John Overdeck and David Siegel have run a hedge fund known as Two Sigma for over 20 years. Two Sigma manages $60 BILLION in belongings. In line with Wikipedia’s listing of the world’s largest hedge funds, Two Sigma ranks because the eighth-largest hedge fund on this planet. HOWEVER. Wikipedia lists Two Sigma’s belongings underneath administration at $40 billion. The precise quantity is $60 billion. If you use $60 billion, Two Sigma is the fifth-largest hedge fund in America, simply forward of a agency known as D.E. Shaw, which can characteristic once more on this story in a second.
As you would possibly guess, John and David are each multi-billionaires. They’re the one house owners of Two Sigma. They’ve equal voting energy over all firm selections, and so they each have a web value of $8 billion. Sounds hunkydory, proper? Effectively, there’s only one drawback: John and David hate one another. They reportedly cannot even talk with one another over fundamental agency operational selections.
Truly, there are two issues.
John Overdeck goes by a billion-dollar divorce, and his spouse, Laura Overdeck, claims that staff at Two Sigma helped him protect billions in belongings…
David Siegel, Michael Bloomberg, and John Overdeck (Photograph by Craig Barritt/Getty Photographs for Bloomberg)
How do you break up a $60 billion hedge fund?
John Overdeck is a math genius. Math is in his blood. His father was a senior mathematician for the NSA. His mom was a director at Pc Sciences Company, a pioneer within the IT subject. In 1986, when he was 17, John gained a silver medal on the Worldwide Math Olympiad. He earned a level in math and statistics at Stanford earlier than enrolling in Stanford’s graduate college to earn a Ph.D in… get this… math.
John by no means bought that Ph.D from Stanford. Within the Nineties, he was recruited away from college to affix a not too long ago launched math-focused hedge fund known as D.E. Shaw. At D.E. Shaw, John shortly rose to the place of managing director of threat administration.
Extra importantly, whereas he was at D.E. Shaw, John caught the eye of the agency’s youngest Senior Vice President, a 30-year-old fellow math nerd named Jeffrey Preston Bezos.
Jeff had not too long ago married his analysis assistant, the longer term MacKenzie Scott. In 1994, the newlywed Bezos give up their respective jobs at D.E. Shaw, packed up their house, and drove throughout the nation in a Volvo headed in direction of Seattle. MacKenzie drove whereas Jeff typed up a marketing strategy for a brand new e-commerce enterprise he was calling “Cadabra” (as in “abracadabra). After Jeff’s lawyer misheard “Cadabra” as “cadaver,” Jeff determined to select a brand new title. He settled on Amazon.
One of many first folks Jeff recruited to affix him in Seattle was… John Overdeck. John’s title stated Vice President, however he was actually Jeff Bezos’s technical assistant.
John labored at Amazon for 2 essential years, from roughly 1995 to 1997. I could not work out precisely when he joined or when he left, however contemplating Amazon went public in Might of 1997, it is in all probability protected to imagine that John labored by the IPO, made a small fortune, and determined to take just a few years off to take pleasure in his riches.
FYI, on the IPO date, Jeff Bezos ended the day with a net worth of $120 million. A 12 months later, he was a billionaire. By late 1999, Bezos was value $10 billion. After the dotcom bubble exploded in 2001, Bezos’ net worth crashed all the way back down to $2 billion.
That very same 12 months, John and one other D.E. Shaw alum named David Siegel determined to launch a hedge fund. They known as it Two Sigma. There was truly a 3rd founder named Mark Picard, however he retired in 2006.
Two Sigma
Proper out of the gate, Two Sigma raised over $100 million from buyers, together with Jeff Bezos.
In its first decade of operation, Two Sigma returned a median of 30% per 12 months to its buyers. This was considerably increased than the typical return generated by the typical hedge fund in the identical time interval.
Two Sigma’s success was on account of its use of cutting-edge expertise and its give attention to quantitative evaluation. The agency employed a whole bunch of mathematicians, physicists, and laptop scientists to develop buying and selling algorithms that would exploit market inefficiencies.
Based mostly in Manhattan’s SoHo neighborhood, Two Sigma cultivated a tradition nearer to Silicon Valley than Wall Avenue, full with chess tournaments and a employees of greater than 2,000 engineers, information scientists, and mathematicians. For years, the agency prided itself on secrecy. The 2 founders, particularly, had been obsessive about avoiding publicity.
