A war between 2 billionaire hedge-fund founders spilled out into the open in an alarming filing
- John Overdeck and David Siegel created hedge-fund giant Two Sigma, amassing billions in wealth.
- A little-noticed filing lays bare their deteriorating relationship.
John Overdeck and David Siegel made billions together. Now they can't agree on almost anything.
The pair launched Two Sigma, a quant hedge fund staffed with reams of mathematicians and computer scientists, with a third cofounder who later left more than two decades ago. They built it into an industry behemoth with $60 billion in assets. The pair have amassed billions in wealth along the way, with each worth $5.8 billion, per Bloomberg.
But there's tension at the top of Two Sigma, per a recent filing that was first reported by Juliet Chung and Gregory Zuckerman at The Wall Street Journal. Hidden on page 41 of a little-noticed filing, the firm reveals that there are challenges on coming to an agreement on, well, almost anything.
Here's the relevant section of the filing:
There have been a variety of management and governance challenges at the Adviser. The Management Committee of the Adviser's general partner (the "Management Committee") has been unable to reach agreement on a number of topics, including:
(i) defining roles, authorities, and responsibilities for a range of C-level officers, including for the various roles of the members of the Management Committee and Chief Investment Officers;
(ii) organizational design and management structure of various teams; (iii) corporate governance and oversight matters; and
(iv) succession plans.
These disagreements can affect the Adviser's ability to retain or attract employees (including very senior employees) and could continue to impact the ability of employees to fully implement key research, engineering, or corporate business initiatives. If such disagreement were to continue, the Adviser's ability to achieve Client mandates could be impacted over time.
To paraphrase then, the management committee, which the WSJ reported includes only the two founders, can't agree on the roles, authorities, and responsibilities of C-Suite individuals, including the role of chief investment officers. Nor can it agree on the org chart, the management structure, corporate governance, or succession plans.
These disagreements might hurt Two Sigma's ability to retain and attract star employees, and those employees' ability to actually implement research, tech, or business initiatives. This could then impact the firm's ability to win business.
Wow.
A spokesperson for Two Sigma declined to comment. Chung and Zuckerman over at the WSJ have more details on what's going on behind the scenes.
Jamie Nash, a partner at law firm Kleinberg Kaplan who advises hedge funds, told the reporters: "Disagreements among founders aren't uncommon, but I've never heard of a disclosure like this."