We have previously said a lot about the "hedge fund hotel" implosion observed in the third quarter, a quarter in which many of the hedge fund community's favorite stocks all suffered spontaneous disintegration leading to unprecedented drawdowns for some of the industry's "best and brighetst" names.

Now, it's Goldman's turn. In the firm's Q3 hedge fund tracker report we read that "from July through October, hedge fund favorite stocks posted their worst relative returns outside of 2008." Goldman continues by admitting that when all hedge funds pile up in the same handful of names, and when even a small disturbance appears, all 2 and 20 bets are off. The result: the firm's Hedge Fund VIP list of companies most beloved to the "smart money" suffered its worst perforamance since 2008 driven almost entirely by just one company: Valeant.