As we acknowledged beforehand, Two Sigma is likely one of the largest hedge funds on this planet in the present day with $60 billion underneath administration. John and David’s former agency, D.E. Shaw, manages round $50 billion.
And, for quite a lot of causes, regardless of all their success, John and David hate one another.
Through the years, John and David have clashed loads of occasions over the whole lot from succession planning, promotions, and funding selections. That is not irregular. What’s irregular is when the animosity between the house owners will get so unhealthy that the fund is forced to make an SEC disclosure that mainly says “our founders hate one another, they’re unable to make fundamental selections collectively, and which may flip right into a threat for buyers.“
John and David have not appeared at an occasion collectively in years. The picture on the high of this text, the place they’re separated by Michael Bloomberg, is from 2017. It is the newest picture of them collectively I may discover in Getty. Insiders declare they often “snipe” at one another throughout conferences in entrance of subordinates.
As the corporate itself admits, the friction is making it tough “to retain or entice staff (together with very senior staff) and will proceed to impression the flexibility of staff to totally implement key analysis, engineering, or company enterprise initiatives.“
John and David every have equal voting rights (one vote per particular person), and they’re utilizing their votes to show each single resolution, regardless of how trivial, right into a cussed stalemate. There is no mechanism for breaking the stalemate. And that is an enormous drawback contemplating what’s going on in John’s private life.
John and Laura Overdeck through Getty
John & Luara
In 2002, John married Laura Anne Bilodeau. They didn’t signal a prenup. John and Laura would go on to have three youngsters collectively. Laura studied astrophysics at Princeton.
In 2011, they established the Overdeck Household Basis, which primarily focuses on STEM schooling charities and analysis. Guess what the “M” in “STEM” stands for… MATH. Up to now, their basis has given away greater than $450 million.
In 2012, Laura based a non-profit known as Bedtime Math, a free web site and app with the aim of constructing “math a enjoyable a part of youngsters’ on a regular basis lives, as beloved because the bedtime story.“
Sadly, that love of math will not be serving to David, John, and Laura work out the right way to divide Two Sigma by two.
Their fairness stakes in Two Sigma have given each John and David a web value of $8 billion. John is likely one of the richest people in New Jersey.
After 20 years of marriage, WITH NO PRENUP, Laura filed for divorce in 2022. That divorce has been dragging on for over three years.
$8 Billion Divorce
Sadly, having a web value of $8 billion that’s largely primarily based on the fairness worth of a non-public firm does not imply you could have billions in liquid money mendacity round to pay out a divorce settlement. And that is the place a brand new battle has arisen.
Widespread sense would say that Laura is entitled to a payout of round $4 billion. However! John cannot give her that payout with out promoting a part of his stake in Two Sigma. He would not wish to do that as a result of promoting a few of his fairness would give David majority possession, and due to this fact full management. And in one other twist, David would not even wish to be in management. He desires to retire, however he additionally DOESN’T need John to be in cost.
Each males stepped again from day-to-day administration in 2024, although Overdeck returned to the corporate’s administration committee earlier this 12 months.
All of it provides as much as a particularly tough drawback that will not be simply solved, regardless of how a lot you’re keen on math.
Hiding Billions?
This week, Laura requested a New Jersey court docket for permission to amend her lawsuit in opposition to Seward & Kissel, the regulation agency that dealt with the couple’s property planning. Within the submitting, she alleged that Two Sigma staff helped her husband “divorce-proof” billions in belongings, together with a good portion of his possession within the hedge fund, by transferring them into irrevocable Wyoming trusts he controls. Laura’s submitting additionally factors out that John has no properties or different ties to the state of Wyoming.
In line with Laura, the scheme started years earlier than she filed for divorce and concerned attorneys at Seward & Kissel working carefully with Two Sigma employees who managed the couple’s household workplace. Emails produced in discovery allegedly present coordination between a Two Sigma worker and Overdeck’s lawyer about sustaining his sole management over the household basis.
The allegations haven’t been confirmed, and John Overdeck’s attorneys have known as them “baseless, if not frivolous and actionable.” But when the court docket grants Laura permission to amend her lawsuit, Two Sigma may quickly face subpoenas and depositions — dragging the $60 billion agency right into a bitter home dispute between its co-founder and his spouse.
These new claims come at a turbulent time for Two Sigma. In late 2023, Two Sigma disclosed that one among its staff had secretly altered key buying and selling fashions, inflicting a whole bunch of hundreds of thousands in unreported beneficial properties and losses throughout a number of portfolios. The revelation led to an SEC investigation and finally a $90 million penalty in 2025.
