secures $1.3bn investment commitment in Japanese insurer tie-up”; Reuters, “Meiji Yasuda to lift Man Group private credit commitment to $1.3 billion”. Man’s shares closed up 6.6% that day, at 334.4p by Yahoo Finance’s price feed, while the FTSE 250 rose 1.1%.

Monday’s close undid most of a slide from 345.0p on 13 October to 313.6p on 23 October, and by 30 October the shares had kept the day’s gain but not mid-October’s level.

Private credit, $14.1bn at 30 September, sits inside private markets, at $17.4bn Man’s smallest business line, out of $270.9bn under management. Man says the deal “supports the firm’s strategic ambitions to continue growing its private credit platform and serve large insurance clients globally”. The money lands on that line; the stake would touch every Man share.

The pace changed, not only the sum

The word doing the work in Man’s sentence is “increase”. Meiji Yasuda’s three-year programme for FY2024 to FY2026, “MY Mutual Way Phase II”, “positions asset management as one of its growth strategies”. Its release of 25 February 2025 put the first Man partnership inside a plan to grow private-asset investment by ¥600bn over those three years, and named no amount for Man. Man’s final results that month did not mention Meiji Yasuda at all.

The number in circulation comes from analysts at Panmure Liberum. Reuters’ Yamini Kalia reported on Monday: “The firms did not disclose the previous investment but Panmure Liberum analysts said Meiji Yasuda made a 150 billion yen commitment.” Nikkei’s report of 25 February 2025 gave the figure its frame: ¥50bn by March 2027, the last year of Meiji Yasuda’s plan, mostly in private debt through Man’s funds, and ¥150bn over about the next ten years, which the insurer was considering (our translation).

So the change is the pace more than the sum. Meiji Yasuda’s words, “a total of JPY 200 billion over the next three years”, come to about ¥67bn a year, against roughly ¥15bn to ¥24bn a year in Nikkei’s two figures: about three to four and a half times faster.

Man’s “increase … to” fits a total that replaces the old plan, and neither firm says how large the increase is, or how much of the ¥200bn is already invested.

Abid Hussain, an analyst at Panmure Liberum, gave Reuters the deal’s best case, and the strongest counterargument to this piece: “A large Japanese Life insurer putting its own capital behind Man’s private credit push is a useful vote of confidence as well as sticky flows.”

Two of his three claims stand on the documents. A planned stake of about 5% with a three-year lock-up is a vote of confidence, and an insurer’s three-year commitment is sticky by design. The third, flows, depends on the base. Against a private credit book of $14.1bn, in a quarter when Man’s private-market line took no net new money, $1.25bn is large. Against Man’s fee revenue, the base that decides whether Monday was about money at all, it has to be priced at Man’s own margin.

The shares pay Man nothing

The two companies describe the stake with different verbs. Man’s announcement: “Meiji Yasuda will consider the acquisition of an equity stake of approximately 5% in Man to further align their interests. Any acquisition would be in the open-market, with no new shares being issued by Man Group.” Meiji Yasuda’s: “we also plan to acquire approximately 5% of Man Group’s outstanding shares from the market.”

Robyn Grew chose a third verb in Man’s release: “The intention to acquire an equity stake reflects our shared vision for the future and further aligns the long-term interests of both companies.” Meiji Yasuda says it plans to buy, Grew calls it an intention, and Man’s own announcement says only that Meiji Yasuda will consider it. The firm with the money to spend is the more committed of the two.

Man’s second sentence matters more. No new shares means Meiji Yasuda’s cash goes to whichever investors sell, not to Man.

Man had 1,141,113,769 voting shares at 30 September, the shares in issue less the 88.2m it holds in treasury; those are the voting shares from here on. About 5% of them is 57.1m shares, roughly £191m of stock at Monday’s close.

Man is a Jersey company, and the holding notices filed with it, the TR-1 forms a shareholder sends the company, are made as a non-UK issuer’s: BlackRock’s of 17 July is marked “Non-UK”. Under the UK transparency rules, a holder in such a company owes its first notice at 5% of the votes, then at 10%, 15% and so on. So a stake built below 5% leaves no public trace, and the first sign of Meiji Yasuda’s buying may be the 5% notice itself.

The other terms bind the buyer. Any shares come with a three-year lock-up, a standstill that caps Meiji Yasuda’s holding at 19.99% of Man’s issued share capital, far above anything planned, and “orderly market arrangements relating to any future disposals”.

Grew’s “aligns the long-term interests” holds as far as the lock-up reaches: it runs three years from the agreement, to October 2029, so a holder that buys now cannot sell before then.

Meiji Yasuda did this at L&G

Two deals of 2025, by Japanese life insurers in London-listed financial firms, show how such a stake gets built. Meiji Yasuda’s at L&G was on the register the day it was announced. Dai-ichi Life’s at M&G reached its first holding notice 124 days after the announcement, at 9.6%.

On 7 February 2025 Meiji Yasuda agreed to buy L&G’s US insurance business for $2,281m and said how it would take its stake: “We plan to acquire 5% of L&G’s shares (based on voting rights …) from the market … Additionally, we plan to assign a financial institution for this acquisition and risk management.”

The bank’s role shows in the notices. Meiji Yasuda crossed 5.000045% of L&G’s votes, 294,664,836 shares, on 7 February, and notified L&G the same day. Morgan Stanley’s notice for the same day shows the bank holding 5.189306% of L&G through financial instruments. Among them is a cash-settled equity swap over exactly 294,664,836 shares, expiring on 8 February 2027.

Read together, the two filings suggest Meiji Yasuda held the votes from day one while Morgan Stanley carried the economic exposure. L&G’s completion release of 2 February 2026, when the $2.3bn cash sale closed, fits that reading: “Following completion of the transaction, Meiji Yasuda will acquire a 5% economic interest in L&G.”

Later notices in March and April 2025 show the same share count. The votes sat with Meiji Yasuda a year before the deal closed.

Dai-ichi’s deal is the closer match in shape. M&G’s announcement of 30 May 2025 made M&G Dai-ichi’s “preferred asset management partner” in Europe, said Dai-ichi “intends to acquire a c.15% shareholding”, and said it “plans to appoint a financial institution to facilitate its acquisition of M&G shares”.

Its first holding notice came on 1 October 2025, at 9.601839% of the votes. M&G announced on 19 August 2026 that Dai-ichi’s nominee would join its board from 3 September, “following satisfaction of certain conditions of the Implementation Agreement”.

Man’s terms follow M&G’s: on-market purchases, no new shares, a 19.99% standstill, a lock-up and a preferred partner. The plainest difference is the stake, c.15% of M&G for Dai-ichi against about 5% of Man for Meiji Yasuda.

Both cycles turned in the same order, the announcement first, the stake on the register second and, at M&G, the board seat third. Man is at the first step. Four days on, Man’s announcement feed shows nothing after the partnership release, and no holding notice naming Meiji Yasuda. That says nothing yet, because only 13.9m Man shares traded from 26 to 30 October, by Yahoo Finance’s data, far short of the 57.1m that 5% needs.

What Man’s announcement lacks is the sentence both earlier deals carried: no financial institution is named to buy the shares or to carry the risk.

→ A bank’s swap book at its worst, Archegos’s in 2021, rebuilt from the SEC complaint and the Credit Suisse report, Trade File No. 3 on Patreon.

What is Monday’s deal worth to Man whether or not Meiji Yasuda’s stake reaches its register?

Below the paid line:

• Exhibit 2: Dai-ichi’s deal at M&G against Man’s, term by term, with the channel each sizes.

• Three numbers on the buyer: the stake in shares, against Man’s buyback and its daily trading volume.

• The commitment’s fee value, worked from Man’s own fee table, and what the 26 October move priced.

• The verdict with our odds, the line that proves it wrong, and three dated checks.

Read more

Leopold Aschenbrenner’s fund is offering its own clients a stake in Fluidstack, the company building data centres for Anthropic. Hedgeweek, relaying Bloomberg, reported on 29 October that the fund’s clients may “co-invest alongside it in Fluidstack” at a valuation of $40bn. Situational Awareness led Fluidstack’s January round at $7.5bn.

In other words, the fund’s new money goes where its old money already sits. Its biggest position is one bet on Anthropic’s data centre buildout, held three ways: the Anthropic shares TechCrunch counted in July as a cushion against its public losses, its January Fluidstack shares and this round. A client taking the offer adds to that bet; the 30 September 13F tests whether the fund rebuilt a public book beside it.

I read every Form D from Fluidstack and the fund, the fund’s 13Fs, every landlord 8-K on Fluidstack and Anthropic’s S-1 with its drafts, then summed the leases to $27.0bn across four campuses.

Read in order, they show four things, and the paid chapters a fifth:

• Citadel took most of the public book in July; the private stakes stayed, Anthropic’s at about half the fund.

• The fund led Fluidstack’s January round, and an outside fund had nearly doubled its Fluidstack mark by June.

• Fluidstack’s lease book, the base rent it owes three listed landlords at four campuses, sits inside Anthropic’s buildout, with Google guaranteeing part of it.

• Anthropic’s prospectus prices no commitment to Fluidstack, yet a delay in Fluidstack’s halls could cost Anthropic too.

• The paid chapters settle what a buyer of the round owns: the equity behind the rent, Google’s share and the rent against Anthropic’s.

Source: Anthropic’s S-1 (26 Oct 2026); TeraWulf, Cipher and Hut 8 8-K exhibits (Aug to Dec 2025); author’s sum · as of 30 Oct 2026

What Situational Awareness kept

Citadel bought most of the fund’s public book on 30 July, after the losses in it. Bloomberg then put the fund’s assets at about $10bn and its Anthropic stake at $5bn, as TechCrunch relayed: one source for both figures. Bradley Saacks of Business Insider reported on 14 October that the fund still holds the stake; its size since July is not public.

The last public snapshot, the fund’s 13F for 30 June, a month before the sale, showed $20.24bn. A 13F lists only long US listed securities at a quarter end, options at the underlying’s value, so it never shows a private stake.

Since the sale the fund has filed on two public stakes. A 13D/A of 4 August showed 4.4% of Core Scientific, after sales took it under 5%. A 21.1% block of SharonAI Holdings, a Nasdaq company, bought under a purchase agreement of 17 June, was still held in September.

Its private stakes reach beyond Anthropic and Fluidstack. Bloomberg reported, as Investing.com relayed on 8 August, a $500m investment in Source Foundry, a chip manufacturing startup, and Hedgeweek names a stake in MatX, another private company.

The clients are investors in two funds, Situational Awareness Partners LP in Delaware and Situational Awareness Offshore LP in the Cayman Islands. Their Form Ds report “amount sold”: cumulative capital sold since each fund’s first sale, never what it is worth and never net of redemptions. By 11 September they had sold $9.53bn to 187 investors, about a fifth of it by 10 March.

On July’s reports, about half of every dollar those clients had in the fund sat in Anthropic shares. Marina Temkin of TechCrunch wrote that many would view the stake as “an asset that continues to appreciate” and that a windfall from it “could offset some of the hedge fund’s public-market losses”. That cushion and the round are one exposure, because Fluidstack’s campuses are Anthropic’s buildout.

The fund led Fluidstack’s January round

The fund’s Form ADV of 11 June 2026 lists Aschenbrenner, the founder, as chief investment officer since May 2024 and Carl Shulman as director of research since October 2024, at a firm of eight employees. In June 2024 Aschenbrenner set out the thesis in an essay: “Behind the scenes, there’s a fierce scramble to secure every power contract still available for the rest of the decade, every voltage transformer that can possibly be procured”. Fluidstack signs for that capacity on a lab’s behalf.

Its Form D for the round, first sold on 10 January, shows $842.5m sold to 30 investors by May and names none of them. In July Fluidstack announced an “$830M Series A” at a “$7.5B valuation”, “Led by Situational Awareness”.

The price climbed from January’s. On 14 April Bloomberg reported, as TheNextWeb relayed, that Fluidstack was in talks to raise $1bn at an $18bn valuation. A June Form D shows $730m sold to seven investors; a Form D files no price.

An outside fund marked the rise: Capital Group’s SmallCap World Fund carried its Fluidstack preferred shares, a Level 3 holding with no market price, at $74.09 each on 31 March and at $144.11 on 30 June. On 29 October Bloomberg put the new round at $40bn, “roughly double” the valuation of a few months earlier and “more than five times” January’s.

The managers have a stake in that price: the fund’s SharonAI 13D says its general partner “is entitled to allocations based on assets under management and realized and unrealized gains”, so a higher mark counts before anything is sold. No filing says that shaped the offer, and an outside fund’s marks nearly doubled first.

Nor does any filing say whether clients would buy new Fluidstack shares or some of the fund’s own; Hedgeweek, relaying Bloomberg, reports the fund considered selling stakes in Anthropic, MatX and Fluidstack during July’s margin calls. The fund declined to comment and a Fluidstack cofounder disputed Bloomberg’s report without details. Until a Fluidstack filing shows what was sold, the $40bn rests on one outlet’s sources.

Fluidstack’s leases are Anthropic’s buildout

Fluidstack’s own filings say nothing about its leases; its landlords’ do. TeraWulf, Cipher and Hut 8, all listed, each disclosed its Fluidstack leases in an 8-K exhibit giving the term and the base term contracted revenue, the rent due before any renewal. Summed, those figures are Fluidstack’s lease book.

Barber Lake, Cipher’s site in Colorado City, Texas, is the cleanest case. Fluidstack leased it for ten years in two leases, announced on 25 September and 20 November 2025, for about $3.8bn of base term contracted revenue. Google’s backstop, its guarantee of Fluidstack’s lease payments, covers $1.73bn, under half of it. Cipher’s deck of 4 August describes that backstop as one “determined by rent payments made by Fluidstack”. At the first signing César Maklary, Fluidstack’s cofounder and president, said that “Fluidstack understands what it takes to deliver the compute this moment requires”.

On 25 September 2026 Cipher amended the lease with Fluidstack and signed “a binding commitment with a leading AI lab to lease the facility for an additional 10-year term following the conclusion of the Barber Lake Lease”. That is “a separate lease”, worth about $5.2bn.

One building holds the whole structure: Fluidstack in the middle for ten years, a lab signing for itself after, and Google’s guarantee tied to Fluidstack’s rent. Gary Wu, Fluidstack’s cofounder and chief executive, said when Anthropic announced its $50bn buildout with Fluidstack that “Fluidstack was built for this moment”; the moment both founders invoke lasts ten years, and the decade after it is the lab’s.

Exhibit 2 sums Barber Lake with the other three campuses. Counting the lab’s separate lease as Fluidstack’s would put the book at $32.2bn instead of $27.0bn.

Source: the landlords’ 8-K Exhibit 99.1, Aug to Dec 2025; author’s sum · as of 30 Oct 2026. Base terms only, Lake Mariner as signed; Abernathy’s landlord is a TeraWulf joint venture with Fluidstack, and its term may be cut to 20 or 15 years by option. River Bend is triple net, the rest modified gross.

The filings behind the rows: TeraWulf · Lake Mariner, New York, $6.7bn · TeraWulf joint venture · Abernathy, Texas, about $9.5bn · Cipher · Barber Lake, Texas (two leases), about $3.8bn · Hut 8 · River Bend, Louisiana, $7.0bn.

Three of the four campuses sit in Texas and New York, the states Anthropic named for its buildout with Fluidstack. Hut 8 reports a partnership with Anthropic and Fluidstack for at least 245 megawatts (MW), the size of its River Bend lease.

Google is tied to these halls by its chips and by its guarantee: it sells TPU8i chips to Broadcom, which leases them to Anthropic under a lease of 31 March 2026. The lease even names “the Fluidstack Property”: where Google gives credit support, Broadcom may not unreasonably refuse a site agreement there modelled on Hut 8’s. And Google backstops the rent at all four campuses, taking warrants in two landlords: about 8%, then 14%, of TeraWulf and about 5.4% of Cipher.

No listed landlord has filed a new Fluidstack campus lease in 2026. The 2026 filings naming Fluidstack show amendments, one raising two Lake Mariner leases from 162 to 168 MW, and a group led by Fluidstack agreeing to buy TeraWulf’s 50.1% of the Abernathy joint venture. No landlord filing ties Fluidstack’s other clients, Meta and Mistral among them, as TheNextWeb reported in April, or the cloud capacity it buys from IREN to a campus lease.

One new build sits outside the landlords’ filings: in April Meridian Arc HoldCo, “a joint venture owned by Next Frontier and Fluidstack”, sold $5.7bn of notes. They fund “two new data centers in Sullivan County, Indiana, which will be leased to Fluidstack”, about 430 MW “with obligations supported by Google”. No filing names the end user, and the halls sit outside the $27.0bn lease book.

Anthropic names it once

On 12 November 2025 Anthropic announced a “$50 billion investment in American computing infrastructure, building data centers with Fluidstack in Texas and New York”. Dario Amodei, its chief executive, gave the reason: “Realizing that potential requires infrastructure that can support continued development at the frontier”.

The S-1 of 26 October gives that partner one sentence. It says Anthropic has “entered into a colocation and services agreement with Fluidstack USA I Inc. (’Fluidstack’), under which Fluidstack provides data center development and operations services to us”. The next sentence is the one Fluidstack’s price turns on: “We have also executed data center leases directly and expect to do so increasingly over time”. Fluidstack builds and runs sites for Anthropic, and Anthropic means to sign more sites itself.

The wording moved across seven filings: the partner was a blank in the 1 June draft and Fluidstack by 13 July. From 9 October the sentence sat inside “Anthropic Direct”, Anthropic’s name for leasing chips itself and hosting them “in dedicated data center facilities leased and operated on our behalf”.

The S-1 prices six compute service commitments by supplier, from up to $120.5bn of compute on Nvidia chips from SpaceX.AI to the AI cloud Lambda’s about $41.3bn over terms into 2034, each larger, at its stated figure, than Fluidstack’s whole $27.0bn lease book. Its Broadcom chip leases, about $161.2bn of rent, are priced apart. Fluidstack, the partner named in the $50bn plan, gets no figure.

Anthropic already signs with Fluidstack’s landlords directly: on 6 July 2026 TeraWulf signed Anthropic for 20 years at its Justified Data site in Hawesville, Kentucky, for about $19bn, twice Fluidstack’s largest lease. Paul Prager, TeraWulf’s chief executive, said: “Our strategy is centered on owning and operating critical infrastructure assets, maintaining direct relationships with our customers, and controlling the long-term evolution of our campuses”. The release names no operator for the site.

That lease has not cut Fluidstack out so far: Fluidstack amended its leases at TeraWulf in July and at Cipher in September, and the S-1 keeps it inside Anthropic Direct. The risk is the S-1’s own “increasingly over time”.

One counter would keep the Anthropic stake a cushion: Anthropic gains when it pays Fluidstack less, so the two stakes should move apart. The S-1 points the other way: in March 2026, under an amended colocation and services agreement, Anthropic guaranteed up to $500m of a data centre provider’s power purchase obligations. The S-1 names no provider, and the only such agreement it names is Fluidstack’s.

The S-1 says rent on Anthropic’s Broadcom chip leases “may commence earlier … when the readiness of a data center facility is delayed”. So a delay at a Fluidstack site can start Anthropic’s chip rent early, while what Fluidstack owes Anthropic for a delay is not filed; if the buildout slows, both stakes fall.

The same holds for any neocloud, a company renting out AI computing capacity, whose campuses are one lab’s buildout: Nscale and Lambda, priced in the same S-1, or CoreWeave with its labs. Owning a lab and its supplier is one position, not two, when the supplier’s book is the lab’s buildout.

→ Citadel’s 2006 takeover of Amaranth’s energy book, rebuilt from the Senate record, Trade File No. 2 on Patreon.

Should a client treat the $40bn round as a bet separate from the fund’s Anthropic stake before 31 December’s filings?

Below the paid line:

• Exhibit 3: Google’s guarantee campus by campus, and the equity behind Fluidstack’s rent.

• Exhibit 4: rent per megawatt year on five rows, Fluidstack’s four campuses against Anthropic’s own lease.

• The January Series A marked at the headline price, beside the SharonAI block from the fund’s 13D/A.

• The verdict with our odds, the line that proves it wrong, and four dated checks.

Read more

In March 2026 Seth Platt moved to fire Two Sigma’s co-chief executive, Carter Lyons, the firm’s filing says. Platt was co-founder David Siegel’s representative on the two-person management committee; co-founder John Overdeck sent the firing to dispute resolution. On 27 October Bloomberg reported that Two Sigma is exploring a minority stake sale to end the deadlock.

The tie-break seat, a third shareholder able to break the founders’ ties, also buys a share of Two Sigma’s earnings; on the one investor contract that prints its fees, those earnings are mostly incentive pay, which a weak year shrinks. I would pay no more per dollar of assets for the seat than buyers of a stake in rival Millennium paid in 2025; a Two Sigma stake price reported above that rate by 30 April 2028 would prove me wrong.

The investor is Hamilton Insurance Group: in 2025 its Two Sigma fund made $616.9m before fees, and Two Sigma took $315.9m. The manager kept slightly more of the year’s profit than the investor, and the seat’s price sets what ending the feud costs the founders.

I read every private fund in Two Sigma’s March filing until they added up to the filing’s own total for its pooled vehicles, and six years of Hamilton’s accounts. Five findings in those documents set the seat's price.

• Two votes and no tie-breaker: the founders’ splits go to an arbitrator, at least four times so far; the seat would replace it with a vote.

