Archegos: The Questions Nobody Asks

TASA ID: 13992

There has been a lot of press articles on the Archegos blow-up already, but many important questions have still not been asked.

The Factual Background

Archegos Capital Management is a family office, which manages the money of Sung Kook "Bill" Hwang since 2013. Hwang is a "Tiger Cub", a former PM/Analyst from famous Tiger Management. Hwang was managing $500m of his own money, which he earned through his role as a portfolio manager in the previous decade.

Hwang started as a stock Salesman in early 90's at Hyundai Securities. After a legal battle which started in 2009, Hwang and his firm Tiger Asia Management pleaded guilty in 2012 to insider trading & stock manipulation charges. They settled $44m with the SEC and HKD 45m with the HK Securities and Futures Commission.

Archegos is actually the new name of his old company Tiger Asia Management. The firm is based in New York, since Hwang was banned from trading in Hong-Kong in 2014, as well as other Asian markets in which he specialized.

Archegos held large concentrated bets in a few companies, notably ViacomCBS, Discovery, Baidu, Tencent and Vipshop.

Besides his own stock positions (already large), he also held stocks synthetically through swaps at prime brokers.

The primes didn't know of the extent of his other prime relations and how large the positions were. The overall position was not $10bn, but more than $50bn - rumored to reach $100 bn.

The list of affected primes is increasing. Only JP and Deutsche seem to have escaped that wreckage. JP, because they refused to offer services to Archegos, and Deutsche, because they were quick to offload positions.

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