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Bloomberg
Once the high-flying Tiger Cub stumbles again on leveraged bets
(Bloomberg) – He was a hot follower of hedge fund legend Julian Robertson – one of the single stars to emerge from the vaunted Tiger Empire. Today, Bill Hwang is at the center of an extraordinary frenzy of giant stock trading spilling over into financial markets and rocking Wall Street. Morgan Stanley and Goldman Sachs Group Inc., along with other big banks, have forced the liquidation of over $ 20 billion. Friday, according to people familiar with the transactions, the holdings of New York-based Hwang’s Archegos Capital Management on Friday. Among the sales were shares of ViacomCBS Inc., GSX Techedu Inc., Farfetch Ltd. and Discovery Inc. The unprecedented sale is the latest twist in Hwang’s long and controversial career. About two decades ago, he was peer at Robertson’s firm, Chase Coleman, who was Wall Street’s most profitable hedge fund manager last year. Now, after having long ceased to handle outside money, he faces his second big scandal: how and why big name banks adopted Hwang after his first failure – an insider plea in 2012 – and allowed it to generate so much leverage. an open question on Wall Street, though his frequent trading and use of borrowed money meant he was a profitable customer. This meant that Archegos did not have to disclose its holdings in regulatory deposits, as the positions appeared on banks’ balance sheets. Swaps are also an easy way to add a lot of leverage to a portfolio, market participants estimate that its assets have grown from $ 5 billion to $ 10 billion, and total positions may have exceeded $ 50 billion. . market movements, and other Archegos employees contacted by telephone declined to comment on the liquidation of its positions or the losses. A devout Christian, he is a director of Fuller Evangelical Theological Seminary in California and a co-founder of the Grace and Mercy Foundation, according to Fuller’s website. The charity is dedicated to the fields of Christianity, art, education, justice and poverty.After leaving Tiger Management as Robertson dissolves the company, Hwang, who is in his 50s , spent a decade running his Tiger Asia Management – backed by in 2012, he closed the hedge fund after admitting on behalf of the company in federal court in Newark, New Jersey, to trading inside information. According to the Justice Department, Tiger Asia raked in $ 16 million in illicit profits in 2008 and 2009, Hwang bounced back almost immediately, opening a family office named Archegos – in Greek for “ one who shows the way. ” from the University of California at Los Angeles in 1988, and earning an MBA from Carnegie Mellon University, Hwang became an institutional equity seller. He was at Hyundai Securities Co. in the early 1990s when he caught the attention of Robertson, who was one of his clients. One year, Tiger Management awarded Hwang $ 50,000 for the charity of his choice – an annual award for the person outside the company who Robertson said had benefited Tiger the most. “He was the best salesperson we’ve had,” Robertson said in an interview in 2006.. “He introduced us to Korea. No one was focusing on Korea at the time and we hired him soon after. After Tiger Management closed, Robertson invested Hwang with around $ 25 million for his own business. “He’s had a meteoric rise,” Robertson said at the time. As the manager of his own fund, Hwang did not provide much transparency to investors about his positions or what contributed to returns, said a person who invested with him. Even so, the clients stayed because it was a money maker, with an annualized return of 16% over the life of the fund. At Archegos, his fortune grew with his outsized bets and quick deals, a style Hwang never spoke of. It’s not just about the money, you know, ”he said in a rare interview with a Fuller executive in 2018, in which he spoke about his vocation as an investor and his faith. “It’s about the long term, and God certainly has a long term view.” For more articles like this, please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business information. © 2021 Bloomberg LP
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