• An $80bn firm, a $233bn book: once the funds counted twice are taken out, the gap between the two counts is leverage.

• A third belongs to insiders: Two Sigma and its people own 33.0% of the funds’ gross assets, and none of the largest fund.

• Half the profit, mostly incentive: on Hamilton’s contract Two Sigma took 49.8% of six years’ profit before fees.

• The price, three ways: what each 10% of Two Sigma is worth, from a rival’s sale, a founder’s divorce and a stake holder’s marks.

Two votes and no tie-breaker

Two Sigma Investments is run through its general partner, Two Sigma Management, LLC, whose co-chairmen are the two founders. The filing lists their revocable trusts as owners of between 25% and 50% each, both since January 2008. Investing.com, citing Bloomberg, wrote that the two hold roughly equal halves of the management company, though the filing puts each trust below half. Lyons has been co-chief executive since September 2024.1

The two-person management committee decides, and the filing records that it cannot agree who the chief executives are. “There is disagreement about whether, when designated, an Executive Manager becomes a co-CEO or whether the appointment of a co-CEO requires approval by both members of the Management Committee.” Platt then moved against Lyons, “given his view that Mr. Lyons undermined his authority as Executive Manager”, and the filing gives Overdeck’s answer:

“Mr. Overdeck believes Mr. Platt’s actions in this regard are imprudent and baseless and has placed the termination into dispute resolution, which means that the termination cannot take effect without Management Committee agreement or resolution through arbitration.”

Either side can freeze what the other starts, and an arbitrator breaks the tie. Hedgeweek, citing Bloomberg, reported that at least four disagreements have gone to arbitration. Platt himself is leaving once a successor is found, Hedgeweek reported on 20 October, citing Bloomberg.

Overdeck put his own priority on the record in his divorce trial, reported on 3 September: “Maintaining voting parity with Dr Siegel is a principal concern”. The filing’s matching ownership ranges show the parity he means, set by trusts we argued in September were built so no life event at either man could move control. A tie-break seat keeps the founders level with each other and hands the deciding vote to someone else.

How a minority stake would cast that vote has not been reported. Investing.com, citing Bloomberg, reported preliminary talks with a Middle Eastern investor and a US pension fund, and a lean toward selling to an existing limited partner in Two Sigma’s funds. Hedgeweek gave a timetable of 12 to 18 months and no stake size or price; the firm declined to comment.

Hamilton put the deadlock’s cost in its 10-K for 2025: “These disagreements have affected Two Sigma’s ability to retain and attract employees (including very senior employees)”. Its 2023 commitment to Two Sigma could be ended by either side if Siegel or Overdeck ceased to be involved in managing Two Sigma, or if more than 25% of the voting interests passed to outsiders in a deal that changed control.

The agreement that replaced it on 1 April 2026, two weeks after Siegel named Platt, names neither founder and turns that change in control into a notice. Hamilton’s 8-K says the old one held “certain withdrawal rights that are not contained in the Investment Agreement”. It also drops the rolling commitment periods, so Hamilton needs no special exit: it can withdraw for any reason, quarterly above its minimum and at most a twelfth a month below it.

An $80bn firm, a $233bn book

Item 5.F of the filing reads $232.8bn of regulatory assets under management, and Item 5.D puts $229.37bn of it in pooled vehicles. The SEC’s instructions say what that counts: “Include the entire value of each securities portfolio … Do not deduct any outstanding indebtedness or other accrued but unpaid liabilities.” The figure is gross assets, before any borrowing or short sale is netted off.

Two Sigma counts itself differently. It “and its affiliated investment managers had approximately $80.0 billion in assets under management as of April 1, 2026, which includes employee and proprietary capital,” a Blackstone fund’s SEC filing of 29 July 2026 says. Bloomberg’s $85bn sits near that count. The regulator’s gross figure is about 2.9 times it.

A sceptic would call the gap double counting, since Two Sigma’s funds invest in one another and a gross total could count a dollar in a feeder and again in its master. If so, stripping out the layers would bring the total down toward the firm’s own count.

Schedule D lists all 62 private funds and their gross asset values at 31 January 2026, the read we taught on Renaissance and Citadel. Added straight, they come to $310.86bn, more than the filing’s own total; that raw sum is the pitfall. The 24 feeders that name a master invest in it, so their $47.22bn is counted twice. Eight vehicles hold stakes in the “Portfolio, LLC” trading funds, so their $33.98bn comes out too. Without both, $229.65bn is left, about 0.1% above the pooled-vehicle total.2

The de-layered total lands on the filing’s own figure, not near the firm’s count, so the gap is leverage: borrowing and short sales the gross count does not net off.

Millennium was about Two Sigma’s size when it sold its stake: Reuters put it at “more than $79 billion”. On the regulator’s gross line Millennium reports $720.8bn, about 6.6 times even the larger $109.7bn of client net assets its own brochure counts at year-end, so Two Sigma’s is the lighter gross-up. Leverage says nothing about whose money it is, and Schedule D answers that too.

A third belongs to insiders

Schedule D asks a second question of each fund: how much of it the adviser and its “related persons” own, the filing’s term for the firm, its founders, its staff and its affiliates. On the de-layered base they own $75.90bn of it, or 33.0%. The base is gross assets; the filing prints no insider share of capital.

Source: Two Sigma Investments Form ADV Part 1A, Schedule D, filed 31 Mar 2026 · as of 31 Jan 2026

The last row is our computation and excludes the feeders and holding vehicles. Read down the last column: Two Sigma’s people own nothing of Absolute Return or Active Extension, while the Equity Portfolio is nearly nine-tenths theirs.

An outside client in Absolute Return, the largest fund and in Hamilton’s words “a diversified, global, equity market neutral portfolio”, therefore invests where the firm’s own people do not. Two Sigma’s brochure says only that its own funds “often have the most attractive risk-reward profiles”.

Five vehicles, most with space names, are the reverse. Two Sigma and its people own all of them, $14.16bn, nearly a fifth of what insiders own.

A stake in the management company buys a share of what these funds pay the firm; the assets stay the funds’.

Outside clients pay for a process they cannot inspect. Pennsylvania’s Public School Employees’ Retirement System said so in a 2016 memo on a Two Sigma fund. “As an investor, there is limited transparency into the models, how the models are assembled to construct a portfolio, or individual portfolio holdings.” Hamilton’s filings cannot show the models either, but they print the bill.

Half the profit, mostly incentive

A buyer’s comfortable assumption about a hedge fund firm is a steady fee annuity, which predicts that the management fee dominates the take, the fee plus the incentive allocation. Hamilton’s contract tests it.

Hamilton invests through Two Sigma Hamilton Fund, LLC, which Two Sigma Investments manages; call it the Hamilton fund. It had $2.18bn of net assets at 31 December 2025, about 2.7% of Two Sigma’s own count.

Since 1 July 2023, Hamilton’s 10-K says, Two Sigma has received “a management fee of 2.5% of the non-managing members’ equity in the net asset value of the TS Hamilton Fund per annum”. It also takes an incentive allocation of “30% of TS Hamilton Fund’s net profits, subject to high watermark provisions”, plus 25% of “Excess Profits”, defined as “the net profits over 10% for such fiscal year”.

The July 2023 recut leaned further toward incentive, cutting the fixed fee from 3% and starting a larger extra allocation at a 10% year instead of 15% (10-K for 2023; S-1).

In 2025 the Hamilton fund made $616.9m before any fee. Two Sigma’s fee was $52.6m and its incentive allocation $263.3m, a take of $315.9m. That is 51.2% of the profit, and 83.3% of the take was incentive. Hamilton still kept a 16.0% return after all fees, while Two Sigma’s take came to about 16% of the fund’s average net assets: manager and investor took about the same slice.

Over six fiscal years, FY2020 to 2025, the fund made $1,902.2m before fees and Two Sigma took $948.0m, or 49.8%. Incentive was 68.8% of that take, blending two sets of terms: 50.5% in 2020 to 2022, before the recut, more since. In FY2020 the fund lost $11.7m before fees, and Two Sigma still took $74.4m. The incentive accrues quarter by quarter, so a year that ends in a loss can still pay it.

The terms move the take in a fixed order:

1. The fee is charged on the fund’s value whatever it returns, so it barely moved.

2. The incentive is charged only on profit above a high-water mark, so it swings: in 2023, a 7.6% year after fees, it was $21.5m.

3. So the take follows the result: $66.7m in 2023, against $315.9m in 2025.

The annuity assumption fails on this contract. The other Two Sigma client contract on file, a Blackstone sub-advisory agreement, leaves its fee appendix blank.

The year in progress pays more on a slightly lower return. Hamilton’s 10-Q for the first half of 2026 shows the fund up 9.6% after fees, against 10.1% a year earlier. Its incentive allocation was $194.5m, against $180.7m.

On 19 October a Two Sigma spokesperson said: “Our team is focused on delivering for our investors, with 2026 shaping up to be one of the strongest years in Two Sigma’s history”. On Hamilton’s numbers a strong year is mostly incentive.

Outside money is still arriving. Form D filings for Titan, Aurora, Beacon Fund and Beacon Bridge show $2.67bn raised since May 2025, about 3.3% of Two Sigma’s own count, though a Form D counts gross sales only. Some has left: New Mexico’s pension fund PERA pulled about $100m in June 2026, and a major investor left in 2023 amid the feud and was later replaced, Hedgeweek reported, citing Bloomberg.

Investing.com, citing Bloomberg, reported at least one allocator demanding guaranteed priority access for more capital. Millennium’s 2025 sale was, in its email to staff, “a minority, passive equity interest”; a seat built to cast the deciding vote cannot be passive, and that allocator would also be buying a place in the capacity queue.

The same arithmetic reaches every founder-owned firm that sells a slice of itself, as Millennium, Brevan Howard and Verition did in 2025: a firm that earns most when it wins sells its best year at a discount.

→ Long-Term Capital Management’s 1998 bond book, rebuilt from the regulators’ reports, Trade File No. 1 on Patreon.

What is each 10% of Two Sigma worth on its own documents, once its incentive pay is priced?

Below the paid line:

• The verdict: what a stake in Two Sigma is worth, the judgement behind it, and our odds a price prints

• A rival’s price per dollar, a founder’s divorce and a stake holder’s marks, each worked to the firm

• Hamilton’s six-year fee table, and every recent stake sale, with the three that printed a price

• What to watch: three dated filings and the figure each one tests

Read more

In April, Citadel’s commodities head, Sebastian Barrack, told a Lausanne summit that 2022 raised margin requirements about 15-fold. His frame is volatility, which markets, he said, failed to price adequately before the US-Iran conflict.

The plainer question is how a hedge fund’s unrated trading arm can stand on the other side of producers’ hedges without the producer posting margin. If Citadel’s gas money were exchange volatility trading alone, its trading arm would need no seat in any producer’s bank line, and producers’ agreements show it holding several.

I read part of the answer in those agreements: the $5 million seat, a lender’s place in a producer’s bank line, held by Citadel Energy Marketing, Citadel’s gas trading arm. The seat would secure any swap the arm writes with that producer. It lets a producer hedge with Citadel’s unrated trading arm without posting margin, and it puts a trading house beside its banks in the collateral.

I searched EDGAR for every document that names Citadel Energy Marketing: none was filed by Citadel.

The chapters follow the gas from the producer to the seat:

• Citadel’s trading arm ranked sixth by US gas volume in 2024; it buys from producers and, since February 2026, has a contract to sell to an export plant.

• Producers’ banks make them hedge, at least 65% of expected output from producing reserves at one line, and the counterparty tests ask for a credit rating the trading arm lacks.

• A $5m seat would secure any swap the arm writes with a producer, and one producer says it would post collateral without that security.

• Before any seat, the arm lent a gas royalty company up to $100m; Citadel has since bought a gas producer’s assets.

• The paid chapter sizes the hedge book one seat sits beside, with every filing in one table.

Citadel buys America’s gas

Citadel Energy Marketing trades gas and power for Citadel, the firm Ken Griffin founded. It bought 1,885 trillion British thermal units (tBtu) of US gas in 2024 and sold 1,803. That ranks it sixth among all US gas market participants reporting on the Federal Energy Regulatory Commission’s Form 552, by Cornerstone Research’s tabulation of FERC’s data. The rank adds gas bought to gas sold, so it measures physical volume and says nothing about profit.

On a second base, the country’s use, Hedgeweek, summarising the FT in June, wrote that Citadel Energy Marketing “traded volumes equivalent to roughly 11% of total US natural gas consumption during 2025”.

Both ends of that book are filed by other companies. At the selling end, Venture Global’s Plaquemines liquefied natural gas (LNG) export plant signed a transaction confirmation with Citadel Energy Marketing on 26 February 2026. By its filing to the Department of Energy, “Plaquemines LNG will purchase natural gas on a long-term basis from Citadel”, for two years at 36.5 tBtu a year, about 2% of what the arm sold in 2024. That is a merchant gas book: gas bought, moved and sold physically.

At the buying end, CNX Resources, a large Appalachian gas producer, names a customer only above 10% of its revenue from contracts with external customers: CNX’s 10% line. It named Citadel Energy Marketing for 2021, 2023, 2024 and 2025. Its 10-K for 2025 puts Citadel third of three that year, at $206.0m. NRG Business Marketing bought $223.2m and DTE Energy Trading $208.8m.

Every credit agreement that seats Citadel Energy Marketing as a Lender is signed for it “By: Citadel Advisors LLC, its Manager“, the hedge fund’s own adviser, so the gas book sits in the fund’s commodities business, which Barrack runs.

Hedgeweek, citing Bloomberg’s sources, put that business’s profit at about $8bn in 2022, half the firm’s total. Bloomberg reported about $4bn, half that, in 2023 and again in 2024. By late December 2025, as gas profits fell, the business was on course for only a slight profit for the year, by Hedgeweek’s same account.

The seats can protect that book; they do not show that it pays.

Margin is the merchant’s problem

A producer that sells gas forward at a fixed price owes the buyer the difference when prices jump. So a spike hands the buyer a large claim on a producer whose forward sale is under water. Margin is collateral posted against a contract’s mark, and it is where volatility reaches cash. If the contract is margined, the producer must post cash at the worst moment; if it is not, the buyer carries the producer’s credit risk with nothing behind it.

Producers’ banks have a say in that hedging. A reserve-based loan is a bank line secured by a producer’s oil and gas reserves, and the Federal Reserve’s guidance on them, SR 16-17, tells banks to consider requiring “hedges for commodity price volatility”. It adds that covenants should make borrowers get “the financial institution’s approval prior to lifting any hedges upon which the institution is relying”.

Some lines turn that advice into a duty. Diversified Energy, another producer, must hedge at least 65% of anticipated production from its producing reserves over the next 12 months. The lines of TXO Partners, oil-weighted by revenue, and of PEDEVCO, another, set floors of their own. A producer under such a line must hedge while its floor binds, and where the bank relies on the hedge, it must hedge with a counterparty the line approves.

The tests are written as credit ratings: BBB or Baa2 for a hedge counterparty in Diversified’s line, BBB+ or Baa1 in CNX’s. Citadel Energy Marketing has no rating from a recognised agency, and in July 2025 TXO’s banks put that in writing.

Other lines skip the rating and name approved counterparties, and the names are merchants. PEDEVCO’s credit agreements list Citadel Energy Marketing as an approved hedge counterparty beside BP Energy, EDF Trading, NextEra Energy Resources and Cargill.

Outside the producers, the July 2023 credit agreement of Temple Generation, a gas-fired power plant, which BKV filed in May 2026, names it a “Qualified Commodity Counterparty“ beside the trading houses J. Aron, Shell, BP Energy, Mercuria and four others. Where a line names no one, an unrated merchant has one door left: a lender’s seat.

What a $5 million seat buys

CNX shows the whole mechanism in two documents. Its Fourth Amended and Restated Credit Agreement of May 2024 signs Citadel Energy Marketing “as a Lender“ with a $5m commitment, the amount a lender stands ready to fund, in a $1.4bn line. Citibank and Goldman Sachs Bank USA hold the same $5m. Three definitions turn that commitment into protection:

1. A “Specified Swap Agreement” is any swap with a counterparty that is “a Lender or an Affiliate of an entity that is … a Lender”, so any swap Citadel writes with CNX qualifies.

2. A swap there includes a “forward contract … relating to Hydrocarbons or power”, so a fixed-price forward purchase of CNX’s gas would qualify too; an index-priced physical purchase would not.

3. The “Secured Parties” include “any provider of a Specified Swap Agreement”, so anything CNX owes Citadel on those contracts is secured by the line’s collateral, ranking equally with the loans’ principal, never ahead.

CNX’s 10-K for 2025 says what that security is worth:

“None of the Company’s counterparty master agreements currently require CNX to post collateral for any of its positions. However … if CNX’s obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the CNX Credit Facility, CNX would have to post collateral for instruments in a liability position in excess of defined thresholds.”

Security on the same basis as the banks is what spares CNX the margin; take it away and the margin comes back. Five million dollars is small change for Citadel, so the seat is easy to read as a courtesy. The definitions ask only whether the counterparty is a Lender, and CNX ties its collateral to that security: the $5 million seat buys a status, and the status does the work.

The seat moves margin rather than abolishing it. If Citadel offsets a producer’s fixed-price sale with futures, a price spike calls cash from Citadel at the exchange, and Barrack said the sector met this year’s shock with “larger capital buffers and more robust funding lines“ after the windfall of recent years.

California Resources, an oil-weighted producer, seated Citadel Energy Marketing in November 2024 for $5m, and Citadel signed again in September 2025. BP Energy, a unit of an oil major, holds the identical seat on that line: merchants used the seat before Citadel did.

TXO shows what the banks agreed to. Its Amendment No. 5, dated 31 July 2025, brought in Fifth Third, Mizuho and Citadel Energy Marketing as New Lenders. Its definition of a Potential Defaulting Lender, a lender that may default, takes in one with “a non-investment grade rating from Moody’s or S&P or another nationally recognized rating agency”.

The banks wrote one sentence for the newcomer, which the agreement calls Citadel:

“Citadel shall not, and at no time will Citadel, constitute a Potential Defaulting Lender solely because it does not have a rating from a nationally recognized rating agency.”

They wrote it “for the avoidance of doubt”: the definition catches a lender with a non-investment-grade rating, and the banks shut out any reading that would treat a missing one the same way. TXO’s line also secures “Lender Hedging Obligations”, those “under any Hedge Contract or any Gas Sales Contract” with a Lender. There the seat would also cover physical gas sales, even contracts signed before the counterparty became a Lender.

Diversified Energy shows the seat most plainly. Citadel Energy Marketing first appears in its lender schedule with the third amendment of 30 April 2026, where it holds a $5m maximum credit amount beside the $5m of Mercuria, a rival merchant.

The line’s hedge counterparty is “(a) any Secured Swap Provider or (b) any other Person” rated BBB or Baa2, and a Secured Swap Provider is “a Lender or an Affiliate of a Lender”. Without an S&P or Moody’s rating of BBB, or a guarantor that has one, the seat was the way in.

The four producers’ filings name Citadel as a Lender, and CNX’s as a customer too, but none as a hedge counterparty: the seats show which hedges would be secured, and none shows that one is live.

A loan, then gas wells

Before any seat, Citadel Energy Marketing made a loan. WhiteHawk Income, a gas royalty company, signed a credit agreement “dated as of August 3, 2023, by and among … the Issuer, as borrower … and Citadel Energy Marketing LLC“. Its S-1 describes “a senior secured term acquisition facility with a maximum amount of $100 million … at 12% per annum”.

That loan did not last. In September 2024, notes bought by two outside groups, Pacific Indemnity and three EIG funds, replaced it, and Citadel became the “Initial Swap Counterparty”. The notes’ hedge test reads “(a) Citadel Energy Marketing LLC or (b) any other Person” rated A-/A3, so the trading arm qualified by name, not by rating.

In May 2026 the notes were amended and restated, and WhiteHawk added a bank-led reserve-based loan in which Citadel Energy Marketing holds no seat. Its existing trades with Citadel stay secured, and that agreement contemplates moving them to one of the line’s lenders. Others took the lending; even the trades may follow.

Then Citadel became an owner. In March 2025 it agreed to buy the Haynesville assets of Paloma Natural Gas, a gas producer, for about $1bn by Bloomberg’s count and $1.2bn by East Daley Analytics’, a quarter to 30% of what its commodities business made in 2024.

Said, March 2025: Bloomberg reported that Citadel would not operate the assets directly. A Citadel spokesperson told it: “Investing in the growth of independent gas producers helps to ensure America’s energy independence,” and “Citadel performs an important role in that effort.”

Reported, December 2025: Paloma, renamed Apex Natural Gas, “currently operates nine rigs in northwest Louisiana“, The Center Square wrote, the state’s most active driller by the Louisiana Oil and Gas Association’s count. In May 2025 East Daley had called Citadel’s long-term strategy “a mystery” and its near-term focus to “increase Haynesville drilling”.

Filed, May 2024 to August 2026: the role Citadel performs for four independent producers is narrower: a seat in each one’s bank line that owns nothing.

→ Citadel’s four seated producers, each one’s hedge book against its bank loans from 2021 to 2025, screened from their 10-Ks, a separate note on Patreon.

How large a book of producer hedges can one $5 million seat put beside the banks, and what does that make the seat?

Below the paid line:

• The size: the hedge book one seat sits beside at CNX, from CNX’s own figures, against the seat’s cost.

• The three seats whose schedules print an amount, on one base, with the arithmetic.

