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Bloomberg
God and man collide in Bill Hwang’s dueling life on Wall Street
(Bloomberg) – As the sun rose outside their boardroom in Midtown Manhattan, visitors to a secret investment empire bowed their heads in prayerful meditation. It was another Friday morning at 7 a.m. and a familiar scene was unfolding inside again. Archegos Capital Management, an obscure family office that would shake up the financial world: in the days leading up to the pandemic, 20 or 30 people crowded around the long table and, over coffee and Danes, listened to Bible recordings , according to the people who were there. The first could be the Old Testament, maybe Isaiah or the Lamentations. Then came the New, the Gospels, which called listeners from a path known more for its earthly greed than for its pious faith: Wall Street. mysterious billionaire trader now at the center of one of the biggest Wall Street fiascos of all time The story so far – of a bewildering fortune stealthily made and then wiped out very publicly in the blink of an eye – has sent shock waves through some of the most powerful banks in the world. Estimates of the potential size of her position before it imploded have skyrocketed to $ 100 billion. The Securities and Exchange Commission is looking into the disaster, which hit trading floors around the world, but these accounts tell only part of the story. Interviews with people inside Hwang’s circle, Wall Street players close to him, and documents associated with his multi-million dollar charitable foundation fill in missing puzzle pieces – pieces that weren’t previously reported. There are, in a sense, not one but two Bill Hwangs. Christian Capitalist One of them walks for hours in Central Park in New York listening to recordings of the Bible and takes a new 21st century view of an age-old ideal: that of a modern Christian capitalist, a financial speculator for Christ, who seeks to earn money in the name of God and then use it to advance the faith. A generous benefactor for a range of unglamorous, mostly conservative Christian causes, this Hwang avoids the traps of extravagant wealth, takes the bus, goes on commercial flights, and lives in what is, by billionaire standards, a humble environment in the suburbs of New Jersey. Bill Hwang: a former sidekick of hedge fund legend Julian Robertson with a thirst for risk and a stomach for volatile markets – a daring trader who once lost a fortune betting against German automaker Volkswagen AG while in charge a hedge fund supposed to be focused on Asia. It was also Bill Hwang who then quietly became one of the most successful alumni of Robertson’s famous tiger management. He hides his dangerous leveraged bets from public view via financial derivatives, was once charged with insider trading and pleaded guilty in 2012 to telegram fraud on behalf of his hedge fund, Tiger Asia. Management. a funder of one of the hottest hands on Wall Street in recent times, Cathie Wood of Ark Investments. Like Hwang, Wood is known to hold Bible study meetings and characters in what some call the “faith in finance” movement. And that’s where the Bill Hwangs finally collide. The fortune he amassed under the noses of the big banks and financial regulators was far greater and riskier than almost anyone might have thought possible – and that wealth was being amassed with lightning speed. In fact, it was perhaps one of the greatest accumulations of private wealth in the history of modern finance. And Hwang lost it all even faster. Breakneck SpeedArchegos – a Greek word often translated as “author” or “Captain,” and often considered a reference to Jesus – was viewed by many traders doing business with the company as sitting on $ 10 billion in assets. That number, representing Hwang’s personal fortune, was actually closer to $ 20 billion, according to people who have done business with Archegos. To put that number in context: Bill Hwang, a name few even know Wall Street had heard so far was worth more than well-known industry figures like Ray Dalio, Steve Cohen and David Tepper. Even more remarkable is the breakneck speed at which Hwang’s fortune grew. Archegos started in 2013 with an estimated amount of $ 200 million. It is a considerable fortune but far from being great in the game of hedge funds. Yet in a decade, Hwang’s fortune has increased 100 times, according to traders and bankers. Much of this wealth has accumulated in the last 12 to 24 months alone, as Hwang began to use more leverage to monetize his returns, and the banks, eager for his lucrative business activity , were strongly obliged to give him credit. to endow its own charity, the Grace & Mercy Foundation, which had nearly $ 500 million in assets in 2018, according to its latest tax return.An institution close to Hwang, and beneficiary of his foundation, is King’s College , a small Christian school in the heart of New York’s financial district. In a statement to Bloomberg, the college said it is grateful for his generosity and that “our prayers are with Mr. Hwang and his staff.” McDonald’s Work The story of the two Bill Hwangs begins in South Korea, where he was born Sung Kook Hwang in 1964. The story he told his friends and associates is familiar to that of the struggle of the immigrants – followed by financial success few, even on Wall Street, can comprehend. s house (like about a third of Koreans, his parents were Christians). When he was a teenager, the