Two Sigma Investments is considering selling a minority stake to an external investor in a bid to resolve a longstanding governance dispute between co-founders John Overdeck and David Siegel, according to a report by Bloomberg.

The New York-based firm, which manages approximately $85bn, has held preliminary discussions with potential investors including a Middle Eastern institution and a US pension fund. The proposed transaction would introduce a third shareholder capable of breaking deadlocks between Overdeck and Siegel, who each control roughly half the business.

Two Sigma is understood to favour an existing limited partner as a potential buyer, although discussions remain at an early stage and any transaction could take 12 to 18 months to complete. The firm declined to comment.

The dispute has repeatedly disrupted decision-making over staffing, compensation and senior management appointments, with at least four disagreements referred to arbitration. Two Sigma previously identified tensions between its founders as a material business risk in a 2023 regulatory filing.

Both founders stepped down as co-chief executives in 2024, appointing representatives to oversee the business. However, subsequent management changes have continued, with Scott Hoffman departing earlier this year citing governance challenges, while his successor, Seth Platt, is also set to leave.

The ownership dispute has been further complicated by Overdeck's ongoing divorce proceedings, in which his wife is seeking a substantial portion of his stake in the firm, which she values at $6.2bn.

Despite the governance uncertainty, Two Sigma has continued to attract investor support, with assets reaching a record high. Its Absolute Return Enhanced Fund returned 16% in the first nine months of 2026.

A transaction would follow similar minority stake sales across the hedge fund industry, including Millennium Management's approximately $2bn deal with a consortium of investors in 2025 and Verition Fund Management's sale of a stake to Affiliated Managers Group earlier that year.