Two Sigma’s new leaders have made their mark with hundreds of job cuts. Here’s what could come next for the $60 billion firm.

• Two Sigma laid off 200 employees Thursday, about 10% of the $60 billion firm’s workforce.
• Co-CEOs Carter Lyons and Scott Hoffman took over for the firm’s cofounders in September.
• The firm plans to continue investing in its core strategies, a person close to the manager said.

Thursday brought the latest twist in a year full of them for the $60 billion hedge fund Two Sigma.

The New York-based quant giant has cut 200 jobs — roughly 10% of its overall workforce. The layoffs come less than three months after co-CEOs Carter Lyons and Scott Hoffman took the helm from John Overdeck and David Siegel, the firm’s billionaire cofounders.

No portfolio managers were eliminated, a person close to the manager told Business Insider. Bloomberg earlier reported the cuts.

Two Sigma, which produced decent returns in its two largest quant funds through the first half of the year, is still planning to grow areas it found to be the most impactful following the firm’s strategic review, the person close to the manager said. Those areas include quant and discretionary strategies, machine learning, and the manager’s tech platform.

The leadership change offered the firm an opportunity to do a broader review of its units, the person said. The manager has expanded in recent years, including with a real-estate strategy in 2021 and the risk-management and portfolio-analytics platform Venn in 2019. The firm also started hiring investors last year to focus on discretionary strategies for the first time.

The goal is to be more disciplined as the firm grows, the person close to Two Sigma said. They said the employee-retention rate was 95%, so any meaningful changes at the firm would have to be done through job cuts.

The firm is just starting on the journey that very few hedge funds ever begin: life without its founders.

Two Sigma’s investors, though, were ready for a change. The firm’s cofounders had been feuding for years, dividing the manager internally.

In the August announcement of his promotion, Lyons, the firm’s former chief business officer, was lauded for his work in expanding Two Sigma’s product offerings. Meanwhile, Hoffman, Lazard’s former general counsel, was picked in part for his experience “navigating complex governance changes,” the announcement said.

The announcement also pointed to Hoffman’s key role in shepherding Lazard’s initial public offering to completion in 2005. It said he was a key player in the process, as he advised the boutique investment bank’s leadership and board.

One industry insider said that his hiring might pave the way for a listing from Two Sigma; the manager’s diversified offerings and tech platform make it more well rounded than the average hedge fund, and a liquidity event could at least partially detangle the bickering cofounders’ fortunes.

In this light, the latest cuts could be seen as a cleanup of balance-sheet bloat — but the person close to the firm said that a listing had not been discussed in any form.