family moved to Las Vegas, where his father got a job as a pastor at a local church. Hwang told friends he arrived in the United States unable to speak or write English and only learned the language while working nights at McDonald’s. Soon after, her father passed away and her mother moved the family to Los Angeles. Hwang continued his studies in economics at the University of California, Los Angeles, then got an MBA at Carnegie Mellon University in Pittsburgh. Finance beckoned – and Hwang, it turned out, was very good at it. this domain. While a modest salesperson at Hyundai Securities, part of the Hyundai Group’s vast Korean chaebol, he caught the attention of Julian Robertson. Hwang, who is not yet 33, was then given a golden ticket to Wall Street: an offer to join Robertson’s Tiger Management, then at the top of his game. Hwang quickly distinguished himself by introducing Robertson on Korean markets – at the time headed for the teeth of the Asian financial crisis – and the preparation for what turned into a lucrative stake in SK Telecom Co. Hamptons’ LunchTiger colleagues say Hwang was the one of Robertson’s most successful proteges – a methodical, discreet analyst with intense focus. Even today, he keeps his desk free of clutter, to better focus his mind. Robertson, these people remember, dubbed him “the Michael Jordan of Asian investing.” Robertson, now 88, still considers Hwang a friend, and the two had lunch together in the Hamptons a few months ago. one thing is for sure, ”Robertson told Bloomberg after news of Archegos’ losses was announced. Hwang would eventually go out on his own as a so-called lion cub. Initially, Hwang turned off the lights, returning an annualized rate of 40% until 2007, when he managed $ 8 billion. At the end of 2008, his Tiger Asia suffered stinging losses on a big bet against Volkswagen. Numerous other hedge funds were also selling the German automaker, and when Porsche Automobil Holding SE abruptly announced it would increase its stake, everything went wild. VW soared 348% in 48 hours, crushing shorts like Hwang. Tiger Asia ended the year down 23%. Many investors withdrew their money, angry that a hedge fund that was supposed to focus on Asia somehow got caught in the massive squeeze. Going forward, he would hunt down stocks that many traders were selling and instead opt for long positions. Millions of amateur investors have taken this approach this year during the social media-fueled frenzy around GameStop and other actions, but before the next hit, Tiger Asia has run into more problems – this time, enough problems. big to make Hwang’s days look like a hedge When Tiger Asia pleaded guilty to wire transfer fraud in 2012, the SEC said the company used inside information to trade shares of two Chinese banks. Hwang and his company ended up paying $ 60 million to settle the criminal and civil charges. The SEC banned him from handling foreign money, and Hong Kong officials banned him from trading there for four years (the ban ended in 2018). The company, which recently employed around 50 people, initially occupied premises in the New York Times headquarters designed by Renzo Piano. Today it is based higher in the city, by Columbus Circle, sharing its address with the Grace & Mercy Foundation. “My journey really started when I had a lot of problems in our business about five or six years ago,” Hwang said in a 2017 video. “And I knew one thing, that this was a situation where money and relationships couldn’t really help. But somehow I reminded myself that I had to follow God’s words. This belief helped Hwang rebuild his financial empire at breakneck speed as banks loaned him billions of dollars to increase his bets which collapsed dramatically as financial firms panicked. What followed was one of the biggest margin calls of all time, pushing his giant portfolio into liquidation. According to analysts at JPMorgan Chase & Co.Leveraged Blowout: How Hwang’s Archegos Blindsided Global Banks As a battered Wall Street points its collective finger at Hwang, his Christian associates have Doug Birdsall, honorary co-chair of the Lausanne Movement, a global group that seeks to mobilize evangelical leaders, said Hwang always likes to think big. When he met him to discuss a new 30-story building in New York City for the American Bible Society, Hwang said, “Why build 30 stories? Build it 66 floors. There are 66 books in the Bible. Before so many things were going so fast so fast, Archegos seemed to be speeding up. A year ago, Hwang asked the SEC to let him work or run a broker; It’s impossible to tell where Bill Hwang, the tough financial speculator, stops and where Bill Hwang, the Christian evangelist and philanthropist, begins. People who know him say that one is inseparable from the other. Despite contacts with regulators, staggering trade losses, and the question swirling around his market transactions, they say Hwang often talks about connecting God and mammon, bringing Christian teaching to the money-centric world. of Wall Street. “If you know how Bill lives, you’ll never think this man is worth as much money as he was,” said John Bai, a CFO who has known Hwang for 30 years. “Maybe for some it’s an epic demise of wealth, but he’s got God on his side. I’m not worried about Bill. It is not about money. For more articles like this, please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business information.
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