A colossal margin call on Archegos is roiling bank balance sheets. Behind the family office is Bill Hwang, a «tiger cub» hedgie who previously pleaded guilty to insider trading.
Archegos Capital Management is believed to be the major seller, according to «The Wall Street Journal» (behind paywall), offloading an estimated amount of nearly $30 billion in block trades through Goldman Sachs, Morgan Stanley and Deutsche Bank.
The move on the trades – made during normal trading hours and some exceeding $1 billion in value, according to estimates by «Bloomberg» – dominated selling including Chinese online and entertainment firms Tencent Music, Baidu, GSX, iQiyi Inc. and Vipshop Holdings Ltd. The unwind ultimately swept up several banks as well, namely Credit Suisse and Nomura.
«Tiger Cub» Asia Roots
Archegos' owner is Bill Hwang, who in 2001 set up the former Tiger Asia Management which was established following his time as a «tiger cub». The term describes the dozen of hedge funds with roots to renowned hedge fund manager Julian Robertson and the 42-year old Tiger Management.
Tiger Asia grew to be a multi-billion dollar hedge fund and one of the largest investors in Asian financial markets. In 2012, the Securities and Exchange Commission charged Hwang and Tiger Asia with insider trading and manipulation of Chinese stocks. Hwang pleaded guilty, agreed to criminal and civil settlements of over $60 million, and later closed the fund.
Brokers Wanted Collateral
In 2013, Hwang converted the firm into a family office – Archegos Capital Management – which has reportedly grown to become larger than even many well-known hedge funds. According to multiple reports, Archegos was forced by banks to sell over $20 billion worth of shares last week after trading positions moved unfavorably.
Prime brokers demanded more collateral from the family office and then exercised their right to liquidate positions for recovery. Credit Suisse is a top provider of such services, according to data from Preqin.