• All ten companies’ filings, by role and filing date.

• The verdict with our odds, the line that proves it wrong, and three dated checks.

Read more

On 8 July 2026 GLG Partners, Man Group’s stock pickers, held a named short of 2.24% in Vistry Group. It was among the last positions Britain’s register published with a name. Man, the world’s biggest public hedge fund in a 2023 Bloomberg headline and famous for its AHL arm’s trend following computers, held more named UK shorts than anyone when the names went dark. Most were GLG’s, and most were new to the register that year.

The regulator’s new totals, one anonymous sum per company, cannot say who has covered those shorts since. A crowded UK short used to name every holder at 0.5% or more. Now a large holder beside it, the kind that matters in a squeeze, has no name.

After July, a manager’s own fund reports are the one regular place a named UK short book still shows: in bands each month, by name twice a year. GLG’s larger UK long short fund, Man Alpha Select Alternative (”Alpha Select”), publishes both. On 26 October I downloaded the short selling files of the Financial Conduct Authority (FCA), grouped every holder’s last named disclosure by firm, followed Man’s companies through the anonymous totals since, and set them against the fund’s reports.

The case runs in six chapters:

• Man held Britain’s most named shorts: 81 still open at the cutoff.

• GLG named most of it this year: 49 of its positions arrived in 2026.

• London chose to hide the names: its totals count every short from 0.2%, unnamed.

• The fund lost 6.61% in July: little of it to company size.

• The totals prove only the cuts: at Kainos, GLG covered at least 1.54 points and may hold nothing.

• Alpha Select’s schedules and size tables: how much of its bet the fund kept.

Man held Britain’s most named shorts

Until 9 July the FCA, Britain’s markets regulator, named every holder of a net short position, measured as a share of a company’s issued capital, of 0.5% or more. An open named position is a holder’s latest such disclosure in a company, notified after 31 December 2020: the population the FCA’s operational guide set for its first totals. Summed by firm, the last named file, with about 600 holders since October 2012, becomes a league.

Man held 81 of the 613 open named positions at the cutoff, in 76 companies, all last updated in 2026. GLG Partners, its discretionary arm, held 62, more than Citadel’s 47 across the whole firm. Man’s systematic managers held the rest: Numeric Investors 13, and AHL Partners, home of the trend following the label rests on, 6.

Source: FCA named file, sheet “Historic Disclosures 10.07.2026”, my grouping by firm; Citadel Securities, a market maker, excluded; Millennium’s own entities (18) and WorldQuant (6), separate firms, counted apart · as of 9 Jul 2026

Read the ranking, which leaves out a Hong Kong manager that also held 23, as a count of positions of 0.5% or more, never as money or as a measure of how bearish a firm is. The line favours concentrated stock pickers: a book spread thinly across many companies crosses 0.5% in fewer of them.

Hedgeweek, Alternatives Watch and Trustnet have ranked GLG at or near the top since 2021, and my count reproduces Trustnet’s 30 for GLG in August 2025. None that I found set a fund’s own reports against the register.

GLG named most of it this year

GLG’s count of open named positions went from 31 at the close of 2025 to 62 at the cutoff. Of the 62, 49 crossed the 0.5% line in 2026. Citadel Advisors, Citadel’s largest named entity, also doubled, from 22 to 44. Marshall Wace fell from 40 in March to 23. A crowd grew, and GLG led it.

Some of the count’s doubling may be growth: Alpha Select grew 26% in the half to £1.79bn, and a fund that grows pushes a short held at the same weight over the 0.5% line.

GLG manages the fund, with Charles Long and Nick Judge as portfolio managers, and the fund’s gross exposure was rebuilt before 2026. GLG wrote in the fund’s 2025 annual report: “Gross exposure increased during the second half of the year, especially in the third quarter, and ended at 193%.” What 2026 added was names on the register.

The fund’s monthly size table splits net exposure by the companies’ market value, in dollar bands, with index positions broken into their stocks. In April 2025 Alpha Select was net long 15.96% of its assets in the giants, companies worth more than $50bn. Below $10bn it was net short 9.10%. By June 2026 the two were 42.97% and 33.38%, with the fund close to flat overall. In pounds, its short side below $10bn grew 1.8 times between the two dates, to about £866m.

What the shorts are for

Call that shape the size tilt: long the giants, net short a third of the fund below $10bn. It is Alpha Select’s bet, not GLG’s: Man Absolute Value, GLG’s smaller UK long short fund (£320m), held the reverse on 30 June, net long 26.44% below $10bn. GLG’s two latest commentaries give a why for the shorts, though neither speaks of company size. The 2025 annual report says that “domestic stocks make up only a small part of our universe and offer exciting shorting opportunities, especially in domestic insurers and retailers.”

The report for the half year to 30 June widened the case to businesses that “need very little physical investment to grow”: “Those are precisely the businesses most exposed to artificial intelligence (AI), because much of what they do can potentially be replicated.”

On the other side, GLG wrote, companies that own physical assets, “utilities, industrial businesses and miners”, are “much harder to displace”. National Grid, Rolls-Royce, Anglo American, Glencore and Siemens were among the fund’s ten largest longs on 30 June.

Not every short is that bet. The 2025 report called one utility short “a partial hedge to the fund’s long position in National Grid”, which was still its largest long in June, at 3.45%. In June two of its ten largest shorts were again UK utilities, while its utilities sector was net long. So the size tilt is a chosen bet, and some shorts beneath it may be hedges.

London chose to hide the names

The FCA’s operational guide put it plainly: “From 13 July 2026, we will no longer disclose individual net short positions. We will instead begin to disclose anonymised ANSPs by company.”

An aggregated net short position (ANSP), what I call the total, sums every position “at or above the 0.2% threshold” in one company and publishes it without names. Funds still report to the FCA from 0.2%; what went is the public line at 0.5%, with a name. The first print, on 13 July, covered positions “held at midnight on 9 July 2026”.

The funds had asked for this. HM Treasury’s 2023 response records their case: “the current regime creates risks around copycat behaviour and short squeezes when individual positions are disclosed publicly”, and “individual position disclosures reveal proprietary trading strategies”. Jack Inglis, chief executive of AIMA, the hedge fund trade body, counted among AIMA’s wins that July “changing short selling rules to protect the confidentiality of investment managers’ positions”.

The register cannot test the first charge. It tests the second only in part: the names gave away positions, while GLG’s reasons, given industry by industry, sat in its own fund reports.

Listed companies argued the other way, the Treasury recorded: “the current individual disclosure regime helps to inform their corporate engagement with their investors”. That engagement now runs on one number per company, and on none where no short reaches 0.2%. The Treasury promised “greater transparency on the overall net short position in a company’s share than the current regime”, and on its own terms it delivered. Each total adds the band from 0.2% to 0.5% the register never printed: more of the crowd, none of the names.

Names still leak in one place: the Takeover Code’s Rule 8.3 makes anyone with a 1% interest in a company under offer disclose its shorts, but a pure short seller never discloses.

The fund lost 6.61% in July

In the three months to 30 September the FTSE 250, Britain’s mid cap index, rose 6.6% against 1% for the FTSE 100. Graeme Evans of interactive investor gave one reason: “Takeover action played a big part in the robust performance of the FTSE 250 index”. He gave another: investors “returned to heavily sold stocks” such as Hays and WPP.

Both reasons reach Man’s named list. Four of the FTSE 250’s ten best performers in the quarter, the top two among them, were on it at the cutoff: GLG’s Hays, Michael Page (PageGroup on the register) and Kainos, and Numeric’s Pinewood Technologies. Pinewood rose 67.7% in a quarter that brought a takeover. Yet Alpha Select held Hays and Michael Page long on 30 June: GLG’s named figure is its net across all its funds, so one fund can sit on the other side.

Alpha Select’s DL share class, the one its monthly reports track, lost 6.61% in July, its worst month of 2026, and 5.58% over the three months. Man’s own trading statement has its IL share class down 5.4% for the quarter, about £97m on the June assets before flows, against a 0.1% loss for the HFRX Equity Market Neutral index. Money came in, and the fund ended September at £1.79bn, where it began.

Around Alpha Select the firm had a strong quarter: Man’s assets rose 7% to $270.9bn on the same statement, so a £1.79bn fund’s bad July barely moves the firm’s numbers.

July’s movers cut both ways: two of the fund’s 30 June shorts, Vodafone and Sage, rose 18.3% and 19.3%, among the FTSE 100’s five best, and AstraZeneca, its second largest long, fell 10.4%. Its Hays and Michael Page longs rose 80.9% and 70.9%.

What company size explains

How much of the quarter is the size tilt? At June exposures, with the FTSE 250 standing in for the smaller companies, the FTSE 100 for the giants and about 3% assumed for the middle band, $10bn to $50bn, where the fund was net short 10.21%:

So the tilt explains roughly 2 of the 5.58 points for the quarter and leaves the rest to the stocks themselves. The estimate is rough: the size bands cover the fund’s whole book while the two indices are British, and its net short in UK companies was 10.35% in June.

It explains little of July: the FTSE 250 rose 4.2% that month and the FTSE 100 3.5%, a gap that costs about 0.3 points at the same exposures. Most of its estimated cost fell in August and September, when the fund made 0.50% and 0.60%, so July’s loss came from the companies it held.

GLG’s commentary covers the half to 30 June and never mentions July. It reached investors in a report the fund company’s directors approved on 26 August, after the loss. It tells them: “Investors should also expect that holding positions that differ from the consensus, in a market of this kind, will produce periods of sharp volatility in returns.”

The totals prove only the cuts

GLG was named short 1.75% of Kainos on 6 July, and at the cutoff every named position in the company added up to 2.43%. The first print put Kainos’s total at 4.46%, above the names, because it counts every short from 0.2%. The total first fell below GLG’s 1.75% on 21 August, at 1.68%, and rose back to 1.86% on 26 August. The total that replaced it on 22 October reads 0.21%, dated 22 September.

Reading a total against a fund’s last named position takes four steps:

1. The total sums every short of 0.2% or more in Kainos.

2. If GLG still holds 0.2% or more, its short sits inside that sum, so it cannot exceed the total.

3. If GLG holds less than 0.2%, it holds less than the total already.

4. Either way GLG holds 0.21% at most, so it has covered at least 1.54 points of its 1.75%.

When today’s total sits below a fund’s last named position, I call the fund capped: it holds the total at most. A fund is below the line, under 0.2%, when its company is still on the reportable list but carries no total. The same holds when the total is dated before the fund’s last disclosure, since the FCA’s Handbook dates a total by “the most recent position date included in a notification”.

Each fall below a named position is a dated proof; each rise is anonymous. The test cannot say whether GLG holds any Kainos at all. To redo it, read each last named position against the totals and the reportable list; a join on the totals file alone drops the companies with no total, which are among the strongest proofs.

GLG’s named figure nets all its funds, and where a total falls but stays above it, the totals cannot tell GLG from the crowd. That objection holds against the register, and fails, for one fund’s slice of the book, against Man’s own documents.

The totals fall as often in Citadel’s companies as in Man’s: the totals measure the crowd, the fund’s reports measure the fund.

In Alpha Select’s reports one number decides the question: its net short in companies below $10bn on 30 September, against 33.38% of the fund in June.

→ GLG’s Vistry short and the 17 other holders named beside it, costed from the FCA register and London closes and set against 44 UK crowds since 2012, a separate note on Patreon.

After a July that cost it 6.61%, how much of its bet against smaller companies did Alpha Select keep?

Below the paid line:

• The schedule table: Man’s named companies marked where GLG’s own fund was short or long.

• The size table: the fund’s exposure by company size before and after the quarter the names went dark.

• The tests: every company where the totals prove GLG cut, and the control table on what they cannot say.

• The verdict, the line that would prove it wrong, and four dated checks to watch.

Read more

Schonfeld’s London office filed its 2025 accounts on 16 October: a £155.2m bill, charged at cost. It goes to Schonfeld’s New York adviser and, through it, to the funds’ investors. The office is one of the portfolio managers that trade Schonfeld’s funds.

The press files Schonfeld as a pass-through shop. A pass-through bills a manager’s costs to investors at cost, and in its full form it replaces the management fee. Schonfeld’s open funds run what a Barclays study calls a partial pass-through: a management fee, with every client also paying its portfolio managers on top, and some clients carrying the firm’s overhead too.

Pricing Schonfeld by its fee misses that bill.

I read all eight years of Schonfeld’s London accounts, its brochure and four years of its fund filings; the four parts of London’s 2025 bill add back to its turnover, the accounts’ word for the bill.

Five chapters make the case:

• The brochure keeps a 0.75% to 2% fee, and a Barclays study sent to the SEC names the structure.

• London’s 2025 bill comes apart into staff, its 11 members’ share and running costs, all at cost.

• Money left in 2023 while London’s bill rose; by end-2025 outsiders held about 85% of the flagship, Strategic Partners.

• Point72’s London arm books $323.7m of pass-through fees beside its management fee.

• What one office’s bill equals against the two main funds, the flagship and Fundamental Equity, and what it did in the year money left.

Source: Author’s calculation from Schonfeld Strategic Advisors (UK) LLP accounts, FY2020–FY2025, Companies House · as of 31 Dec 2025

Staff are average headcount; the bill rose with headcount in every year shown.

Not instead of the fee

eFinancialCareers wrote in November 2023 that “Schonfeld adheres to the ‘pass through model’, whereby its costs are passed on to investors”. Hedgeweek’s account of Bloomberg’s 2025 tally of pass-through charges named Citadel, Millennium, Balyasny, ExodusPoint and Point72; Schonfeld did not appear.

The New York adviser, Schonfeld Strategic Advisors LLC, prices its funds in Item 5 of its brochure, the Form ADV Part 2A disclosure it files with the SEC, dated 1 July 2026. For funds “generally available for subscriptions”, “the Advisor charges a management fee ranging from 0.75% to 2% (depending on the applicable class of ownership interest)”, plus a performance allocation, the firm’s share of gains, of 12.5% to 22.5%. Some classes may pay neither, and fees can be waived.

The label turns on one sentence in the same item. “The management fee and performance allocations described above are in addition to the fees and performance-based compensation charged by Portfolio Managers who manage the funds’ assets.” Item 6 makes it universal. “For all clients, Portfolio Managers (including Internal Portfolio Managers) are paid performance-based compensation, which is directly or indirectly borne by clients whose assets are managed or traded by such Portfolio Managers.”

So every client pays its portfolio managers on top of anything it pays the firm. The rule travels to any pod shop: read the expense section before the fee table, because “in addition to” there makes the fee one line of the price.

AIMA, the industry body, sent the SEC a Barclays study of how multi-manager funds charge with a September 2022 letter.1 Of the multi-manager funds reviewed, 26%, with 55% of the assets, ran a full pass-through with no management fee. A further 37%, with 30% of the assets, ran a partial pass-through: performance-based portfolio-manager pay and strategy expenses passed through, with a management fee for infrastructure. Schonfeld’s brochure describes the partial kind of the pod-shop pay deal.

A full pass-through does exist at Schonfeld, in one corner: “Investors in certain classes of one private fund do not pay a management fee and instead are allocated the expenses of the Advisor and its affiliates”. The brochure does not say which fund, or how large those classes are; call them the expense class.

The firm’s own wording goes further than its fee table: “The expenses of the Advisor are generally borne by its non-management-fee-paying clients and certain management-fee-paying clients”. Another spreads the affiliates’ costs wider: “Expenses of the Trading Vehicles, the Portfolio Managers and the Advisor’s affiliates are borne by non-management-fee-paying and management fee-paying clients of the Advisor, as applicable.” The trading vehicles are the accounts most client money trades through.

So the firm’s overhead and other staff’s bonuses fall on clients that pay no management fee, the expense class among them, and on “certain” fee-paying funds. The objection to “on top” is that for some fee payers the fee itself pays those costs:

All or a portion of the management fee compensation payable by certain management-fee-paying funds […] will be used by the Advisor to offset expenses incurred by the Advisor and its affiliates.

Which fee payers bear which costs is set in offering documents that are not public. The objection holds for overhead, at a size the firm does not publish, and fails for the portfolio managers’ pay, which Item 6 puts on all clients.

The brochure names the temptation, an “incentive to allocate expenses to non-management-fee-paying clients instead of management-fee-paying clients who do not bear such expenses.” That choice sits with the adviser: expenses are “allocated in the discretion of the Advisor or relevant Manager”.

Steven Schonfeld founded the firm, and the adviser “is owned 100% by three trusts for the benefit of Steven Schonfeld and/or his family”. Ryan Tolkin, chief executive since 2021, runs it with an Executive Committee that “functions similarly to a board of directors” but has no direct decision-making authority over client accounts.

London bills at cost

The brochure lists Schonfeld Strategic Advisors (UK) LLP, the London office, among the affiliates that “act as Portfolio Managers”. Its accounts say its portfolio managers “primarily invest in the European markets”, sub-advising “a portion of the capital of the funds” for the New York adviser. That adviser’s subsidiaries are London’s two designated members, the members legally responsible for its filings.

Two of London’s documents say how it is paid. Note 1.3 of the accounts says so plainly. “The LLP employs an expense-based pass-through model and does not receive a management fee or any other asset-based fee.” Its MIFIDPRU 8 disclosure, the statement the FCA’s disclosure rules require, published in September 2025: “SSA UK grows revenues by increasing the underlying asset base on which it charges a management fee via a ‘pass-through’ model in reimbursement of expenses.”

Both describe the same money, London’s bill: a reimbursement of its expenses, which the regulatory filing calls a management fee and the accounts a sub-advisory fee, and which the accounts say is not charged on assets. Under the funds’ offering documents it includes “performance-based compensation charged by the SSA UK’s portfolio management teams, salaries, operational and overhead expenses”. London’s share is sized by “a methodology that the LLP, in its sole discretion, believes to be fair and equitable”.

The 2025 bill comes apart into the lines that make it:

1. Staff: £97.2m, for an average of 192 people.

2. The 11 members’ profit share: £29.8m.

3. Rent and the rest of administrative expenses: £28.9m.

4. Less sublease income and interest received: £0.7m.

£97.2m + £29.8m + £28.9m − £0.7m = £155.2m, the turnover in the accounts.

That bill holds both layers of the partial pass-through. The pay of London’s portfolio-management teams comes on top of the fee for every client whose money they trade (Item 6).

London is both an affiliate and a portfolio manager, so its overhead and members’ share can sit in either layer. Where they count as affiliate expenses, the expense class and “certain” fee payers bear them, and some fee payers have them offset by their fee. All but £5.7m of the members’ share is charged as an expense; that £5.7m stayed in the partnership’s reserves.

Tolkin was a guest on the Generating Alpha podcast, as eFinancialCareers reported on 5 January 2026. “We have tons of people today who used to spend a lot of time organising data.” … “If programmed effectively, that can be done in a fraction of the time.” London’s 2025 accounts, closed before the remark was reported, show operations staff up from 26 to 33. Technology went from 30 to 34. The remark is a forecast about the work; the accounts are a payroll, and the 2026 accounts will test it.

Money left in 2023; London’s bill rose

In 2023 Schonfeld held talks with Millennium that broke down. eFinancialCareers reported that November: “There were redemptions.” It added that “Schonfeld raised $2bn from investors in spring, before still more redemptions led to it to seek a further injection of cash in the failed Millennium deal.” London’s bill rose that year anyway, from £88.8m to £116.7m.

Each year’s Form ADV Part 1, the registration form an adviser must update at least once a year, asks in Schedule D what share of each private fund is “beneficially owned by you and your related persons”. Those are the firm, its owners’ vehicles and its staff. Four copies give four year ends for the flagship’s onshore fund.2

Source: Form ADV Part 1, Schedule D, Schonfeld Strategic Partners Fund LLC, as filed 29 Nov 2022, 20 Sep 2023, 10 Jul 2024 and 30 Sep 2026. Each is a mid-year amendment carrying the prior annual update’s fund rows · 2021 and 2022: onshore investors only

On the later basis the related persons’ share rose from 8% at end-2023, so outsiders held about 85% by the end.3 The two earlier copies counted onshore investors only, so they cannot be set beside the later two.4

The form cannot show the family taking money out. Its measure counts staff, and the family’s holding company, SGH, also invests directly, “within the same Trading Vehicles as assets of non-affiliated clients”.

One insider told the site that November what falling assets do to a pass-through shop: “The pass through model works great when you’re growing your assets and your cost base” … “but if assets are falling and the cost base is high, a smaller number of investors have to cover the remaining costs” … “It’s a very negative convex business model.” Joel Litman and Rob Spivey of Valens Research put it more briefly that month: “Costs don’t drop in line when assets do, so a gap is created.”

How rivals pay London

Three rivals run London partnerships too, each paid a different way. Point72 Europe (London) LLP booked $323.7m of pass-through fees in 2025, a line that “equals the total pass-through eligible expenses the Partnership incurred during the year”, beside $71.2m of management fees and $57.2m of performance fees.

Point72’s brochure says the same thing outright: an advisory fee of 1.50% to 2.85% a year of net asset value, and “There is no limit on the amount of Pass-Through Expenses that may be charged to the Point72 Multi-Strat Funds”.

Balyasny Asset Management (UK) LLP is paid a service fee “based on the residual profit-split model, subject to a cost reimbursement floor”, on 2025 turnover of £558.3m. ExodusPoint Capital Management UK, LLP nearly doubled its advisory revenue in 2025, to £423.3m. Its 15 members kept £221.9m of it, about half.

