Though the third quarter was a strong one for hedge and arbitrage funds, both suffered tremendous losses in October due to drops in energy stocks, merger and acquisition deals that fell apart, exposure to the credit markets and a difficult environment for stock and bonds, CNN/Money reports.

October has always been a rough month, but this year was particularly rough, with some long/short funds possibly losing as much as 8% to 10%. And the difficult environment has been true domestically as well as offshore.

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