The Archegos Capital Blow-up

Archegos Capital: The little-known family office of Bill Hwang convinced almost every big bank to lend enormous sums to it.  One of the so-called Tiger Cub veterans of Julian Robertson’s Tiger Management fund, Hwang was, after all, a man who had run into trouble before, having been banned from trading in Hong Kong and fined millions in the US to settle illegal trading charges in 2012.  Hwang, used to run a hedge fund called Tiger Asia, but he returned outside money after his trading misadventures. Now he is the man behind Archegos Capital, the family office that has become a stark example of what happens when banks give out too much leverage and call it back all at once.Bill Hwang had been flying under the radar until his bet on ViacomCBS ran into trouble last week. The plunge triggered margin calls, a bank’s way of saying, “put up more cash or we’re selling your positions”. What followed was a wave of selling by banks that wiped $33bn off the companies involved on Friday alone. By some accounts, share sales by Hwang’s various counterparties have already topped $30bn, with more damage expected to follow. That spelt trouble not only for Hwang but also the top banks including Goldman Sachs, Morgan Stanley, Credit Suisse and Nomura which extended billions of dollars in credit to allow Archegos to make highly levered bets on US and Chinese stocks. We learned on Monday that the banks had attempted to co-ordinate efforts to limit the mayhem. Those talks failed and chaos ensued.Patrick's Books: Statistics For The Trading Floor: https://amzn.to/3eerLA0​ Derivatives For The Trading Floor: https://amzn.to/3cjsyPF​ Corporate Finance: https://amzn.to/3fn3rvCPatreon Page: https://www.patreon.com/PatrickBoyleOnFinanceVisit our website: www.onfinance.org Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyleYouTube Channel https://www.youtube.com/c/PatrickBoyleOnFinance/videos Support the show