Schonfeld’s London is paid its costs, its members’ share included: £29.8m for 11 members, about a fifth of the bill. The difference is how each firm pays its London partners, not whether investors pay for London: at fund level, all four firms pass costs through.

Cambridge Associates reviewed the expenses of the platforms it sampled for 2024. It puts the pay risk in one line: “Variable compensation is generally charged in addition to a fund level incentive fee, exposing investors to possible netting risk”. That is the risk of paying winning teams in a year the fund loses.

Why did London’s bill keep rising in 2023, the year investors pulled money out?

Below the paid line:

• London’s bill against the two main funds’ capital at four year ends, at two exchange rates.

• The year money left, split into bill and capital on two bases, and which fund it left from.

• What the regulator counts as London’s fixed overheads, from London’s own filing.

• The bet on London’s next accounts, its odds and the two dated checks.

Read more

Optiver’s shareholders, founder Johann Kaemingk among them, took €761 million in dividends in 2024. On 19 October 2026 a Bloomberg headline read “High Frequency Trader Optiver Seeks $900 Million Debt Package”. The Amsterdam market maker is seeking a debt package about the size of what it paid its owners in one year.

A reader of the headline might take a trader that borrows to be short of money, yet Optiver’s 2025 profit was a record and it calls its capital structure “conservative”. I read the package as Optiver borrowing to grow rather than paying its owners less, and its 2026 filed accounts will test that in the payout, the share of the year’s profit paid as dividends. That share sets how fast the equity behind Optiver’s quotes grows, and its lenders and clearing firms lean on that equity.

So why borrow at all? Optiver says in its Annual Review 2025 that it “trades on its own account, deploying its own capital across markets”. Quote, the Dutch magazine that reads its filed accounts, called the equity left after the 2024 dividend “zeer comfortabele” (very comfortable). Both describe a firm with money of its own, and neither says how the growth is paid for.

The owners take a large share of each profit, while the spending turns to computing power, a New York build out and an energy trader. Call the result pay and borrow, in which growth the owners could fund by taking less is borrowed and the owners’ share stays untouched. It breaks if the payout falls below 40% once the debt arrives.

Quote and FD, the Dutch financial daily, read the dividend from Optiver’s filed accounts in eight of the years since 2015; I set each against that year’s profit and cross checked them against its equity from 2020 to 2025. Both checks find about half of the profit going out. I also read both of its US arm’s audited balance sheets at the SEC.

The case runs in six steps, the last two behind the paywall:

• Optiver’s profit has more than quadrupled since 2019, and its spending has turned to computing power.

• At the end of 2025 its US arm’s hedged book ran on cash owed to its clearing firms.

• About half of each profit goes out, Optiver’s own equity agrees, and part of 2025’s apparent dip can be the dollar.

• Flow Traders, the listed Amsterdam market maker, stopped its dividend before taking private credit; Optiver’s record shows no such stop.

• What Optiver really keeps of its profit, and what one lean year would cover.

• Whether the owners take less once the debt arrives, and what would prove us wrong.

Source: Author’s calculation from Optiver’s filed annual accounts, years 2015 to 2024, as Quote and FD reported them · as of 31 December 2024

The payout stays at about half or more while profit rises from €279m to €1.37bn.

Each year keeps its source’s base: dividends for that year’s profit in 2015, 2018, 2019 and 2020, dividends paid during the year in 2024, and no base stated for 2016, 2017 and 2021. For 2019, the payout multiplies the €180 a share Quote reported by the 1.46 million to 1.5 million shares its figures imply. Each row is a press read of that year’s accounts, mostly published the next spring: Quote’s for 2015, 2016 and 2017, 2018, 2019, 2020 and 2024, and FD’s for 2021.

How Optiver makes its profit

Optiver quotes prices to buy and to sell, trades on those quotes and manages the inventory this leaves by hedging each position against others. What its trading income leaves after costs is the profit the owners divide, and the part they leave in adds to Optiver’s capital.

Profit was €397m in 2019 and more than tripled to €1.38bn in 2020. It fell back in 2021 and again in 2023, then rose to €1.77bn in 2025. If Optiver were borrowing because it is short of profit, its releases would show profit falling; they show a record, which Quote’s headline called “duizelingwekkende” (dizzying).

Jan Boomaars, the chief executive who signs Optiver’s annual reviews, wrote in the 2025 results release that “Our ambition is clear: to continue strengthening our position as a global liquidity provider, without compromising risk discipline.” The strengthening is where the money now goes.

The word that marks the turn in how Optiver describes its spending is “compute”, meaning computing power, which appears five times in the 2025 Annual Review and in none of the 2022, 2023 or 2024 reviews, which come no closer than “computer science” and, in 2022, “big data computing”. The build itself is older: on 7 May 2024 AMD quoted Alexander Itkin, Optiver’s US chief technology officer, on “building world-leading computational scale”, so the count dates the description; the spending began earlier.

Boomaars’s letter says “we are investing heavily in compute, data and global platforms”. The same review records “a new office in New York” and trading “in new asset classes”, U.S. credit among them, and in August 2026 Optiver agreed to buy a majority of Northpool, a Leiden power and gas trader.

Optiver prints no figure for any of these, and each is paid for before it earns. Under pay and borrow, that money comes from the profit the owners leave in or from lenders, and Optiver’s US arm already runs on one kind of lender.

Its US book runs on credit

Optiver US LLC, the group’s market making US broker dealer, has two statements online at the SEC, for 2018 and 2025, both audited by KPMG.

At the end of 2025 the arm owned $66.2bn of securities and had sold short 97% as much, most of both in options. Management writes that “market risk is substantially diminished when all financial instruments are aggregated” (note 7), so the gross figure, as in our Hudson River Trading piece, measures the size of a book largely hedged within itself and says little about its net exposure.

Note 4 shows the funding: at end-2025 the arm owed brokers, dealers and clearing organisations a net $916.1m, a line that holds $1.44bn of cash, partly offset by open trade equity (gains on positions still open). Call the cash the clearing credit, the cash the arm borrows from the firms that clear its trades, an affiliate among them (note 9). It is about 1.8 times the arm’s own equity of $803.4m.

The two year ends online differ in direction. At end-2018 the arm’s clearing firms owed it $138.6m, against $39.1m it owed them. At end-2025 they owed it $21.5m, against $916.1m. At those two dates the arm went from net creditor of its clearing firms to net debtor.

Optiver describes its trading as deploying its own capital, but at end-2025 its US book owed its clearing firms that clearing credit, so the package would add a second kind of lender, one that could term some of that credit out.

A capital squeeze is the other reading, and nothing Optiver publishes shows one. The US arm held $571m of net capital at end-2025, the liquid cushion the SEC’s Rule 15c3-1 counts, against a $250 thousand minimum. On 12 January 2026 it sent $40m of capital up to its parent, which fits no squeeze at the arm.

Optiver’s EU and UK investment firms publish their capital disclosures only “upon request”, its disclosures page says. Under the EU rules, a senior loan counts as funding, and only debt ranked below other creditors counts as capital. Bloomberg’s headline does not say how the package ranks, so it cannot be shown to add to those firms’ capital.

Half of each profit goes out

Optiver files its full annual accounts with the Dutch Chamber of Commerce, the KvK, and Quote and FD have reported the dividend from them in eight of the ten years from 2015 to 2024. For 2024 they show €761m paid in dividends against that year’s net profit, a payout of 56%.

Optiver kept paying a dividend even as capital rules tightened, FD’s headline on the 2017 results noted. Quote wrote in April 2019 that “Zoals gebruikelijk in beurshandelkringen wordt een flink gedeelte van de jaarwinst uitgekeerd aan de aandeelhouders” (as is customary among trading firms, a large part of the year’s profit is paid to shareholders).

Optiver has kept more before. Its 2013 accounts, as Quote quoted them in July 2014, said “In 2014 zullen we nieuwe kapitaalbuffers opbouwen die gebruikt kunnen worden wanneer verliezen worden geleden” (in 2014 we will build new capital buffers for use when losses are suffered), under a capital policy to be put to the Dutch central bank, and the dividend proposed out of 2015’s profit was “minder dan de helft” (less than half).

I found no report of the dividend for 2022, 2023 or 2025: for 2022 Quote saw only a shortened report, and in April 2026 it did not know the exact 2025 amounts. The KvK accounts carry each year’s dividend and were not read for this piece.

Boomaars runs the firm with Sandrine Teran, the chief financial officer, and Tadhg O’Shea, the chief risk officer, but the owners decide the payout. Quote wrote on 2 April 2026 of “de Quote 500-lieden die als aandeelhouders beslissen wat er met de winst gebeurt” (the people on Quote’s list of the 500 richest Dutch who, as shareholders, decide what happens to the profit), among them Kaemingk and a fellow shareholder, Chris Oomen.

Senior staff can also buy shares, which Optiver Holding, the group parent, must buy back from those still employed five years on, the US arm’s 2018 statement says. Many staff hold shares and share in the profit through the dividend, Quote noted in April 2023, so part of the payout reaches staff.

The equity bridge agrees

Optiver’s own releases cross check the missing years through an equity bridge, in which closing equity is opening equity plus profit, minus dividends and staff share buy backs, plus staff share issues, plus or minus currency on foreign subsidiaries. The rise in equity against profit, the share kept, mirrors the payout, blurred by share trades and currency. From 2020 to 2025 Optiver earned €7.92bn and its equity rose €3.96bn, from €1,532m at end-2019. It kept 50%, in line with Exhibit 1.

2025 alone looks different, because equity rose by only 33% of the year’s profit, which at face value says Optiver paid out two thirds. That is the pitfall: much of Optiver’s equity sits in subsidiaries outside the euro, its 2023 review says, and the dollar fell against the euro over 2025 on the ECB’s rates, so part of the gap can be currency.

The releases and Annual Reviews have described “a conservative capital structure” every year from 2019 to 2025, and the numbers it publishes agree. At a payout of about half, faster growth needs lenders or a smaller dividend, and pay and borrow takes the lenders.

Other market makers borrow too

Flow Traders took both. It measures its trading capital as net liquidity at clearing and prime brokers plus bank cash. In July 2024, a month after taking a small bank loan, its board announced a Trading Capital Expansion Plan, and its Annual Report 2025 says that “To expand the trading capital base, the Board suspended regular dividend payments until further notice”. In October 2025 a $200m private credit term loan, beside an undrawn $75m revolver, replaced the bank loan, at SOFR plus 500 basis points.

Trading capital rose by about a third in 2025, and the loan’s covenant keeps it at three times the loan or more, “on a daily basis”. The board wrote that “The use of external leverage has shown to be accretive to shareholders’ return on equity and is expected to continue to do so given the opportunities ahead.”

The bigger trading capital is on the record, much of it the loan itself; accretion is the board’s word, and the loan’s price is the bar each year’s trading must clear. Optiver’s record to 2024 shows no such stop, and it is now seeking the debt anyway.

Set against each firm’s own equity, with clearing firm credit left out, the borrowing differs in kind as well as size. Optiver’s package alone, leaving out any borrowing its KvK accounts may hold, is 14% to 15% of its end-2025 equity. Flow Traders’ two facilities came to about 27% at end-2025, 20% drawn.

Virtu Financial’s whole stock of long term borrowings was about 103% at end-2025. Jane Street’s one August issue, $14.6bn of senior secured notes raised to retire about $11.1bn of its debt, came to about 27% of the members’ equity S&P put at about $55bn for March 2026, and about 6.4% net of the debt it retires.

Set beside those, the package cuts against any reading of strain, and Optiver’s equity rose in each of the last six years.

In 2022 Moody’s wrote that Citadel Securities planned to use a term loan “to increase its trading capital”, the use Flow Traders put its own loan to. The payout decides how much of the growth the owners fund by taking less, and Flow Traders’ loan shows what the lenders’ share costs.

Once Optiver can borrow, does its 2026 payout fall, or do its owners keep taking their share of every good year?

Below the paid line:

• What Optiver kept of last year’s profit, and how much of the gap currency can explain.

• The package against a lean year’s profit, against what Optiver keeps, and against Flow Traders’ covenant.

• The verdict on pay and borrow, our odds on the next payout, and what proves us wrong.

• Four dated checks, from Northpool’s completion to the KvK filing that settles the bet.

Read more

On 27 August 2026, AQR’s Form ADV listed 191 Flex hedge funds; 187 listed one beneficial owner. They are the newest part of the tax business Bloomberg credits with making AQR the world’s largest hedge fund manager. That business sells two things: deferral of gains, and ordinary losses that can offset wages, within a limit.

The IRS notice, open for comment until 28 October, describes the second: swaps, currency forwards and straddles. Bloomberg ties those losses to AQR’s commingled funds, Delphi Plus first; AQR’s materials for the separate Flex accounts list none. Guidance by 31 March 2027 tests whether the notice stops at the commingled funds.

A holder’s exposure turns on which product his fund sells, and AQR’s on how much of its growth those commingled funds carried.

I read four of AQR’s Form ADV filings, the SEC registration that lists every private fund, from November 2024 to August 2026. I matched the Flex funds on the May 2026 filing to their Form Ds, the notices a fund files after its first sale. In order, they show:

• Taxes built AQR’s size: tax funds went from 10.6% to 43.5% of its private fund gross.

• Three wrappers make one tax machine, the newest a hedge fund of one.

• Clients buy deferral or ordinary losses; documents Bloomberg saw put Delphi Plus’s 2025 ordinary losses at 28% of capital.

• Washington is reading one half: the notice’s three trades need a derivative or a currency election.

• Below the wall, a split of AQR’s private fund growth, fund by fund, measures how much of it the notice describes.

Source: Author’s calculation from AQR Capital Management, LLC Form ADV Part 1A, Schedule D 7.B.1 (Q11, Q13), filings of 27 Nov 2024, 30 May 2025, 29 May 2026 and 27 Aug 2026.

Read down the last column to May 2026. Tax funds are the Flex funds plus the commingled AQR TA (tax aware) funds; gross is each fund’s gross assets on its Form ADV row, never client money.

Taxes built AQR’s size

Alternative Fund Insight’s power list of 26 March 2026 had AQR’s hedge fund assets up 89% in 2025 to $109.1bn, “ahead of long-time leader Bridgewater Associates”. On 4 August, Hedgeweek, citing a Bloomberg report, called AQR “the world’s largest hedge fund manager”. Bloomberg’s headline named the cause: “A Tax Strategy for the Rich Built the World’s Largest Hedge Fund”.

None of the three says what it counts, so the rank stays theirs. A Bloomberg Law headline on the notice added the sequel, “Tax-Slashing ‘Holy Grail’ Popularized by AQR Dealt IRS Warning”. Read together, they say the strategy that built the rank is the one the IRS warned about.

The test is the fund row reading: Schedule D of Form ADV gives each private fund a row, with gross assets at Question 11 and beneficial owners at Question 13. Gross counts the long side of a levered book in full, which is why AQR’s $312bn of regulatory assets sits well above the $187.18bn of client net assets in its brochure at the end of 2025. I sorted every row into Flex funds, TA funds and the rest, leaving out AQR Arbitrage, a sister adviser with its own filing.

The trap is the date. All four filings are amendments between annual filings, which the SEC’s instructions do not require to refresh asset figures, so each mixes old values with new series, August most of all; its tax share reads 48.2%. I measure on the May 2026 filing: 43.5%, gross against gross.

On money, Institutional Investor reported that by the end of 2025 “more than a third of its total assets” sat in tax aware funds. On private fund gross or on money, tax is a third or more, and it is the part that grew. The label is right that taxes built AQR’s size; it does not say which tax.

Three wrappers, one tax machine

Cliff Asness, AQR’s cofounder and principal owner, gave the reason in a 2021 essay titled “Now There’s Nothing Certain But Death”. “For almost my entire career I’ve been vexed that investments for taxable investors didn’t focus enough on after-tax returns, and many taxable investors didn’t seem to care,” he wrote. AQR’s brochure calls the answer “tax-aware implementation of some of our strategies”: its systematic strategies, sold through three wrappers.

The first is the Flex accounts: separately managed accounts (SMAs) that advisers and wealth managers sell at “typically $1 million”, per AQR Flex’s Form CRS, its client relationship summary. The Flex accounts get no fund rows.

Loukia Gyftopoulou, a Bloomberg reporter, told NPR on 1 October that, in the few years since it began offering the strategy, AQR went “from having 3 billion in these accounts to having 70 billion”. That is about the size of the whole tax aware business, which Institutional Investor put at “about $68.8 billion” in June, so her “these accounts” may mean all of it.

The second is the TA funds, ten commingled private funds named “AQR TA” on the August filing, which added Delphi Long Short Equity Fund II beside the original Delphi Long Short Equity. Delphi Plus is the largest by gross, and Delphi Long Short Equity has more owners.

The third is the Flex funds: series of AQR Flex 1 Series LLC, each listed as its own private fund and managed by AQR Capital Management II. None was on the November 2024 filing. These are hedge funds of one: Form ADV’s instructions make any private fund that “may sell securities or other assets short” a hedge fund.

Series G1 is one. Its Form D, filed on 7 May 2026, records $100m sold to one investor; the August filing shows $311,342,000 of gross and one beneficial owner.

No document I read says why AQR puts one client’s book in a fund of its own. An AQR paper on funds of one in general, not on its own Flex funds, says such a fund “may technically qualify as a partnership, but in substance, it often resembles an SMA”. It adds: “A legal wrapper cannot be used to circumvent anti-abuse rules.” On that reading the wrapper changes the label, since an SMA gets no row on Schedule D, and should not change how the anti-abuse rules apply.

One machine, then, with three doors, and the newest opens onto a hedge fund with one beneficial owner.

Clients buy deferral, or ordinary losses

Bloomberg’s August story put the Flex pitch: “Invest $100 million in the most aggressive of AQR’s Flex strategies”. Over ten years, “it may generate over $580 million of losses that can be used to erase taxes from other investments.” Institutional Investor reports the reading of AQR’s Flex marketing presentations by Nate Koppikar, a short seller at Orso Partners, that “Flex SMA projects cumulative net capital losses of 723 percent of invested capital over ten years”. His figure names the Flex accounts; Bloomberg’s names no wrapper.

AQR answers that the losses are not the point: “most of the tax benefit of TA LS strategies, relative to their tax-agnostic counterparts, comes from the deferral of gains,” it wrote on 28 September. Deferral means postponing the realisation of gains, and the losses buy it:

1. The account holds long and short positions, with leverage.

2. It sells positions that have fallen, realising capital losses that can be used against gains elsewhere.

3. It keeps those that have risen, so the kept winners become unrealised gains, taxed only when sold.

The two figures and AQR’s answer describe one book. Each loss realised cuts the book’s tax basis by as much, so the unrealised gain grows with every one. What the losses are worth depends on the exit. A seller pays tax that may “offset some of the benefits accumulated along the way”, per AQR’s Not Locked Up. Heirs get “a basis step-up at death”, per its lifecycle paper, but shorts are not stepped up, leaving “a small remaining built-in gain of 19% of the current NAV” in its 150/50 case.

The second product

The second product changes a loss’s character, capital or ordinary, which decides what it can offset. Two Bloomberg figures rest on documents its reporters saw. Justina Lee wrote on 22 November 2024 that “An AQR presentation obtained by Bloomberg News shows” Delphi Plus “was able to generate ordinary losses amounting to 31% of capital invested in 2023”. On 29 September 2026, Sridhar Natarajan and Loukia Gyftopoulou wrote that the fund “recorded ordinary losses in 2025” equal to 28% of capital invested, “according to documents seen by Bloomberg”.

The rest comes from people familiar with the funds. One told Lee that Delphi Plus’s trades include “notional principal contracts, or NPCs”, the class of contract that includes swaps. Her story added: “AQR has at least two more, the people said, including the trend-following TA Helix Fund” and the multistrategy TA Legacy Fund.

Mark Stancato of VIP Wealth Advisors wrote on 10 August that “In Delphi Plus, swap and currency activity can generate separately stated ordinary income or expense”, while AQR Flex “may generate capital losses”. AQR, he added, “explicitly takes the position that its tax-aware funds are trader funds”, funds that trade as a business, so Delphi Plus’s ordinary losses “may potentially offset W-2 income”, within limits that include the cap on business losses.

Take one holder at Delphi Plus’s $5m minimum (its Form ADV row and Form D): at 2025’s 28% that is $1.4m of ordinary losses. The 2025 cap lets a joint filer set $626,000 of business losses against wages; at the 37% top federal rate, that is about $232,000 of tax that year, and the rest carries forward.

Daniel Hemel, a New York University law professor who specializes in taxation, told Institutional Investor: “The IRS could stop it because it is using derivatives to generate ordinary losses.” The same story added: “Hemel isn’t so sure the IRS would shut down the Flex SMA strategy.” His line runs where the swaps are: in Delphi Plus.

A fund’s name does not tell a holder what he owns: Delphi Long Short Equity shares Delphi Plus’s TA wrapper, and no document I read states its tax character. Every fund tied to ordinary losses is a commingled TA fund that AQR, by Stancato’s account, treats as a trader fund.

No Flex fund’s offering document is public. AQR Flex describes “long/short equity strategies” with no swaps or derivatives, but it describes the Flex accounts. I class the funds of one with them because AQR’s paper says such a fund resembles an SMA, and no document I read puts a derivative in either.

