# AI Hedge Funds Plunge as Deleveraging Hits Third Time in Ten Months

> Hedge funds suffer rare simultaneous plunge for third time in ten months as AI financing concerns trigger deleveraging.
- Title: AI Hedge Funds Plunge as Deleveraging Hits Third Time in Ten…
- Summary: Hedge funds suffer rare simultaneous plunge for third time in ten months as AI financing concerns trigger deleveraging. Hedge funds reversed all cumulative…
- Keywords: goldman sachs, hedge funds, ai financing, deleveraging, quantitative funds, korea, taiwan, ai capex, momentum factor, s&p 500, coreweave, oracle
- Source: BigGo Finance — https://finance.biggo.com/news/b165edfc-390b-4dd7-a38f-3c795dc989b1
- Author: BigGo Finance
- Published: 2026-10-16T06:26:10+00:00
- Read time: 2 min
- Topics: goldman sachs, hedge funds, ai financing, deleveraging, quantitative funds, korea, taiwan, ai capex, momentum factor, s&p 500, coreweave, oracle
## AI Financing Concerns Trigger Deleveraging
Hedge funds experienced third synchronized multi-strategy crash in ten months, with quantitative funds suffering a -3.7 standard deviation blow.
## Asian Hedge Funds Bear Brunt
Asian hedge funds saw monthly losses widen to -6.8%, with South Korean and Taiwanese AI positions bearing the most damage.
## Goldman Sachs Data Shows Reversal
Goldman Sachs Prime data shows hedge funds completely reversed all cumulative AI net buying since 2025 within five trading days.
## Taiwan Foreign Outflow Hits $9.3 Billion
Taiwan recorded a historic single-day foreign outflow of approximately $9.3 billion, a record level for the country.
## VaR Models Underestimate Extreme Risk
Goldman Sachs analysts warn current VaR models systematically underestimate extreme risk, with overall leverage at 310%.
## Taiwan Positioning at 99th Percentile
Taiwan positioning remains at the 99th percentile of its five-year range, suggesting deleveraging pressure may only be beginning.
## Momentum Factor Collapses
Momentum factor down 3.4 standard deviations, Crowded Longs down 1.8 standard deviations, and Crowded Shorts squeezed higher by 1.2 standard deviations.
## Quantitative Funds Turned Negative
Quantitative funds suffered a -3.7 standard deviation blow, the worst single-day loss since August 19, after posting gains the previous day.
## South Korea's AI Positioning Unwound
South Korea's net positioning allocation fell 75 basis points this month to 3.64%, sitting at the 32nd percentile of the past year.
## Taiwan's Positioning Remains High
Taiwan's positioning remains near historical highs at the 94th percentile of the past year and 99th percentile of the five-year range.
## AI Stock Net Selling Accelerates
Hedge funds net sold global AI stocks for five consecutive trading days from October 8 to 14, reversing all cumulative net buying since 2025.
## KOSPI Enters Bear Market
KOSPI fell into bear market territory, triggering circuit breakers and a single-day foreign outflow of $9.3 billion.
## Credit Spreads Widening
SoftBank Group's 5-year credit default swap spread widened to 424 basis points, a single-day widening of 24 basis points.
## AI Portfolio Long/Short Ratio Declines
AI portfolio long/short ratio declined from the June peak of 4.34 to 3.27, at the 7th percentile over the past year.
## Deleveraging May Only Begin
Goldman Sachs analysts warn that current VaR models systematically underestimate extreme risk, suggesting deleveraging pressure may only be beginning.
## Key takeaway

Hedge funds reversed all cumulative AI net buying since 2025 within five trading days after a -3.7 standard deviation crash.