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Bill Hwang refuses to discuss the Archegos fiasco or its next steps.
He sits on the porch in a white plastic chair, a recessed swing, the lawn freshly mown.
Here in the suburb of Tenafly, 15 miles from midtown Manhattan, few would guess that this unpretentious character is none other than Bill Hwang – the man who just lost over $ 20 billion.
“Billion with a B?” Gasps a neighbor down the block, when told about the epic explosion at Archegos Capital Management in Hwang.
Yes, a billion, with a B, as shocked lenders can attest. Four months after Archegos rocked global finance, bankers and federal authorities are still sifting through the wreckage. The liquidator who cleaned up after Lehman Brothers has now come for Archegos. Some colleagues turned on Hwang; others hope it will finance hedge funds that may still rise from their ashes.
U.S. prosecutors are also asking questions, including the most important: Was this all another show of Wall Street greed and pride, or was it something worse? Credit Suisse Group AG, stunned by a hard hit of $ 5.5 billion, says it was likely cheated by Hwang’s family office.
Hwang searches for his own answers. He amassed one of the world’s greatest fortunes in virtual secrecy – then lost it, very publicly, in the blink of an eye. In the mild heat of this summer morning, he awaits a call with a retired American general who he hopes could give him some advice. He’s dressed like an average American football dad: teal shirt, blue cargo pants, Adidas slides. He has a pad of paper and a pen handy. An 8-ounce plastic bottle of Poland Spring spring water sits on the white plastic table which, like the chair, could be from Costco.
Handy, too, a Christian pamphlet – a testament to the faith that guided Hwang as he made dangerous bets in the markets and has even been charged with insider trading in the past. The title is Armor of God, a reference to Ephesians 6:11 – “Put on the full armor of God, so that you can take a stand against the plans of the devil. “
Hwang is relaxed, belittles himself, and reflects in a brief conversation, but refuses to discuss the Archegos fiasco or its next steps. He’s lying here in New Jersey, in this tidy neighborhood of 15,000 people, beyond the cliffs of the Palisades that rise above the Hudson River. He’s not exactly a Wall Street Napoleon exiled to Elba: Hwang has lived here for years, in the same house, with cobwebs in the attic and hedges in front. A Mercedes is sitting in the driveway. “Black Lives Matter” marks the well-kept lawns of the neighbors. Homes on this leafy street tend to sell for a few million dollars – a modest price, for a billionaire.
It’s hard to reconcile Hwang’s unglamorous life here with the portrayal of him that has emerged in recent months. By all accounts, he avoids the pitfalls of extravagant wealth. At the Tenafly Classic Diner, where the “NJ Sandwich” costs $ 6.95, waiters say he’s been known to stop, but hasn’t seen it lately. Most recently, he drove his family to town as he faced one of the biggest debacles in Wall Street history.
Credit Suisse has provided the first official snapshot of the fire. A 172-page autopsy, released on July 29, revealed a litany of management failures at Credit Suisse. But the ailing lender also said “it seems likely that Archegos has deceived CS and obscured the true extent of his positions, which Archegos has amassed amid an unprecedented global pandemic.”
This account also hints at a change in Hwang’s strategy that baffled outsiders. Archegos had grown rapidly by making huge bets on established FAANG stocks – blue-chip American technology companies. But last year he was investing money in riskier bets like ViacomCBS and several Chinese stocks listed in the US, some of which had been targeted by short sellers.
When the banks started emptying Hwang’s wallet, those stocks fell. And a more recent Chinese government crackdown has further decimated many of Hwang’s favorite bets.
For Hwang’s family office, now comes the inevitable: liquidation. Just a few months ago, it boasted that it had assets – built on borrowed money – valued at over $ 120 billion. Today everyone is lining up for the crumbs.
The liquidation manager is David Pauker, the specialist who intervened after Lehman’s bankruptcy in the 2008 financial crisis. More recently, Pauker worked on the restructuring of Steinhoff International Holdings, the South African furniture retailer which has almost collapsed after an accounting scandal in 2017. He declined to comment on pending cases.
Across the river from Tenafly, at Hwang’s Manhattan office, his landlord is suing Archegos for unpaid rent. Like property owners across town, real estate giant Vornado Realty Trust – led by billionaire Steven Roth – has been stung by the pandemic. He’s trying to recover $ 159,165.55 from Archegos.
Hwang’s offices on the 38th floor of the building across from Carnegie Hall have mostly been emptied, and his Christian charity, the Grace and Mercy Foundation, has scampered to the cheaper 22nd floor of the same building. The foundation had more than $ 600 million in assets in 2019, according to its most recent tax returns. He had even more money in early 2021, according to a person familiar with the matter.
The size of Bill Hwang’s fortune remains uncertain. Former employees complain that even though they were wiped out, Hwang, thanks to private investment and other holdings outside of Archegos, could still be a billionaire.
One of those investments was the seed capital he poured into four of Cathie Wood’s exchange-traded funds that exploded in popularity thanks to their above-market returns.
The banks haggle with Hwang’s team to determine the size of his remaining wealth and if they can get any back. Credit Suisse has said it will seek to recover money from Archegos and its related entities and individuals. The Swiss bank also reported in its findings that Hwang’s company had withdrawn more than $ 2 billion in excess margin from its account with the lender in the days leading up to the collapse.
The Justice Department has launched an investigation into the explosion. At least a series of questions revolved around communication between Hwang’s senior partner Andy Mills and the lenders, and whether he may have misled them on the week of the crash, according to a person interviewed by prosecutors.
“The claim that Andy Mills or anyone at Archegos misled the banks during the week of March 22 is false in all respects,” an Archegos spokesperson said.
The Archegos debacle severed ties between Hwang and some former colleagues, who are struggling to recoup deferred compensation related to the company. Part of their annual bonus – which stood at around $ 50 million – was invested alongside Hwang and exploded in value with his wallet, people familiar with the matter said. They want Hwang to withdraw money from the money he may have put aside elsewhere.
One of Archegos’ employees has listed his house in Manhattan and another in Long Island, according to real estate listings.
Regardless, Hwang tries to move on. He invests his remaining money and occasionally crosses the Hudson for dinner at a New York restaurant. He spends free hours as he did for much of his adult life: praying, reading Christian-themed literature, and listening to Bible recordings. He recently read “The Screwtape Letters” by CS Lewis, looking for tips on navigating current issues. A satirical letter-writing novel, the book features the demon Screwtape writing letters of advice to his nephew, Wormwood, who is trying to win the soul of a young man.
Others are also trying to move on. Hwang has promised to put his weight, if not his money, behind at least three funds launched by the proteges. Hwang named his company Archegos, an ancient Greek word for leader or author, a reference to Jesus. The names of two of the new funds reflect the cataclysm of Archegos. One is Red Ember Capital and the other is AriseN Partners.
(Except for the title, this story was not edited by NDTV staff and is posted from a syndicated feed.)
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