Washington is reading one half

Notice 2026-62, released at the end of September and printed in the Internal Revenue Bulletin of 19 October, names no manager. It asks for comments by 28 October on tax aware fund strategies that “create a pattern of generating capital gain and ordinary loss”. Section 3 describes three trades, held in “an investment partnership or a separately managed account”, and each lets a loss arrive as ordinary while the matching gain stays capital:

1. An identified straddle pairs a currency forward with a currency future, or an equity index swap with a future on the same index, and closes the future first, so a gain lands as capital and the matching loss as ordinary.

2. Currency forwards are bought and sold the same day, and an election chooses each forward’s character after the fact.

3. A fund that is “a trader for federal income tax purposes” ends its winning swaps just before a scheduled payment, so the gain is capital, and holds its losing swaps to the payment, so the loss arrives as ordinary expense.

A book that holds only stocks, long and short, has no currency contract or swap to elect or close, so none of the three fits it. Section 3 calls its one stock example, an index investor who sells losers and keeps winners at year end, “long-standing, well-established”: a long only book, with nothing said either way about a levered long and short one.

Section 4.01(4) keeps the door open, asking about “other investment fund strategies” that “may be viewed as producing unintended federal income tax results”. Guidance “could apply prospectively only or retroactively”, and a retroactive rule would reach losses already taken.

The platforms moved first, on new money. Fidelity restricted new client assets in long and short SMAs from February 2026, by Koppikar’s account, and Schwab lifted its minimum for some such accounts from $1m to $10m on 16 September, Bloomberg News reported.

Institutional Investor, which obtained his letter to Orso’s investors, quoted Koppikar: “if regulatory action forces custodians to reconsider the risks of facilitating these structures, the entire AQR Flex SMA growth engine seizes up overnight.” His engine is the Flex accounts, so no Schedule D row can test him.

When a manager’s growth is a tax product, the question is what its trades sell, deferral or character, and whether they run in a commingled trader fund. That question reaches every tax aware long and short manager, every league table that counts tax accounts as hedge fund assets, and Affiliated Managers Group (AMG), which holds an equity stake in AQR. Michelle Celarier of Institutional Investor reported that “AMG’s CFO has said that the company expects AQR to account for more than 20 percent of its earnings this year.”

So far the evidence points away from the funds of one: nothing I read ties one to the notice’s trades, though the Flex funds went from none in November 2024 to 94 in May 2026.

How much of AQR’s private fund growth sits in the funds tied to ordinary losses, and how much in its funds of one?

Below the paid line:

• The table: the change in gross by fund and family, November 2024 to May 2026, graded by evidence, then Form D sales.

• Delphi Plus’s owner curve; the largest fund of one; the Flex series first sold in the third quarter of 2026.

• The verdict with its odds, the 31 March 2027 line that proves it wrong, and the dated checks.

Read more

Squarepoint’s US adviser has told the SEC since at least March 2025 that it reserves shorter-term signals for some funds. Its July 2026 brochure repeats the tests for them: higher fees, far more staff money.

Hedgeweek says most of Squarepoint’s capital comes “from partners and employees”, which suggests staff and outsiders ride together. The filing shows one master fund they do not share, 100% owned by the firm and its people. On my reading, outsiders get the slower of two Squarepoints: their funds lack the brochure’s “shorter-term signals”, which work only at limited size. So holders of Focus and Atlas, and perhaps Core, the funds outsiders buy, would trade second, at prices the brochure expects to be less favourable.

I read four of Squarepoint’s Form ADVs, from December 2022 to August 2026, and five rivals’, fund by fund; they make the case in five steps:

• Four partners own most of the firm, whose regulatory assets, a gross measure, are three times those in its December 2022 filing.

• One master fund, with 390 investors, is owned entirely by the firm and its people.

• The brochure reserves the shorter-term signals for funds with higher fees and far more staff money in dollars; Focus and Atlas carry the least, and Core is the open question.

• A number of its principals own most of STG, an options market maker that shares Squarepoint’s offices and research.

• Whether any of five rivals runs a fund its own people own on this scale, and which way staff ownership has moved since the December 2022 filing.

Bars are gross assets, which count borrowing and the funds’ holdings of one another; labels give the share its people own.

Four partners own most of it

Squarepoint began as nQuant, a team that moved from Lehman Brothers to Barclays in 2008, by the firm’s own account; it now calls itself “a privately held firm led by its four founding partners”. Its brochure names its majority owners: “Olivier Durantel, Antoine Fillet, Maxime Fortin and Grégoire Schneider”. None of the four has given an on-record interview that I could find.

On 16 December 2014 entities owned by its managers bought the business from Barclays, the brochure says. That same day, Squarepoint International Feeder Ltd, an offshore feeder of the master fund its staff now own outright, made its first sale. The US feeder of Squarepoint Core Master Fund Ltd first sold on 1 October 2015.

Its adviser, Squarepoint Ops LLC, which with its affiliates forms what its brochure calls the Squarepoint Group, runs all 28 of its accounts with discretion, so one firm decides which fund gets what it trades. Its regulatory assets under management, a gross figure that nets no borrowing, were $227bn on 31 December 2025, three times the figure in its December 2022 filing.

Growth puts more money in line for signals of limited capacity, and the brochure’s rule decides which funds get them: their capacity, it says, “has been reserved for the Higher Fee Funds”, the funds that pass those tests.

Staff own one fund outright

Form ADV gives each private fund its own row, in Schedule D, section 7.B.1, and Squarepoint’s, read fund by fund, sort into two kinds. Question 14 asks what share of a fund the adviser and its related persons own. The SEC’s instructions count among them “all of your current employees (other than employees performing only clerical, administrative, support or similar functions)”, so I call that share the insider share.

If staff and outsiders shared funds, the staff’s biggest stake would sit in a fund outsiders also own. In the August 2026 filing it sits in one they do not: Squarepoint Master Fund Ltd (the staff fund) reports $57.5bn of gross assets, 390 owners and an insider share of 100%. It is itself a fund of funds that invests in other funds Squarepoint manages, which the rows do not name, and no fund of funds owns any of it.

Squarepoint Core Master Fund Ltd (Core) is larger, at $77.3bn of gross assets, with 226 owners and an insider share of 36%.

Squarepoint Focus Master Fund Ltd (Focus) has $39.9bn of gross assets and an insider share of 14%. Squarepoint Atlas Master Fund Ltd (Atlas) has $25.6bn and 20%. On Question 14, outsiders own most of all three, so I call them the outside funds.

The rows show insider money in a fund of its own, and staff a minority, on Question 14, in every outside fund. The one quantity they leave open is staff money through the staff fund: funds of funds own between 13% and 37% of each outside fund, and the filing does not say whose those stakes are.

Citadel’s people sit with outsiders instead: on Citadel Advisors’ filing of 11 June 2026, Citadel Wellington LLC, with $30.9bn of gross assets, is 53% owned by Citadel and its people, a majority by share inside a fund outsiders also hold.

So an outside investor’s own number is the insider share of the fund he holds, and the brochure sets out what each fund gets for its money.

Higher Fee Funds get shorter-term signals

Item 6 of the brochure gives the adviser’s rule for which fund gets which signal. It defines the Higher Fee Funds by two tests. They charge “higher performance-based fees or performance allocations than other Funds, in percentage terms or in absolute dollar amounts”, and “Squarepoint staff have significantly more capital invested in those Funds” than in others. Then it says what they get:

“The Higher Fee Funds have access to shorter-term signals that are not made available to other Funds because the signals are believed to be capacity constrained, and their capacity has been reserved for the Higher Fee Funds.”

In plain terms, the short horizon signals have room for only so much money, and the firm keeps that room for the funds where its staff have the most at stake. The mechanism runs in four steps:

1. A short horizon signal predicts a price move over a short window; trade it with too much money and the fund’s own orders move the price it is chasing, which is what capacity constrained means.

2. Squarepoint gives that scarce capacity to the Higher Fee Funds, which also “have priority with respect to new strategies, methods, signals, and other opportunities”.

3. On execution, the brochure adds that “the Higher Fee Funds generally reach the market ahead of the other Funds. This is likely to result in the other Funds having their orders filled at less favorable prices.”

4. The brochure says the Higher Fee Funds “have generally experienced, and are expected to continue to experience, higher Sharpe ratios and higher gross returns than the other Funds”.

The signal rule splits the funds two ways, the Higher Fee Funds against “other Funds”. The fund rows show no fees, and the staff test is in dollars. On gross assets, the staff fund carries about $57.5bn of staff money on Question 14, and Core about $28bn. Focus and Atlas carry $5bn to $6bn each. I read the staff fund as a Higher Fee Fund, though the brochure also lists “proprietary funds” beside the tier, so it could sit outside it.

If Core is one too, which its staff money allows, its outside owners sit in the faster tier, while Focus and Atlas carry the least staff money of the four. The brochure names none, so which fund is which stays my reading. Item 6 gives the gap no number, only that one fund’s impact on another “may be material”; any cost of trading second falls on about $66bn of gross assets in Focus and Atlas, and up to $143bn with Core.

The faster tier is not free on paper. The Higher Fee Funds carry higher performance fees, in rate or in dollars, and Item 5 says certain shares restricted to staff bear other products’ expenses “on a greater than pro rata basis”. The brochure prices neither as the cost of the signals.

A further clause lets the firm copy one fund’s human traders into another, including from “other Funds in which Squarepoint Group personnel have substantial proprietary capital invested”, and the copying can run “In either direction”.

The brochure says the copy “is expected to underperform”, at times “materially”, and that the adviser “will continue to charge performance-based fees and management fees” on it. The receiving fund pays full fees for a copy the firm expects to trail.

The rule is not new: the July 2026 brochure lists no material change to Item 6 since the March 2025 one. Item 10 names another business, one that some of the principals own themselves.

Some principals own a market maker

Item 10 puts it in one sentence: “A number of the Squarepoint Group’s principals and their related persons own, directly or indirectly, a substantial majority of a separate commercial trading business, STG group”.

Its broker-dealer, STG Securities LLC, “principally operates as a market maker and liquidity provider with respect to options”. It “does not perform any services, including execution and brokerage services, for clients or the Funds”. It “may, on occasion, act as a counterparty to the Funds” on orders with a US options leg, which “will be handled by a third-party broker”.

STG Group was founded in 2022, and on 30 September 2025 its holding company bought Hull Partners LLC, now STG Securities.

FINRA’s BrokerCheck shows Kirill Gelman running it as chief executive since September 2025, with Eric Levine as head of trading, and STG Securities’ audited accounts show $7.15m of member’s equity on 31 December 2025: a startup’s balance sheet.

STG’s press statement of March 2026 presented the launch as a clean break: “STG Group was established by principals at Squarepoint and is separate from its investment management business”. Hedgeweek, citing that statement on 5 March, reported that “the new broker-dealer will operate independently from Squarepoint’s hedge fund operations and trade securities using its own capital”.

The brochure filed in July 2026 lists the ties:

• the two groups “share office space, technology, infrastructure, research, data and other resources”;

• “certain senior management of Squarepoint Group are involved in strategic, governance, operational and/or other management decisions or activities related to the Squarepoint Group and the STG Group”;

• the Squarepoint Group “expects from time to time to enter into lending arrangements … between Higher-Fee Funds and other funds managed by the Squarepoint Group and entities affiliated with the Squarepoint Group, including the STG Group”.

BrokerCheck adds that a Squarepoint services company has kept part of STG Securities’ books and records since 18 November 2025. STG’s statement and the brochure, which says the two “generally operate as separate businesses”, agree on “separate” and part at “independently”.

The brochure answers the obvious worry in one line: “The Squarepoint Group and the STG Group do not coordinate their trading activities.” Uncoordinated is not harmless. It adds that STG’s trading “may inadvertently have adverse impacts” on the funds, that “any such adverse impacts could be material”, and that “Increases in overlap and competition in business activities will exacerbate the impacts described above”.

On paper STG sits outside the adviser: its Form BD says it is not “under common control with” any securities or advisory firm, and the tie runs through “a number of” principals rather than through the adviser.

eFinancialCareers made the comparison on 5 March: STG “will have a similar relationship to the fund that Citadel Securities has to Citadel”. The lending clause, which that comparison leaves out, brings STG closer to that shape.

So STG touches an outside holder in three ways. It shares Squarepoint’s research, its own trading can move the prices and liquidity his fund meets, and on occasion it may take the other side of his fund’s options orders through that broker. The lending clause touches the funds where staff money sits, not his. STG is separate in law and close in practice.

Where will Squarepoint’s next brochure, due by the end of March 2027, leave a holder of Core: behind the staff fund, or beside it?

Below the paid line:

• The screen: the largest fund each of six firms’ people own, side by side, and where Renaissance’s Medallion sits.

• The series: each fund’s insider share across three filings, and the funds of funds’ stakes in dollars.

• The verdict, my odds on which fund gets the signals, and the line that would prove me wrong.

• What to watch: three dated checks on STG and Squarepoint’s next annual ADV.

Read more

In 2025, Jane Street Europe, the firm’s London trading company, nearly tripled its trading gains. Its return on capital went from 17.1% to 17.7%, by the measure its own accounts define, applied to the company alone, without its Indian and Korean subsidiaries.

In other words, since 2023 Jane Street Europe has earned a steady return on its capital, measured as operating profit over capital employed (total assets less current liabilities). Its 2026 accounts, due by 30 September 2027, should show it again.

That matters to anyone reading Jane Street’s London accounts: the trading company’s profit measures the capital it puts up, and London’s trading sits in a bill. Since 2023 its return has been no gauge of how London traded.

In July, Elias Ward of btw.media read the same accounts the other way. He set the 2025 falls of the London group, the company with its subsidiaries, a return on capital down from 34% to 19% among them, beside the company’s own figures. He wrote that “a lower return on capital employed shows that more capital does not automatically mean more value”. He read its independence as “a costed bet that internal control over technology and capital produces better trading outcomes than outsourced scale”.

The London group’s return did fall. The fall sits in its subsidiaries in India and Korea, whose trading gains, Korea’s included in 2025, dropped by about three quarters in a year that included an order by India’s market regulator. The company itself employed more capital in 2025 and earned a higher return on it. One question decides between the readings: does the trading company’s own return move with its trading? From 2023 to 2025 it did not.

I read the accounts Jane Street Europe and its London partnership have filed since 2022 and recomputed the company’s return from its own definition. I also matched the charge it books against the partnership’s revenue line “amounts charged to other affiliates”: they agree within 6% every year.

The case runs in six chapters:

• Since 2022 the trading company has held London’s positions, and the partnership its people.

• The trading company’s return has held near 17.5% while the charge moved with its gains.

• London’s pay nearly doubled in 2025, part of it a promise paid later.

• The largest partner, a Delaware Jane Street company, was entitled to $1.56bn of 2025’s profit.

• India carries the London group’s fall, and a $539m escrow with no provision.

• The 2026 accounts should put the return inside 13% to 22% again.

Source: Author’s calculation from Jane Street Europe Limited accounts FY2022 to FY2025, the revenue note (note 2 in FY2022 and FY2023, note 3 in FY2024, note 4 in FY2025) and the balance sheet, company column; return is operating profit over total assets less current liabilities · as of 31 Dec 2025.

Read it down: from 2023 the return stays within a point while the gains swing, and 2022, the year London’s people moved out, sits above. The swing went into the partnership’s charge, which rose from $202.7m in 2024 to $1.67bn.

London moved its people in 2022

The move began with a rewrite. Jane Street Europe’s 2022 accounts say: “During the year ended 31 December 2022, the Group’s Transfer Pricing Arrangements were revised and the Company entered into a UK Services Agreement.” Transfer pricing is what one company in a group charges another. From 1 January the company “no longer receives an allocation of employee costs”. On 1 August “all of the Company’s employee contracts were transferred to JSUP”, under the rules that carry employment contracts across unchanged when work moves to a new employer.

JSUP is Jane Street UK Partnership LLP, a limited liability partnership formed in October 2021. The accounts give no reason beyond the revision, and warn that 2022’s revenues are “not directly comparable” with earlier years.

What stayed in the trading company is the trading. Its revenues “are attributable to income from movements in the fair value of financial instruments, trading profits and losses”, plus charges to Jane Street’s US parent and from other affiliates. That is narrower than the usual answer, market making on enormous volume, and fees run the other way: commissions and fees, and interest and dividends, sit as costs inside its 2025 revenue line.

The partnership’s accounts describe its job in one line: “The principal activity of the LLP is the provision of certain operational services to its UK affiliates”. It employs London’s people, seconds them out and bears the trading company’s audit fee and future lease payments. It averaged 790 people in 2025 of Jane Street’s roughly 3,500, and its two designated members are Delaware companies: Jane Street Group, LLC and Jane Street Global Trading, LLC.

For the whole firm, Reuters reported Jane Street’s 2025 net trading revenue at $39.6bn, against roughly $12.3bn at Hudson River Trading and $12.2bn at Citadel Securities, none of it filed.

Since 2022 the trading company has held the positions and none of the people, and the partnership the people and none of the positions. The charge between them, labelled in 2022 “Amounts charged from JSUP”, is where London’s trading shows up.

London’s company earns a steady return

The trading company’s accounts name the link: it “receives/pays compensation for all trading activities performed on behalf of the Group in accordance with a trading services agreement … and the Group’s transfer pricing arrangements”. The machine runs in four steps:

1. London’s people, employed by the partnership, trade positions booked in the trading company or elsewhere in Jane Street.

2. The gains land in the company that holds the position.

3. The partnership charges that company under arrangements whose formula the accounts never state.

4. The trading company’s revenue line is left with the rest; the partnership spends the charge on its people and allocates what remains to its members.

The 2025 revenue note is the worked case, set out in Exhibit 2.

Source: Jane Street Europe Limited accounts FY2025, note 4 p29, group column except the first line, which is the company’s own; the India and Korea line is the author’s calculation, group less company · as of 31 Dec 2025.

The lines sum to the filed revenue within rounding; the second line is why the London group’s column misleads.

In the company’s own column the charge took 71.5% of its gains, and its revenue line was left with $498.1m. Its operating profit was $491.3m on capital employed of $2,770.7m, which is 17.73%. The accounts define the measure themselves: “Return on capital employed is calculated by dividing operating profit by total assets less current liabilities”.

To redo it, take Jane Street Europe’s accounts for 2022 to 2025, use the company column rather than the group’s, and apply that definition each year. Then set the charge beside the partnership’s revenue line “amounts charged to other affiliates”, as Exhibit 3 does. The trap is the London group’s column, which carries India and Korea: on it the 2025 charge looks like 67% of the gains instead of 71.5%, and the return falls with India’s gains.

Source: Jane Street Europe Limited accounts FY2022 to FY2025, company column; Jane Street UK Partnership LLP accounts FY2022 to FY2025, the revenue note (note 2 in FY2022 and FY2023, note 3 in FY2024 and FY2025), its FY2022 a 14-month period · as of 31 Dec 2025.

Read across: one bill seen from both ends, then the two inputs of Exhibit 1’s return.

The obvious rival is a cost plus fee, which would give the partnership a small, steady markup on its costs and leave the trading company’s return to swing. The partnership’s profit has instead ranged from 84% to 118% of its costs; the steady number is the trading company’s, though from 2023 its gains slipped 8% and then nearly tripled.

What the four years show instead is a return that follows the capital. From 2023 to 2025 it stayed inside a band of about two thirds of a point. In each of those years the charge moved by 97% to 125% of the change in the gains.

It is the shape left by a method that pays the capital a return and leaves the rest to the people: a split that gave the company a real share of what remains would have lifted its 2025 return, which barely moved. That is my reading of the filings, which disclose no method.

KPMG has identified a fraud risk over the transfer pricing arrangements in every audit of the trading company since 2022, at first tied to the changes in them. The 2025 report, signed by James Voyle as senior statutory auditor, words it this way:

“On this audit we do not believe there is a fraud risk related to trading revenue because of the nature of the transfer pricing arrangements used by the Company, as well as the systemised nature of trading revenue streams. Given the complex and inherently judgmental nature of transfer pricing arrangements … we have identified a fraud risk over the transfer pricing arrangements.”

It is a risk the audit tested, and each year’s opinion says the accounts “give a true and fair view”. The trading is systemised; the judgement, and London’s year, sit in the bill.

London’s pay nearly doubled

The partnership’s biggest cost is its people. Its 2025 payroll was $1.66bn, up 93.5% on 2024. eFinancialCareers’ Alex McMurray, working from the same accounts, headlined “Jane Street’s UK pay: $1.9m per head, $55m if you’re a partner“ on 16 September, and my reading matches it: salaries alone, $1.48bn over 790 people, come to about $1.88m each.

From 2023 to 2025 headcount rose by about a quarter while payroll more than tripled.

The 2025 accounts carry a sentence the 2024 set does not: “In addition, the LLP provides other long-term benefits to participants in a compensation plan. The estimated value of future payments related to these benefits are recognised as an expense within staff costs.” A new line arrives with it, $287.0m of accruals falling due after more than a year, where the 2024 balance sheet showed none.

So part of 2025’s pay is a promise booked now and paid later. The accounts do not say how much of that balance was expensed in 2025; if all of it was, payroll still rose about 60%. The filing does not say what the plan is.

Nor did 2025’s jump come from people moving in: every contract moved in 2022, and in 2025 headcount rose only about 15%.

Per head, London’s payroll came to $2.11m in 2025, against a Jane Street average for 2025 of about $2.7m that Bloomberg reported, on a different base: a reported pay pool spread over about 3,500 people. Pay rose most in the year the charge did, and what it leaves goes to the partnership’s members.

