Sigma Investments’ co-founders are looking to sell a stake in the firm to resolve decision-making gridlock stemming from their protracted feud, according to people familiar with the matter.

The quantitative hedge fund giant held talks about selling a stake to a Middle East investor or a US pension fund, the people said, asking not to be identified discussing confidential details. With founders John Overdeck and David Siegel each owning roughly half the firm, the move would bring in a party that could serve as a tie-breaker to end their disagreements.

The deliberations are at an early stage and may end without an agreement. Any deal could take a year to 18 months before being finalized, one of the people said.

A representative for Two Sigma, which manages about $85 billion, declined to comment.

Two Sigma prefers to tap an existing investor in its funds, known as a limited partner, to acquire a stake, the people said. At least one LP demanded that Two Sigma guarantee it would be first in line to invest more cash in its funds, one of the people said.

The founders’ failure to agree on a variety of issues, including staffing and employee compensation, has resulted in one stalemate after another. Two Sigma has told investors that at least four matters have wound up in arbitration, and sometimes even that hasn’t resulted in a resolution.

Looming over the billionaires’ yearslong animus is yet another feud: Overdeck’s ongoing divorce trial in New Jersey Superior Court. His wife Laura is seeking more than a third of his stake in Two Sigma, which she estimated is worth $6.2 billion. Overdeck has testified that maintaining equal control of the firm is a “principal concern” and that he might have to liquidate some of his holding to pay her.

The relationship between Siegel and Overdeck, who launched Two Sigma in 2001, became so strained that the firm took the unusual step of citing the conflict as a material risk in a 2023 regulatory filing, and keeping a leadership team in place has been anything but easy ever since.

The following year, both men stepped down as co-chief executive officers and left the management committee. Overdeck picked then Two Sigma veteran Carter Lyons to be his proxy in both roles, while Siegel chose former Lazard Inc. general counsel Scott Hoffman. Eight months later, Overdeck returned to the management committee, bumping Lyons from that post while keeping him on as co-CEO.

By this year, Hoffman had had enough and quit, citing “ongoing governance challenges,” according to March 31 filing, and Siegel subsequently selected Seth Platt to succeed Hoffman. Now Platt is also leaving, Bloomberg reported this month, forcing Siegel to pick his third proxy on the management committee in about two years.

Despite their disagreements, many investors have been willing to stick with the firm, in no small part because it continues to perform. Two Sigma’s Absolute Return Enhanced Fund gained 16% this year through September, and the firm’s asset are at an all-time high.

If Two Sigma agrees to sell a stake, it would be at least the third large hedge fund firm to do so in recent years. In late 2025, Izzy Englander’s Millennium Management completed the sale of a minority, passive interest in its management company to a group of investors for about $2 billion. Earlier that year, Verition Fund Management sold a minority stake to Affiliated Managers Group Inc.