The biggest partner is in Delaware

The charge lands in the partnership as revenue, and after pay the biggest share of that revenue is one member’s. The partnership “is controlled by and is a subsidiary of JSG, an entity that was formed under the laws of the State of Delaware”, and M R Berger signed its 2025 accounts on behalf of both Delaware members.

Its $3.88bn of 2025 revenue has two payers. “Amounts charged to other affiliates” came to $1.67bn, matching the trading company’s charge to about $2.5m. “Amounts charged to the Parent” came to $2.21bn, for London’s work for the rest of Jane Street, and no filing shows how it is set.

Of that revenue, 43% went on pay and 40% to a single member, which the accounts call “a corporate Member”, entitled to $1.56bn of the $1.86bn of members’ profit. The partnership averaged eight members in 2025, “a mix of corporate entities and natural persons”. Its register has only ever listed two corporate ones, the two Delaware designated members.

On 16 September 2026 McMurray put the top member at $1.54bn and wrote that, if that went “to one of the entities”, “the remaining partners received an average of $55.6m”. Note 5 of the partnership’s 2025 accounts files the largest entitlement at $1,563,388,000, to “a corporate Member”, which leaves $292m for the other seven members. One of those seven is the second Delaware company, so the six people on the register averaged at most $48.7m each.

At the end of 2025 the trading company still owed its affiliates nearly $1.5bn, most of the year’s charge.

The people on the two sides of the bill overlap too. John Steven Mackenzie, a director of the trading company and of Jane Street Financial, a London investment firm, has been a member of the partnership since 1 August 2022, and Maanit Desai, the trading company’s other director, since 1 January 2025. The payer’s directors sit in the payee, and the biggest partner is Jane Street itself.

India carries the London group’s fall

The London group’s fall sits in two Indian subsidiaries of the trading company. JSI Investments Private Limited and JSI2 Investments Private Limited are “registered in India and regulated by the Securities and Exchange Board of India”, and the trading company owns them. Read as the London group’s column less the company’s, an approximation, the subsidiaries’ trading gains went from about $32m in 2023 to $592m in 2024, roughly two fifths of the London group’s trading gains that year.

In 2025 they fell to about $149m, including Jane Street Korea, acquired on 1 October and counted from the year’s opening balances, while the trading company’s own revenue and operating profit rose.

On 3 July 2025 India’s market regulator, known as SEBI, issued an interim order signed by Ananth Narayan G., one of its whole time members. It said “the intraday reversal of positions in the cash market was conducted by JS Group in its India entities viz. JSI Investments Private Limited”. SEBI says the matter is still at the investigation stage.

SEBI ordered the four Jane Street entities in its case, two of them outside the London group, to deposit a sum jointly and severally. The two London-owned Indian entities “have credited a sum of 48.44 billion INR (equivalent to approximately $539 million) to an escrow account with a lien marked in favour of SEBI”. The London group carries it as “Other receivables” due after more than a year, and “no provision has been recorded”. The sum is about 18% of the London group’s equity.

The trading company’s directors, Desai and Mackenzie, answer in its accounts that Jane Street “is cooperating with SEBI’s investigation and plans to challenge the findings of the Interim Order through the appropriate process”. On 21 October 2026 India’s Securities Appellate Tribunal reserved its order on Jane Street’s plea for SEBI’s documents.

India’s gains and deposit sit in the London group’s column, so none of it reaches the trading company’s operating profit.

The 2026 accounts can break it

In 2026 Bloomberg reported a record first quarter for Jane Street, with $16.1bn of trading revenue, and Reuters a $15bn hit in July, in a report CNBC carried on 14 August.

If the steady return holds, none of that reaches the trading company’s return: a strong year or a weak one moves the partnership’s charge, and the return lands near 17.5% again. The band I set is 13% to 22% of capital employed, far wider than the three years’ own range.

The 2022 transition year, at 23.7%, sits above that band, in a year the company paid a $350m dividend and still borrowed from its parent at interest. Added back, that dividend alone moves 2022 to 19.75%.

The ratio rests on capital at the year end, which Jane Street can move. The steady years also begin with the loan between the company and its parent turning interest free on 1 January 2023, and by the end of 2025 the company had lent its parent $1.42bn on those terms, about half its capital employed.

I would put 80% on the 2026 return landing inside that band, against three years in three since the revision. I am lower than three in three because the arrangements have been rewritten once in four years.

Only 2025 tested much: in 2024 the gains moved 8%, and 2026 tests the reading only if its gains move a long way from 2025’s. The evidence is an audited filing for the return, and no filing at all for the formula behind it.

The lease rules that start on 1 January 2026, “increasing both total assets and total liabilities”, can lower the ratio a little without the argument being wrong.

Flip the assumption and suppose the company is paid for its own trades. Had the charge stayed at 2024’s 24.4% share of its gains, its 2025 return would have been about 57% on unchanged capital, and still over 40% with the extra profit kept as capital. Leaving the band would be ordinary.

The reading reaches past Jane Street, though not far: McMurray’s March survey of “20 top electronic trading firms and what they pay in London“ reported that two of the twenty run partnerships, Jane Street and XTX. The rule travels as a test, never a presumption: Jane Street Financial is billed through the same partnership, yet its return on capital went from 19% in 2022 to 16% in 2023, then climbed to 23% and 31%. Where a trading group’s London company earns a steady return on its capital, read its trading year in the bill it is charged.

The argument is wrong if Jane Street Europe Limited’s 2026 accounts, due at Companies House by 30 September 2027, show its operating profit outside 13% to 22% of its capital employed, total assets less current liabilities in the company column.

Three trip wires come with it:

• An explicit statement that the transfer pricing arrangements, the trading services agreement or the UK Services Agreement were revised, amended or replaced voids the test rather than failing it.

• So does a change in capital that moves the ratio by itself: a dividend or other return of capital above about $540m, a fifth of 2025’s capital employed, would lift 2025’s return to 22%, and an injection of about $1bn would pull it to 13%.

• A charge further from the partnership’s 2026 revenue “charged to other affiliates” than 6% or $25m, whichever is larger, would mean the two sides no longer describe one bill.

If the 2026 accounts show the trading company’s return inside that band again, London’s trading year will have landed in the partnership’s bill for a fourth steady year, and the company will have been paid for its capital.

Further reading

• How HRT and Jane Street Made $22.5B in One Quarter: The Models, the 50.1% Edge, and the SEBI Order: the firm-wide quarter and the SEBI order that this piece reads from London’s side

• How Hudson River Trading Beat Goldman’s Desks, at What Risk: the rival Jane Street is ranked against here, read from its own quarter

• How Market Makers Like Citadel Securities Actually Make Money on 0DTE Options: how a market maker earns on its own positions, the gains this piece follows into a bill

Next: Jane Street’s July loss, and which of its books took it, read from its own filings.

→ The five line screen for where a London trading group’s year shows up in its accounts on Patreon, open to everyone.

Navnoor Bawa · YouTube · LinkedIn · Corrections: reply or comment.

Logo: Jane Street

Chris Rokos’s fund made 50.8% in 2022, its best year. In January 2024 Bloomberg’s headline read “Rokos’ Hedge Fund Paid Members £445 Million After 2022 Gains”. Yet that record year booked his London partnership 62% of the revenue his pandemic year did.

The headline is right that the firm’s revenue swings with the fund, but the return alone did not set it. A macro firm like this one is paid mostly by its fund’s climb above the high-water mark, the highest value already charged a fee. In London’s accounts the cut fell on his own holding company, not on the other members: the owner eats the mark.

Money in the hole, the gap below its mark, pays no performance fee. His July 2025 fee rise, the step-up, has two rungs, and the fixed one, a higher management fee, keeps paying through the hole: 75 cents more per $100 every year.

I read the ten sets of accounts the partnership has filed at Companies House since 2016 and checked each year’s figures through March 2024 against the next year’s comparative. They tell the story in five chapters:

• A Jersey manager he owns earns the fees; London bills it for a share.

• The pandemic year booked about £1bn; the record year first refilled 2021’s hole, which explains most of its fall in revenue.

• In London’s accounts the fall came out of his holding company’s allocation.

• The fixed fee pays the firm below the mark; the step-up adds about $150m a year.

• What the new terms would have taken since January 2020, and which fee takes it.

Source: Author’s calculation from Rokos Capital Management LLP accounts, years to March 2017–2025 (Companies House) and the fund’s reported returns · as of 21 October 2026

Each bar is a year’s revenue to 31 March, labelled with the return of the calendar year whose fee it holds. The firm’s assets grew from about $3.5bn in 2016 to about $22bn in 2025.

A Jersey manager pays London partners

The fees are earned by Rokos Capital Management (Jersey) LP, the Jersey manager. The London partnership, Rokos Capital Management LLP, bills only that manager; its accounts to March 2025 say “All revenue arose in Jersey, as sub-advisory fees”. It earns whatever share of the fees the Jersey manager passes down, a share the SEC brochure does not size.

Chris Rokos holds at least three-quarters of the Jersey manager, which in turn holds at least three-quarters of his holding company, Rokos Intermediate (Jersey) Ltd. That company takes an allocation of the partnership’s profit (Form ADV Part 1A, Schedules A and B).

Before the step-up, on terms the press reported, investors paid 2% a year of their money and 20% of the gain above the high-water mark. The fees fit a charge at 31 December, so the fund’s 2020 sits in the partnership’s accounts to March 2021.

In 2019 Chris Rokos, also the fund’s main trader, merged “portfolios previously run by individual traders into a single pool of money, allowing him to place bigger bets”. Such a book, like his bets against the Fed, wins big and loses big, and one bad year leaves the whole fund far below its mark.

Christos Nifadopoulos, a designated member, signed the accounts to March 2025 and their plainest sentence: “As a result of its revenue being linked to the performance of the fund it manages, the LLP’s principal risk is market risk.” The record narrows that link to the fund’s distance above its mark: for 2024, a year begun at the mark, revenue was £1.24bn.

The record year refilled a hole

In 2020, the year to beat, the fund made 43.8% and went into 2021 at about $14.5bn. For money that began the year at its mark, the whole gain carried the 20% fee, so fee and return rose together. The accounts to March 2021 show it: revenue was £1,038.3m, against £269.7m for 2019’s 9.3% gain. His holding company was allocated more than half the profit.

December 2020 reset the mark at the fund’s new high, and money invested in January 2020 then spent most of two years below it.

I matched the accounts to the fund’s year using the quarterly valuations UBS files on the SEC’s Form N-PORT. UBS’s A&Q Multi-Strategy Fund holds Rokos, and its four quarters of 2022, with no money in or out, chain to +50.8%, within a fraction of a point of the return Reuters reported. The fund publishes no returns; every other year’s figure is the press’s.

In 2021 the fund lost 26%, its worst year; in 2022 it made 50.8%. Run $100 invested on 1 January 2020, on 2% and 20%, through both years:

1. In 2020 it gains about 57% before fees and ends at $143.80, its new mark, after $12.95 of fees.

2. In 2021 it ends at $106.41, after $2.88 of management fee and no performance fee, because it is below the mark.

3. In 2022 it makes the same gain before fees, about 57%, and ends at $160.49. The 20% falls only on the climb above $143.80, so its fees are $6.30. UBS’s quarterly valuations show it crossing the line in the third quarter, at $145.73 by 30 September.

The same gain before fees paid less than half the fee. That $100 is among the most mark-bound money in the fund, though some money was not: the $1bn taken in January 2022 entered at its own mark, so it paid the full fee on 2022.

Set each year’s revenue against the calendar year whose fee it holds, and the record year booked £643.5m, 62.0% of 2020’s. The pitfall is the year: matched to the accounts to March 2022, 2022 seems to have booked £119.7m, the lean year’s figure.

Three ordinary explanations for the 62% fail on the record. A smaller fund would have shrunk the revenue, but it went into 2020 as a “$9 Billion Hedge Fund” and the firm went into 2022 at $12bn. The pound did not flatter 2020: in dollars, at the European Central Bank’s year-end rates, the record year is 54.6% of 2020’s, a deeper fall. And the US arm, Rokos Capital Management (US) LP, is paid out of revenue, so it can lower the profit, never the revenue.

That leaves the mark, and on every estimate we could build from the fund’s reported size it explains most of the fall. The rest is a change in how much of the Jersey manager’s fees reached London, which the accounts do not show and the press figures cannot size. At the year-end rate London booked about $1.42bn for 2020. The $100 case’s rates give only $1.17bn on the $9bn the fund started that year with, so the reported sizes cannot split the fall more finely than that.

The mark fell on the owner

Exhibit 2 · The record year’s fall landed on one member · as of 21 October 2026

Source: Rokos Capital Management LLP accounts to March 2021 and March 2023, notes 7 and 14 (Companies House); 2020 return as Bloomberg reported it, 2022 from UBS’s A&Q fund’s N-PORT filings; all other members include Chris Rokos in his own name and two corporate members, Erunger Limited (Jersey, a member since 3 January 2019) and Rokos Services (UK) Ltd, which bills the partnership and is at least three-quarters owned by his holding company (members list; Form ADV Part 1A) · as of 21 October 2026

The last money rows show who absorbed the fall: his holding company’s allocation fell 88%, while all other members’ profit fell 6%. The £26.7m the press reported as that year’s top payout is note 7’s profit paid to the member with the largest entitlement; the allocations are note 14’s. Of the £62.3m allocated to his holding company, £32.4m was still owed to it at 31 March 2023, and still at March 2025.

On that record the partners appear to have been paid on the year, and the owner’s holding company took the hole: the owner eats the mark. The mark sets the size of the pool, and profits “are allocated to members after finalisation of the financial statements”, by a partnership Chris Rokos controls.

What London did not receive did not leave him: the Jersey manager that keeps the rest is at least three-quarters his, and nothing public shows what it kept.

After 2017’s 3.4% loss, the accounts to March 2019, which hold the fee for 2018, allocated his holding company £15.0m, against £112.8m two years earlier. The other members’ profit fell from £40.3m to £21.3m. Measured from the year before each loss to the year after it, his holding company took the deeper cut both times; only in 2022 did the rest barely move.

Nor is the split a formula: in the year to March 2024, a year above the mark, his holding company was allocated nothing while the member with the largest entitlement was paid £110.2m. Chris Rokos is also a member in his own name, so that nil says nothing about his own take, which the accounts never attribute to him by name.

The fixed fee pays lean years

The lean year is the accounts to March 2022, which hold the fee for 2021, when the fund lost 26% and earned no performance fee. Revenue was £119.7m against costs of £106.8m.

That year shows how much of the fixed fee reached London. The fund went into 2021 at about $14.5bn and the firm into 2022 at about $12bn. Across the year that is about $13–14.5bn. A 2% fee on it comes to roughly $260–290m by our estimate. If the insiders’ money paid none, it is $221–247m. London’s £119.7m, about $161m, was between about half and three-quarters of it, roughly enough to cover its own costs.

In July 2025 the firm told investors it would raise the management fee to 2.75% and the performance fee to 25% over three years. Hedgeweek, citing Bloomberg, put the move down to heavy investment in talent, research and trading infrastructure. Investors unwilling to accept could redeem; a firm representative said no redemptions had occurred.

The accounts bear out the talent part: costs nearly tripled, from £106.8m in the lean year to £311m in the year to March 2025. The London partnership reported 310 staff to the SEC in October 2026 and the US arm 51, their salaries paid whatever the fund does. The higher fixed fee looks built to pay them through another 2021.

In August 2025, with the fund above $22bn, the firm moved to cap it at $20bn and return the excess. Investors who stayed were paid: by November 2025 the fund was reported up more than 20%, against 4.8% to October for the self-reported macro average of HFR, a data firm, and 0.9% for Brevan Howard’s Master Fund.

The October 2026 brochure names three fees: management, infrastructure and performance. At the full rung, 0.75 points more on a fund held at its $20bn cap is $150m a year. On the $22bn the firm was reported to manage in October 2026, it is $165m. If the 15% that Rokos and related persons own (Form ADV Part 1A) pays no fee, the cap’s figure is $127.5m, more than half of the lean year’s management fee on the same fee-paying share.

A high-water-mark fund that pays its people from performance fees usually has its thinnest fee year when it loses money, and a fixed charge, as a fee or a pass-through, is what pays the firm through it. Tudor’s brochure says its pass-through staff pay “will be payable whether or not the applicable Tudor Hedge Fund experiences positive trading results”, and Marshall Wace has charged a “compensation surcharge” of up to 0.75% of fund assets.

Peers’ brochures put their management fees lower, each beside other charges:

• Caxton: up to 2.4%, with pass-throughs and performance rates of up to 30%.

• Tudor’s flagship: 1.75–2.25%, with its pass-through on some funds.

• Element: 2%, with performance rates of up to 40%.

So 2.75% would be the highest management fee of the four, though not the highest total charge.

In August 2026 Rokos was reported to be adding a three-year share class, with 8.33% of capital redeemable each quarter against 25% in the one-year class. Our August piece read the fee rise and the cap as price and size instead of a longer lock-up, and we were wrong about the lock-up.

Should an investor stay in Rokos for three more years at 2.75% and 25%, or redeem now?

Below the paid line:

• The new terms run over the fund’s own path since 2020, in one table.

• How the extra cost splits between the two rungs, and which one charges in a losing year.

• Whether staying paid: the share of the gain kept, and the one kind of year that changes it.

• Our bet on the December accounts’ revenue line, with its odds and its kill line, then four dated checks.

Read more

On 15 July 2026, Michael Stanton signed the papers for a Morgan Stanley feeder into Turion, Steve Cohen’s AI fund. He signed for its general partner, an affiliate of iCapital, which became Morgan Stanley’s feeder fund service provider in 2019; HedgePremier is the name on those feeders for wealth clients. No client had bought on filing day.

Morgan Stanley can now offer its richest clients Point72’s AI fund, which fell 11.4% in July while Point72’s flagship fell 3.3%, Hedgeweek reported, citing Bloomberg. The Point72 those clients know is the flagship, the diversified platform the firm’s own Form ADV brochure calls its Multi-Strat Funds. The same brochure files Turion apart, among funds that “pursue a single investment strategy”.

So which fund does a buyer get? The same-ledger test reads the books of one UBS fund that owns both, turning its quarterly marks on each into returns. Its marks for the quarter to December cover October. In the week to 15 October, Goldman Sachs’s prime brokerage data showed hedge funds cutting technology at the fastest proportional pace since its records began in 2016, Hedgeweek reported. A feeder client’s money rides on which fund those marks describe.

I read Point72’s registration, every Form D filed for Turion’s feeders and the quarterly filings of two UBS funds that own Turion.

Six chapters make the case:

• Cohen built Turion to be different: one theme, few names, and a gain of about 30% by mid-November 2025.

• Outside money, sold by outsiders: two outside distributors filed this summer to offer Turion.

• Morgan Stanley’s shelf added the theme: a buyer pays two layers of fees, into a fund with a 25% gate.

• One UBS ledger marks both funds: two kinds of UBS filing turn into a return series for each fund.

• Turion’s slope against the flagship’s: settles how far each fund moves with the Nasdaq-100 and with chip stocks.

• What a Turion buyer holds: settles who sits beside him, what he pays for, and the dated test.

Cohen built Turion to be different

The brochure gives Turion a narrower job than the flagship’s. Point72 launched it in October 2024, when its onshore feeder made its first sale. The main funds pursue “long/short equity, systematic and global macro investment strategies”. Turion’s are “focused on investment in technology and technology-enabled businesses believed to be impacted by artificial intelligence”, their holdings “expected to be concentrated in a limited number of financial instruments”. So the flagship spreads risk across many books and styles, and Turion puts it into one theme and a short list of names.

Turion’s chain of control runs to Cohen: Point72 Turion GP, LLC, its general partner, runs the funds, and Turion’s onshore and offshore partnerships’ Form Ds name Steven A. Cohen as “Sole beneficial owner of the Managing Member of the Issuer’s General Partner”. Eric Sanchez, Turion’s portfolio manager according to Hedgeweek, runs the book. The brochure’s Turion section gives the fund’s premise: “Point72 believes outsized returns come from variant investment opinions resulting from deep fundamental research in sectors experiencing rapid change.”

Cohen said what he thought of the sector four months after Turion’s first sale. “We’re in the early stages of something transformational,” he told the iConnections conference in Miami on 28 January 2025, Hedgeweek reported. “Great companies are going to be expensive,” he said. A fund built around the second sentence needs room to stay long through a rally. Hedgeweek says Turion has that room: “a wider mandate than the hedge fund manager’s main fund, giving it the flexibility to hold longer-biased positions”. Hedgeweek reported on 12 November 2025 that Turion had made about 30% on the year, including about 9% in October.

The printed view of Turion is that it is a long short book. Reuters, on 16 January 2025, called it “the hedge fund that picks winners and losers in the AI supply chain”. the annual report of A&Q Long/Short, the UBS fund that owns both, says that at the end of 2025 “the Fund was invested in Investment Funds that employed Equity Hedged strategy”, Turion and the flagship among them. Both can be true while Turion moves with the market, since a book can run shorts and still be mostly long.

July put Turion in its league. The Nasdaq-100 fell 6.6% that month and the chip index, the PHLX Semiconductor index, 20.6%; Turion fell 1.7 times as far as the first and about half as far as the second.

Its loss sat beside Altimeter’s 11% and the 21.7% lost by Whale Rock’s flagship on Hedgeweek’s list of the month’s biggest losers. The platforms barely moved: Millennium lost 2.1% and Balyasny 1.5%. Point72’s flagship fell about half as far as the Nasdaq-100. In July the fund built on one theme lost with that list.

Outside money, sold by outsiders

Turion is small inside Point72, and most of the money in it comes from outside. Alex Morrell of Business Insider reported that “Point72 hit $50 billion in assets in April” and that Turion had “nearly $4 billion”, so about 8% of the firm’s capital sits in the AI fund.1

Point72’s registration shows who holds it. At the end of 2025, Turion’s master had 121 beneficial owners, and investors outside the US held 63% of it, against 49% of the flagship’s main fund, Point72 Associates, LLC.

The feeders split the inside money unevenly. The offshore partnership, Point72 Turion Offshore, L.P., had $2.17bn of gross assets and 48 owners, and 79% of it was owned from outside the US. Point72 and its related persons, among them its affiliates, Cohen and its employees, owned none of it. The onshore feeder, Point72 Turion Onshore, L.P., was the US door: 11% of it was owned from abroad, and 42% of its $610m belonged to Point72 and its people. So the firm’s own money sits on the US side.

The feeders’ filings show what came in after Cohen made his case. Each Form D reports cumulative sales since the first sale, gross of redemptions, and the amendments filed in September 2025 and September 2026 sit a year apart.

Over that year the onshore feeder sold another $160m to 36 more investors. The offshore partnership sold another $144m to 11 more. Together Point72’s three Turion feeders, the third an offshore company, report $1.29bn of Regulation D sales to 177 investors since 2024, about $7m a head.

Two new doors opened this summer, and neither is Point72’s. ShoreBridge Point72 Turion filed on 25 June 2026, to be sold by ShoreBridge Capital Securities, of Summit, New Jersey, in 13 states. HedgePremier/Point72 Turion followed on 15 July, and neither had made a sale when it filed.

So the AI fund is small beside the firm, owned more from abroad than the flagship, and now offered through doors Point72 does not run.

Morgan Stanley’s shelf added the theme

Counted on EDGAR, HedgePremier has carried 103 feeders since 2009, 15 of them since 2020; it first carried a Point72-named feeder in 2019, and two of this year’s three are Turion’s.

In a Sacra interview on 11 August 2025, an iCapital managing director explained why the shelf exists: “the funds themselves aren’t really set up to take a thousand Morgan Stanley investors or a thousand UBS investors.” By Point72’s Form ADV, Turion’s master asks a $5m minimum and its own feeders $150,000, so the limit a feeder solves is the count: it lets many brokerage clients come in as one investor.

In 2024 the shelf added new Millennium and Jain Global feeders, and in July 2026 Cohen’s theme; the filings do not say whose choice Turion was. By the Turion filing and its Ltd. twin, iCapital’s affiliate sponsors the feeder, Morgan Stanley Smith Barney sells it in all states, and Point72 manages the fund underneath. The plumbing decides who gets in, and it leaves what they own unchanged.

Who gets in is narrow: under Rule 506(b) and section 3(c)(7) of the Investment Company Act, only qualified purchasers, a test of investments held, may buy.

The fees come in layers, as FINRA, the brokers’ regulator, warned of feeder funds in a 20 January 2026 note: “Master-feeder structures typically have several levels of fees.” The Form D names the top one: “Certain private placement clients of Morgan Stanley, Smith Barney, LLC (”MSSB”) are required to pay (i) an upfront placement fee to MSSB and (ii) an annual fee to the fund (which is then paid to MSSB).” Neither HedgePremier filing prints a rate for either fee.

Underneath, Point72’s brochure says it typically charges each fund a monthly advisory fee “at rates ranging from 1.50% (per annum) to 2.85% (per annum) of the net asset value”. Performance compensation, a share of net profits at a rate the brochure does not print, comes on top. If Turion’s rate sits in that range, which a fund’s rate may exceed or undercut, a $10m stake pays $150,000 to $285,000 a year, before the performance fee and Morgan Stanley’s two.

The HedgePremier feeder’s own exit terms are not on file; UBS’s, as a holder of the onshore feeder, are. A&Q Technology Fund, the other UBS holder, owns it with quarterly redemptions on 65 days’ notice. Its report footnotes the holding: “The Investment Fund is subject to an investor level gate of 25%.”

At the end of 2025 that stake was also under a lock-up, with no exit before 31 March 2026 except for a fee. A&Q Long/Short holds the flagship’s US feeder, Point72 Capital, L.P. (the flagship feeder), on 45 days’ notice behind the same gate.

On those terms, a holder who read Turion’s July loss when Hedgeweek reported it, on 6 August, had already missed the 27 July notice date for a 30 September exit, so the earliest way out was 31 December, and then for a quarter of the stake at most. A flagship holder could still give notice for 30 September until 16 August. From January 2027 the flagship lets holders out 8.33% a quarter instead of 25%, Hedgeweek reported, citing Bloomberg.

In a holder’s units, July cost a $10m stake about $1.1m in Turion and about $0.3m in the flagship, before any feeder’s fees. A buyer of Cohen’s theme pays two layers of fees into a fund that lets holders out quarterly. What he holds comes down to each fund’s beta to the Nasdaq-100 on UBS’s books, how far its quarterly return moved per 1% move in the index.

One UBS ledger marks both funds

The same-ledger test needs two kinds of filing and one division. A&Q Long/Short Strategies Fund, a registered UBS fund of hedge funds, files an N-PORT report each quarter with the value of every holding, and its annual report prints each holding’s cost. Value per dollar of cost is the first divided by the second, and its change from one quarter to the next is the holding’s return.

On that ledger the flagship feeder, held since 2018, compounds to +17.6% for 2025, against about 17.5% in the press. For the first half of 2026 it compounds to +14.6%, against about 14.5%.

Turion sits on the same ledger, bought on 1 February 2025 at an unchanged cost of $3.33m, so its six quarters run from February 2025 to June 2026. The one pitfall is a redemption. On A&Q Technology’s books, where a 30 June redemption cut cost by 5.41%, raw value gives +24.1%; per dollar of cost both UBS funds give +31.2%, as A&Q Long/Short’s June filing shows.

Which Point72 does a Morgan Stanley feeder client own on UBS’s books, the hedged platform or a one-theme tech book, and what will the December filing decide?

Below the paid line:

• The exhibit: both funds on one UBS ledger, quarter by quarter, against the Nasdaq index and the chip index.

• The Form ADV ownership line, each fund’s return beyond the market, and the betas without the decisive quarter.

• Our odds on UBS’s December filing, and the dated line that would prove us wrong.

Read more

In July 2026, Steve Cohen’s Point72 flagship lost 3.3% while Turion, his firm’s AI fund, lost 11.4%. The flagship, like Millennium’s and Balyasny’s, spreads its capital across many traders’ teams, called pods.

The book shared by many traders lost far less than the book run on one theme, so the question is how, and who paid. My answer is the drawdown ladder: the staged cuts a pod shop makes to a losing trader’s capital. It can keep the firm’s loss small by moving it onto the traders it cuts and, regulators warn, onto anyone holding the names they sell. Millennium’s, Point72’s and Balyasny’s October returns, printed by 10 November, test it.

The same trade, two outcomes

Business Insider’s July scorecard lists 13 platforms besides Citadel, and their median July loss was 1.5%. The four AI funds in Hedgeweek’s report on July’s biggest losers lost a median 16.6%. That is about eleven times as much.

I read the three firms’ Form ADV filings (the registration a US investment adviser files, brochures included) and Cambridge Associates’ 2014 toolkit for allocators, which prints one unnamed manager’s ladder. I also set the two newsrooms’ July returns side by side: where both name a platform (Point72, Millennium, Balyasny, Verition, ExodusPoint and Citadel), the figures agree. Point72’s brochure ties Turion to businesses “believed to be impacted by artificial intelligence.”

Each figure is a return reported in the press. A platform that held less AI, or ran low net exposure with its longs nearly offset by shorts, would show part of the same gap before any trader was cut. The AI funds were picked as the month’s biggest losers, so eleven times is an upper bound.

The firms’ own 13F filings for 30 June measure the first of those (Millennium, Point72, Balyasny). Their AI-chip baskets were about 3% to 4% of their long books. Held through July, they cost under 1% of capital, about a fifth to a quarter of each firm’s July loss. Less AI explains much of the gap to the AI funds. It does not explain what the platforms lost. No July 2026 pod closure for losses has been reported.

Read it from the top: every AI fund listed lost more than every platform, and the two platforms that lost more than 5% both trade Asia.

Those two are the leak. Dymon Asia and Pinpoint fell amid “stock market jitters in Korea and Japanese economic woes,” by Business Insider’s account. A platform whose books share one region can lose like a concentrated fund, and a ladder that cuts one pod at a time does least for a firm whose pods lose together.

Citadel is set apart because it stood on the other side.1 Wellington, its flagship fund, gained 5.9% in July. That month Situational Awareness, an AI fund, reportedly lost 67% and sold most of its public equity book to Citadel to meet margin calls. Those calls worked as a stop with one step, set by its lenders, which takes away two things a ladder spreads out: the size of the cut and its timing.

The firm halves a losing book

Diversification is the usual explanation for the platforms’ steadiness. The USCA All Terrain Fund, an allocator to them, wrote in its annual report filed in June 2025: “We view these allocations as intended to be ‘market neutral’.” The managers’ own filings are less sure. Point72’s brochure: “even a well-diversified, multi-strategy approach may not protect a Point72 Fund from significant losses.” Millennium’s adds that “strategies that are largely uncorrelated under normal market conditions may become more correlated at times of market stress.”

If diversification can fail under stress, something else holds the number, and the firm decides it. Millennium’s August 2026 brochure describes its job as “selecting, monitoring and evaluating Portfolio Managers and allocating and reallocating the Millennium Partners Funds’ invested capital among them.” Balyasny’s March 2026 brochure says the firm “regularly reassesses the allocation of the Investment Funds’ assets for possible reallocation among other Portfolio Managers.”

Millennium’s brochure states no thresholds; the numbers come from reporting. A portfolio manager running $1bn who loses 5% has his trading capital “slashed in half, to $500 million.” Once losses reach 7.5% of the original, “they will likely be fired,” with exceptions. Bloomberg’s reporting on the industry, as Hedgeweek carried it, says pods are typically dismissed after a 7% decline, so the second rung sits at 7% to 7.5%.

On that $1bn book, a loss of $70m to $75m makes it closable.

Cambridge Associates’ 2014 toolkit, written for allocators, prints one unnamed platform’s ladder. A 2.5% loss, half Millennium’s reported first rung, halves capital, a cumulative 5% halves it again, and a cumulative 7.5% brings a stop out, “an immediate sale of the assets in the portfolio to prevent further losses.” The same paragraph, on multi-manager (”MM”) firms, carries its own caveat: “most MM firms maintain soft drawdown limits or often grant exceptions to hard limits.”

Here is the reported ladder, one step at a time:

1. A pod’s book loses 5% of its allocation.

2. The firm halves the allocation, so the pod sells longs and covers shorts, which locks in the loss and halves the next one.

3. At 7% to 7.5% the firm can close the book, and the stop out sells what is left.

4. The firm’s number takes that pod’s realised loss, capped by the rungs.

August 2024: losses, then exits

The unwind of the yen carry trade, in which investors borrow cheaply in yen to buy assets that pay more, gives a case with names in it. Early losses in August 2024 prompted Millennium, Balyasny and BlueCrest, another firm that runs its traders in pods, “to halt the operation of at least six traders and their investment pods,” Bloomberg reported, as Hedgeweek carried it on 2 September.

1. Early August: books lose money as the yen carry trade unwinds.

2. The report ties two exits to those losses. Ryan Fitzgibbon, who traded industrial and energy stocks for Millennium in Houston, “left the firm following losses.” BlueCrest shut Chiga Murayama’s Japanese government bond pod after losses, and he and team member Yosuke Motegi left.

3. Others leave, with no loss tied to them by name. Shao Ying and Zachary Corones, index rebalancing in Asia for Millennium, “also exited,” and Mark Cox left Balyasny in Hong Kong. The report puts the exits down to the firms’ “stringent risk management approach.”

4. The firm’s number: Millennium was up 0.7% through 23 August.

The loss landed on named traders, their books left, and the firm stood in profit with a week of the month left. That is the order the ladder predicts, though it shows the order, not the effect.

The cuts took out books that were losing, and a rebound in the market did the rest; nothing public says how the 0.7% splits between the two.

Two books carry the firm’s risk

The rule bends at the top, and the record shows where the firm’s own risk then sits. Glen Scheinberg and Pratik Madhvani run index rebalancing pods at Millennium, trading around changes to stock indices. By early March 2025 their two books had lost about $900m, the losses behind Millennium’s 1.3% February, its worst month in more than six years.

Millennium ran about $75bn across more than 340 teams at the time. The two books’ $900m was about 1.2% of that capital, as large as the firm’s whole February loss on its own. The comparison is loose: the $900m runs to early March and counts the two books gross, before anything the other teams made.

Both stayed. The reports I read name no cut to the index rebalancing teams after February 2025, and Millennium kept running the trade. No report gives the pods’ capital, so whether the $900m crossed their rung cannot be known.

In November 2025 the same teams were reportedly down hundreds of millions of dollars at one point, “although some losses were recovered toward month-end,” and Millennium finished the month up about 0.5%.

In June 2026 the same two pods made about $3.7bn, more than half of Millennium’s roughly $6.6bn of profit before fees, as Bloomberg reported. Millennium returned 4.1% that month.

So two books carried the firm’s worst month in more than six years and more than half of its June 2026 profit. Keeping them reads as a choice the firm made, and its reported rule allows one: “sometimes exceptions are made.” Cambridge’s file describes the same bend in plainer words: platforms widen limits “for an unusually profitable or long-tenured trader,” and its one printed ladder stretches for traders on an unusual “winning streak.”

The ladder is hard for most books and soft for the books that earn most, so the firm’s own exposure gathers in its biggest books. That also settles one rival reading, that a bad month’s losses scatter across hundreds of teams and cancel: in February 2025 they sat largely in two.

The market pays, regulators warn

When a crowded long breaks, the platforms cut their losing books in the same days, so anyone still holding those names meets the sales as the price. A pod shop does not avoid the loss; it can hand it to whoever buys what its traders are forced to sell.

Two of the firms’ brochures warn about crowding:

• Millennium’s, in a risk factor on managers who trade by model, warns of what happens “to the extent that such Portfolio Managers’ models come to resemble those employed by other managers.” A disruption then “could accelerate reductions in liquidity or rapid repricing due to simultaneous trading across a number of managers in the marketplace.”

• Point72’s warns that growth in competing firms may bring more “investors that are attempting to purchase or sell similar positions simultaneously.”

Both describe many firms trading the same positions at the same time. Neither names its own ladder as a cause.

Andrew Bailey, governor of the Bank of England, named the pods’ part in a February 2025 speech: “where risk management results in pods de-risking aggressively in a shock, this could result in these funds amplifying market moves.” The IMF’s April 2025 report cites that speech, and its October 2026 report widens the warning to hedge funds in general.

Goldman Sachs’s prime brokerage counts the selling among the funds it finances. Its notes on October’s AI sell-off, as Reuters reported, track de-grossing, “long selling and short covering combined,” which is what a cut book does.

From COVID through the end of 2025, the three broad strategies Goldman tracks never all fell more than 80bp on the same day. In 2026 they did so three times, on 4 February, 28 July and 15 October. Funds with no ladder sold AI stocks too, so the count shows how hard the losses came, not the ladder’s share of them.

Leverage sets how much a cut book must sell. Multi-strategy funds’ gross assets averaged 9.51 times their net assets on 30 September 2023 and 12.29 times on 30 June 2026, each fund weighted by its size, in Office of Financial Research data from the larger funds’ Form PF filings, rates and repo books included. The average fund carries more assets per dollar of capital than in 2023; the data do not say how much of the rise sits in the books a ladder cuts.

Bruno Schneller of Erlen Capital, which invests in hedge funds, read October as “less a fundamental rejection of AI and more a classic, high-velocity unwind of a crowded trade meeting a macro reality check.” He pointed to “how much of the hedge fund industry has effectively been trading the same underlying theme, even when portfolios look very different on paper.” Exhibit 1 shows July’s version: twelve of thirteen platforms lost in the same month, which fits a shared trade without proving one.

The IMF’s October report puts a size on crowding by all hedge funds. In quarters of market stress, the stocks most crowded relative to their daily trading volume ran about 10 percentage points more volatile and fell about 4 points further than the least crowded. Nothing I read separates the ladders’ share of that cost, so the market’s part of the bill stays the regulators’ warning.

The trader carries the cut

A Millennium pod is paid on its own performance. Millennium’s brochure says what a losing year costs its manager: “If a Portfolio Manager suffers net losses during the year, generally the losses are carried forward and past losses must be made up before performance-based compensation becomes payable in subsequent years.”

A manager down on the year generally earns no performance pay until he wins the loss back. That gives a trader with a losing year reason to move to a firm where the count starts again.

Exits alone prove little. Business Insider put Millennium’s turnover at about 15%-20% of all staff each year in 2024 and tied it to the stop-loss rule itself; no report gives the rate for portfolio managers.

Stress months show the cut landing. In March 2025, Balyasny was “forced to stop out several portfolio managers.” The same report had Millennium down about 1.4% through the first week of March. It was liquidating a $1bn financials book run by Jonathan Philpot and an energy pod run by Justin Grant, and the reports give no reason for either closure.

Neither belonged to the index desks that lost the $900m. So the firm kept its two losing index books and closed two others in the same weeks.

Antoine Iskandar, a senior Millennium portfolio manager in Zug, shows the other exit. He managed “more than $600m” in equities, relative value and equity derivatives. His team “reportedly incurred losses running into tens of millions of dollars in 2026” after cumulative profits over the three prior years, Hedgeweek reported, citing Bloomberg. Balyasny is “set to hire” him. Iskandar, Millennium and Balyasny declined to comment.

He had also discussed a spinout with Millennium, a second reason to move. Bloomberg, reporting the move, framed what such a switch offers: it “benefits traders by allowing them to start making money for themselves again, instead of focusing on recouping losses at their previous employer.” The record shows a manager moving after losses; it shows no stop out.

October’s returns test the ladder

This is wrong if Millennium’s, Point72’s or Balyasny’s flagship fund reports an October 2026 loss larger than 5% in the monthly figures the trade press prints by 10 November 2026. That is more than Millennium’s reported first rung lets a single pod lose before its capital is halved; Point72’s and Balyasny’s rungs are not reported. The line tests whether the ladder bounds a firm’s month at all; it cannot show that the ladder caused July’s gap.

The mechanism has its own check. Watch for reports of pods closed or traders cut at the three firms in October, tied to losses. Bloomberg’s report of November 2021 is the model: Balyasny, BlueCrest and ExodusPoint each “curtailed the betting of two to four traders after they hit maximum loss levels.”

The line can lose, and it has. Point72 slid 10% in January 2021, the month it and Citadel put close to $3bn into Melvin Capital. It lost about 5% in November 2018, when Millennium’s 2.8% loss was its third worst month on record. Balyasny’s worst flagship month I found is a 4.3% loss in March 2026.

I would bet, at 90%, that none of the three crosses the line in October. The record, in unaudited press reports, holds one flagship crossing and one touch in the months I found, both at Point72, and the reports give no count of all months. I keep 10% on a breach because the first half of October brought this year’s third day of broad same day losses, and Asia stock pickers lost 6.8% in that fortnight.

A breach could come three ways the pods’ ladder does not reach. The firm can keep a losing desk, as Millennium kept its two index rebalancing desks in 2025. A gap beats any stop, because a stop out sells after the move. And the firm’s own direct trading outside the pods, Millennium’s brochure says, “may exacerbate any losses” when it adds exposure.

If all three report October inside 5%, the numbers held; reported cuts tied to losses would show the ladder operating, not that it was the reason. If one reports more, the ladder did not hold that firm’s month, whether the loss came through the pods or around them.

Further reading

• The Bank of England warned about this crowding. Citadel and Millennium’s size tier took $6.5 billion anyway: the same Bailey warning on pods de-risking together, set against where the money went

• When Hedge Funds Lost Money While Markets Hit All-Time Highs: The October 2025 Crowding Crisis: an earlier crowded unwind, and who sold into it

Next Thursday: a named fund’s bet, read from its own filing, with the position.

→ The three platforms’ June chip books marked through July, with the arithmetic and the 13F screen a reader can rerun on Patreon, open to everyone.

Navnoor Bawa · YouTube · LinkedIn · Patreon · Corrections: reply or comment.

Image: Millennium Management LLC · Trademark, the firm’s own mark, editorial use · via mlp.com

On 23 June Coatue’s founder, Philippe Laffont, told CNBC he owned chip equipment makers to avoid picking the winning chip. His 30 June filing put the quarter’s biggest open market buy elsewhere: 2.98 million more Micron shares, added as Micron tripled, while the equipment lines were trimmed.

Most of that filing’s chip weight came from price rather than buying. Coatue Innovative Strategies Fund (CTEK), the firm’s registered fund for qualified individual investors, hedged part of its Micron near the top. CTEK prints its shorts, and Coatue’s next 13F, due 16 November, tests whether the firm kept its Micron.

At Friday’s close the filing’s shares are worth billions less than Coatue reported, for every book that holds them.

Coatue’s June book was nearly half chips

Eleven lines did it. I call them the chip complex: TSMC, Lam Research, Micron, Applied Materials, Broadcom, Intel, Cerebras, Nvidia, ASML, Qualcomm and AMD. They were 46.4% of the June book, from 37.1% in March. A year earlier they were 17.9%. A 13F shows only the reported long book of US-listed stock, filed up to 45 days late.

Micron shows what the weight is made of: Coatue held 165,931 shares on 31 March and 3,142,269 on 30 June. Micron’s close went from $338 to $1,154 over the quarter, and a dollar column cannot tell the two effects apart.

I rebuilt the filing’s 211 rows at Nasdaq’s closes: each filed value divided by its shares gives the 30 June close to the cent on all 64 holdings with a usable close.

The book rose $19.6bn in the quarter, 67% in reported value, buying included. Tiger Global had 39.3% of its June book in the same eleven lines, the nearest of three fellow Tiger cubs. Lone Pine had 12.6% and Viking 5.1%.

A 10% move in the chip complex would move the book by $2.26bn at June’s values. This week Lam fell 17% and Applied 19%. Micron fell 15%, and any book long those names, or copied from this filing, took the same fall.

Price made the weight; Micron was the buy

Laffont runs that book: the brochure, dated 29 July 2026, gives him in Item 4 “overall responsibility for… the implementation of all portfolio transactions.” On CNBC on 23 June he gave the logic:

“All of them at the end of the day will need the same machines.”

“If I’m a supplier to the fabs, I don’t need to make an exact bet on which of the chips is going to win… That’s sort of the reasons why we own the semi caps.”

The fabs’ suppliers get paid whichever chip wins, and the 13F for 30 June, filed 14 August, agrees on the dollar column: Lam, Applied and ASML came to $7.73bn, twice the $3.63bn Micron line.

The coverage read the add as conviction. The Motley Fool headlined it on 2 September: “Billionaire Philippe Laffont Just Bought Micron Stock in Q2…” Daniel Scrivner, who blogs on managers’ holdings, called it “a strong conviction bet on memory chips as a critical AI infrastructure bottleneck.”

That holds as far as it goes, and a share count shows a count, not a motive. It leaves open how much of the weight Coatue bought, and whether the Micron line was still live when the filing was read.

The share column answers the first: March shares times the price change is the price effect, and the share change times the June close is the trading. It is the share column method we used on Tiger Global.

The chip complex’s $11.80bn rise has three parts. Price on March’s shares made $6.59bn, and Cerebras shares Coatue held before its May listing made $1.47bn. Open market buying, net of trims, made $3.74bn at June closes; bought evenly across the quarter, the same shares would have cost about $2.52bn. Outside the listing the rise is $10.33bn. Price is 64% of it on March’s shares, or $9.51bn and 92% when June’s shares weight the price change; the lower figure carries the claim on its own.

Source: Coatue 13F-HR infotables, 31 March and 30 June 2026 · as of 30 June 2026

Lam’s line rose from $2.15bn to $4.09bn on fewer shares, so its weight is all price.

The paid half settles whether to own Micron now or wait for the printed Coatue cost, and which two filings must come first.

Below the paid line:

• The June book marked to 16 October, its chip lines one by one.

• CTEK’s Micron cost, its short by 30 June, and its monthly cards since.

• The position, with its entry tied to the two November filings.

Read more

Hudson River Trading made a record $11.4bn trading in the second quarter of 2026, Bloomberg reported on 19 August. In December Bloomberg said HRT was minting billions by “embracing more risk”; to see what that risk looks like, I netted the stock its US dealer owned against the stock and futures it sold, at all eight year-ends filed electronically.

Hudson River Trading out-traded each Goldman Sachs desk in the second quarter, and its US dealer’s audits show how it carries the risk: a bigger book, hedged within the same band. From 2019 to 2025 the dealer’s book and its unhedged residual both grew about tenfold, and a loss would land first on its partners’ capital.

The piece runs in four steps: the quarter against Goldman’s desks, why volume does not pay for it, the risk Bloomberg described, and what eight audits show about it.

HRT out-traded each Goldman desk

Goldman Sachs had posted its quarter five weeks before Bloomberg’s report. Its 8-K of 14 July 2026 showed $7.4bn of equities revenue and $4.6bn from FICC, its fixed income, currencies and commodities desk. HRT’s $11.4bn is larger than either. It is also about 1.5 times the $7.5bn the two desks made from intermediation, which is buying and selling for clients, the part of a bank’s trading closest to what a market maker does.

Add the $4.5bn the desks earned from financing, lending to clients against their securities, and they made $12.0bn. HRT reached neither that nor JPMorgan’s $12.1bn of markets revenue. It did clear Morgan Stanley’s $8.8bn and the record $7.3bn at Citadel Securities, a non-bank market maker.

The figures are not the same kind of revenue. Goldman’s is client business, reported in a filing; HRT’s is a private firm’s own trading revenue, reported by Bloomberg and then by the FT from a person familiar with the results, and HRT declined to comment. Virtu Financial, a market maker that files its numbers, reported $0.86bn of trading income for the same three months.

Volume alone doesn’t pay for it

A sceptic has two explanations for the record that need no audit. The first is a volatility windfall, which predicts a jumpier market. The FT’s report, in Hedgeweek’s summary, credited “Market volatility linked to the war in Iran and dramatic swings in technology and artificial intelligence stocks”.

The market’s volatility index was calmer: the VIX averaged 18.31 in the quarter against 23.56 a year earlier, on our average of daily closes.1 An index average cannot see single stocks swinging against each other, so the windfall survives only in the FT’s narrower form, swings inside technology and AI stocks.

The second is a tide that lifted every intermediary. Jamie Dimon, JPMorgan’s chief executive, described it in his bank’s 8-K: “Markets revenue growing 35% due to elevated client activity, strong trading performance and continued demand for financing in Equities”. A tide predicts that every firm grows alike, and at about the pace of volume. Nasdaq’s 10-Q puts US share volume up 10% on a year earlier, and options volume up 27%.

Exhibit 1 · HRT grew faster than the tide and faster than Citadel Securities.

Source: Bloomberg Law and Hedgeweek for HRT; Bloomberg and Hedgeweek for Citadel Securities; the Goldman Sachs, Morgan Stanley and JPMorgan Q2 8-Ks; Virtu’s and Nasdaq’s Q2 10-Qs · as of 30 Jun 2026

Volume grew by about a tenth to a quarter, the banks by a third to just over a half, and the two non-bank market makers about three and four times. Virtu grew at the tide’s pace: its market-making measure rose 28%, against HRT’s fourfold.

Raman Kalra of Coalition Greenwich, a market research firm, put the non-bank liquidity providers’ revenue pools up 45% from 2024 to 2025, in a 3 June 2026 release. “Whether these outsized returns are the new normal or just a byproduct of a unique macroeconomic moment remains to be seen,” Kalra said. One quarter cannot settle that. It does show HRT taking more than the tide, and Bloomberg had printed an explanation the previous December.

The story says more risk

On 2 December 2025 Bloomberg ran “More Risk, Less Speed: Hudson River Mints Billions Slowing Down”. Its second paragraph begins: “The high-frequency firm is increasingly holding positions for days and even weeks, embracing more risk”. Business Insider had described the engine nine months earlier, from people familiar with the firm. HRT, it said, was “earning billions in profits from hedge-fund-style trading strategies that require greater risk and longer holding periods”.

The unit running them is Prism, which “generated more than $2 billion” in 2024, according to the same report, with “ETF arbitrage and index rebalance” its noteworthy strategies. Roughly half of profits still came from the high-frequency business HRT calls Classic.

Iain Dunning, who heads AI research at HRT, gave both halves on Bloomberg’s Odd Lots podcast on 31 October 2025. “We make money only because someone else wants to trade,” he said. “If no one was trading, we wouldn’t exist.” On the longer horizons he went further: “I think the market making service provision does break down.”

The filings back Bloomberg on holding. HRT Financial LP, the group’s US dealer, files a Form 3 each time it becomes a 10% owner of a listed company, and it filed one in 2023, two in 2024, four in 2025 and 66 in 2026 through 16 September, nearly all for micro-caps. Adam Nunes, the dealer’s president and chief executive since May 2010, signs them. One Form 4 shows Aditxt shares bought on 18 June 2026 and sold to zero on 22 June: held four days.

The dealer’s quarterly 13F, which Nunes has signed every quarter since at least 2017, grew too, to $54.8bn at 30 June 2026, 2.4 times its level a year earlier.2 The 13F shows HRT holds more; how long it holds is Bloomberg’s reporting, not the filing’s.

The second half, “more risk”, is a different claim. If risk means a net position that moves with the market, a bigger book sold short against itself carries little more of it, and a bigger book left open carries a lot. Which one HRT built is written down once a year, in the dealer’s audited balance sheet. I found no published netting of it; Bloomberg and Business Insider describe the holding, not the net.

So the two answers predict different balance sheets. If HRT’s extra risk is a growing directional bet, what is left after its hedges should grow faster than its book, and its share of the book should climb out of its old range. If the extra risk is a bigger book hedged the same way, the dollars should grow and the share should not.

The audits show the same band

Every US broker-dealer files an audited Statement of Financial Condition each year, on Form X-17A-5. The dealer’s statement for 31 December 2025 opens its notes: “HRTF provides liquidity to financial markets and trades financial instruments utilizing a proprietary electronic trading system.” It adds: “The Partnership is engaged in a single line of business of proprietary trading as a securities dealer.”

The test is one subtraction, repeated. From each year-end’s equities owned, take away the equities sold, not yet purchased, then the futures sold, and add back the futures bought, all as the statement prints them, futures at notional. Notional is the full value of the stock or index a contract stands for. Call what is left the residual: the dealer’s net stock position after its hedges.

The trap is to use the 13F instead, which lists no shorts and no futures, so its residual is always 100% of the book.

Exhibit 2 · The dealer’s 2025 residual was $2.63bn, 11.3% of the stock it owned.

• Equities owned: $23.23bn, 100%

• Less equities sold, not yet purchased: $9.86bn, 42%

• Less futures sold, notional: $11.07bn, 48%

• Plus futures bought, notional: $0.33bn, 1%

• Residual: $2.63bn, 11.3%

Source: HRT Financial LP, audited Statement of Financial Condition, fair-value table and derivatives note; assumes the futures sold offset stock, since the note does not name their underlyings · as of 31 Dec 2025

At end-2025, and at three of the four year-ends before it, short sales offset about two fifths of the stock the dealer owned, and futures sold offset most of the rest. Exhibit 3 repeats it at every year-end, and sets the residual against partners’ capital, the owners’ equity a loss reaches first.

Exhibit 3 · From 2019 the residual stayed between 3.0% and 17.3% of the stock owned, and between 14% and 88% of partners’ capital.

Source: Author’s calculation from HRT Financial LP audited Statements of Financial Condition, fair-value tables and derivatives notes; each year’s statement is in the dealer’s EDGAR filing list. Partners’ capital is from the same statements; in 2018 and 2019, before the dealer became a partnership, it is members’ capital · as of 31 Dec 2025

Two things hold across the table. The residual share topped 20% once, in 2018, on a book of less than $1bn; from 2019 the dealer sold short, or sold futures against, between 83% and 97% of what it owned. And the share moves without a trend. It fell to 6.4% in 2021, when the book first passed $18bn, and to 3.0% in 2024.

If the extra risk Bloomberg described were a growing bet, the 2025 statement would show the residual above its 2019 to 2024 range. On the stock owned, 2025’s 11.3% sits inside that range; on partners’ capital, its 62% sits inside it too, below 2023’s 88%. A band that wide cannot tell a slowly growing bet from a steady one.

The residual set a record

A hedged book still carries risk: the spread between what it owns and what it sold, and whatever the futures fail to match. That is the form of “more risk” the audits show: more of that spread risk, carried on a bigger book.

The number that cuts against our claim is the latest one. The residual rose from $0.48bn at the end of 2024 to $2.63bn a year later, 5.5 times, the largest in dollars of the eight year-ends, though only 15% above 2023’s $2.29bn. Its share of the stock owned went from 3.0% to 11.3%. In the year Bloomberg described, the bet grew in dollars, and its share went back to where it had been.

Against the partners’ capital, the record is large. The 2025 statement shows $4.22bn of it, so the residual equals 62%, second among the eight year-ends only to 2023’s 88%. Its subsequent-events note adds: “During this time, the Partners have withdrawn capital of $500.0 million.” That leaves $3.72bn before any 2026 profit, and puts the residual at 71%. A 10% fall in whatever the residual is long would cost about $0.26bn, 7% of that smaller base.

Who would bear that loss is on file. FINRA’s BrokerCheck lists the dealer, which Nunes runs, as a Delaware partnership owned through HRT companies. Jason Carroll, a co-founder Business Insider calls “a current managing partner”, holds between 50% and 75% of HRT Capital LLC, which indirectly owns 75% or more of the dealer.

No HRT document says why the dealer hedges what it carries. I infer it from the structure, with moderate confidence: when a loss lands first on the partners’ capital, a dealer has reason to keep its residual a small share of its book. Eight audits show the result that inference predicts. None of them states the motive.

What the audits cannot see

1. The futures’ underlyings and direction are not named. Netting only the stock leaves 57% to 58% of it in 2021, 2023, 2024 and 2025, so the futures carry the claim, and this is where the case against it is strongest. Two facts fit index hedging without proving it. At end-2025 the net futures sold, $10.74bn, hedged 80% of the stock-only net of $13.37bn; what they left is the residual. And the two largest lines on the June 2026 13F are the SPDR S&P 500 and Invesco QQQ index funds. The dealer also trades Treasuries, so some futures could be on rates. From 2021 the notes do not label futures bought or sold either: this piece reads the liability-side contracts as sold, as the 2018 to 2020 notes labelled them, and 2022’s fit that reading less cleanly.

Citadel Securities LLC’s audited statement for 31 December 2025 shows $34.16bn of equities and ETFs owned, 61% of it left after short sales, beside HRT’s 58%. Its derivative notionals appear only gross, $2.28tn of equity contracts with no bought or sold split, so the full netting cannot be run on it.

1. Option deltas are not disclosed. The 2025 note shows $31.6bn of options bought and $31.8bn sold, at notional,. Matched notional says the book sits on both sides. It gives no direction, and no delta is printed.

2. A year-end is a snapshot. The gap since the last audit is wide. The 13F’s shares and fund units rose from $24.26bn at 31 December 2025 to $39.92bn at 30 June 2026, 65% more, hedged by an amount no public filing shows. The next audit is the first look at that book.

3. The stock it owns has changed. The long book now reaches into micro-caps, where nearly all of 2026’s Form 3s were filed, while the hedges the evidence fits are index futures and index funds. A micro-cap hedged with an index carries size, liquidity and basis risk an index holding does not, so the residual can hold near 11% of the stock owned while the risk in each dollar rises. A constant ratio is not constant risk. For now each line is small: the largest of the stocks it crossed in the second quarter sat at $255,000 in the dealer’s 30 June 13F.

4. One entity is not the group. On 31 August 2022 Moody’s cut HRT to Ba2 from Ba1, outlook negative, and located the added risk in its “expansion into certain regions and markets outside of its core historical areas of focus”. The dealer’s statement cannot test that: it covers one US entity, and risk taken through prime brokers elsewhere need not touch it.

So the finding stops at the dealer, at its year-ends.

The next audit decides it

The argument is wrong if HRT Financial LP’s audited statement for 31 December 2026, due on the SEC’s EDGAR system by 1 March 2027, shows a residual above 20% of equities owned. That would make the dealer’s bet larger against its book than at any year-end since 2019.

I would bet, at about 75%, that the share stays under its line, because the dealer has hedged more than four fifths of its stock at seven straight year-ends while the book grew about tenfold.

The base rate alone would say 80% to 88%. The line was crossed at one of eight year-ends, on a book under $1bn, and the largest one-year rise in the eight statements, 8.3 points from 2024 to 2025, would carry the share from 2025’s 11.3% to 19.6%, 0.4 points short. My odds are lower because the futures’ underlyings are unnamed and the dealer is not the whole firm.

A market maker’s gross book shows its volume; only its net shows its bet.

HRT’s 2026 audit lands by 1 March: a net under a fifth of the stock it owns means the bigger book stayed hedged; above it, the extra risk Bloomberg found has become a bet.

Further reading

• How HRT and Jane Street Made $22.5B in One Quarter: The Models, the 50.1% Edge, and the SEBI Order: the same two firms’ trading engines, a year earlier

• How to Read a Market Maker’s 13F Options Line: Jane Street and Susquehanna’s SpaceX Book, Ranked Against Their Own: reading a dealer’s own filings without mistaking inventory for a bet

Next Monday: a named fund’s bet, read from its own filing, with the position.

→ A screen of every Form 3 HRT’s dealer has filed as a new 10% owner, each timed to its last reported trade on Patreon, open to everyone.

Navnoor Bawa · YouTube · LinkedIn · Patreon

Logo: Hudson River Trading LLC

On 28 September Boaz Weinstein’s Saba Capital had its biggest day yet buying BlackRock’s listed private credit fund. Its Schedule 13D, filed 14 October, names BlackRock TCP Capital Corp. (TCPC), which closed that day at 69 cents per dollar of its pro forma net assets.

Weinstein is buying BlackRock loans at a discount that either doubts the marks or prices something else.

It prices something else. A buyer paid around 90 cents per dollar of marks for half the loans; the shares price the rest lower, a gap only a cash exit collects, and TCPC’s board lists one. The same officers run BlackRock’s non-traded private credit funds, whose marks a public sale would test.

BlackRock sold half the loans

On 4 August TCPC sold most of a continuation vehicle, set up to hold the loans, to funds managed by Pantheon, a private credit secondaries buyer, for about $152m. The vehicle held about $523m of TCPC’s loans, 48% of its debt book at fair value. I rebuilt that price from Appendix A, the pricing schedule in TCPC’s 8-K, then priced the shares against their sector and each exit.

Phil Tseng, then chief executive, described the deal in the 6 August release as done “while realizing a substantial premium relative to the value implied by the Company’s current share price”. The pro forma balance sheet filed that day shows the other base: net assets fall $57.1m, or $0.68 a share. June’s net asset value (NAV) of $6.58 becomes $5.90.

Both are true on different bases: the premium is against a $3.50 share price the day before, barely half of June’s NAV, and the loss is against BlackRock’s marks.

A buyer’s price tests the marks, not the wrapper: the listing, the fees and a board that decides whether holders get the loans’ cash. Cherkes, Sagi and Stanton tied closed-end fund discounts to the liquidity a listed fund offers against its manager’s fees. On 6 August the board also hired KBW (Keefe, Bruyette & Woods) to weigh reinvesting, buybacks, “strategic combinations” or “completing an orderly realization of portfolio assets”.

A buyer paid 89 to 95 cents

Appendix A of the 8-K prices the vehicle in five steps, and they rebuild Pantheon’s cheque:

1. Start from the loans at 95% of their 31 December value: about $565m on $595m.

2. Add $74m of cash TCPC put in for unfunded commitments.

3. Subtract $43m repaid since December.

4. Subtract $30m of income since December and other adjustments, handed to the buyer by the December pricing date.

5. Subtract the $406m the vehicle’s collateralised loan obligation (CLO) owes.

That leaves $160m of equity; 95% of it is $152m, the gross proceeds TCPC reported.

The deal was struck at 95% of December values, and by June BlackRock had marked the same loans about 6% lower, so on the loans alone the price sat close to June marks. With the income handed back and the costs, TCPC’s NAV fell $57.1m on about $520m of loans moved at June marks: an all-in cost of about 11 cents a dollar, roughly half of it that income.

Appendix A does not say how much of that income is price, so Pantheon paid between about 89 and 95 cents per dollar of June marks. If BlackRock’s marks explained the discount, the buyer would have demanded a deep cut on loans valued on unobservable inputs; it did not.

The market’s price for the loans has not moved. Net of debt and cash, the shares valued TCPC’s investments at about 80 cents per dollar of marks on both June balance sheets: the reported one at $3.50, before the sale, and the pro forma one at $4.08.1 BlackRock sold half of TCPC’s loans at 89 to 95 cents; the market still prices the rest near 80, and only an exit collects the gap.

The price rose on lower leverage

Lotfi Karoui of PIMCO wrote on 17 August of business development companies (BDCs), the listed funds that lend to private companies, that “BDC equities continue to trade at significant discounts to NAV, reflecting skepticism toward reported marks.”

Exhibit 1 · TCPC rose three times as fast as the BDC ETF · Source: Yahoo Finance; TCPC pro forma · as of 7 Aug 2026

Source: Yahoo Finance closes, 5 and 7 August 2026; TCPC pro forma balance sheet.

TCPC beat the BDC ETF by 12 points, and the price moved to about what the same 80 cents on the loans implies once the sale’s cash paid down debt: about $4.04. The sale and the repayments since June cut net debt from 1.38 times net assets to about 0.4.

Blue Owl Capital Corp. (OBDC) shows where that re-rating stops. It sold about $400m of loans in February “at fair value, equivalent to… 99.8% of par”, and trades at 0.71x its June NAV. TCPC’s 0.69x sits between FS KKR’s 0.58x and Ares Capital’s 0.96x. Selling at marks did not lift OBDC above 0.71x.

Own TCPC beside Saba now, or only once TCPC’s board names a route: the ticket sets the trigger, the size and a kill line, first tested on 5 November.

Below the paid line:

• Exhibit 2: TCPC valued in a cash exit, line by line.

• Exhibit 3: each route on KBW’s list, priced per share.

• Exhibit 4: Saba’s 2024 campaigns, counted by outcome.

• The position: trigger, payoff, kill line and odds.

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