Goldman Sachs Group Inc. and Morgan Stanley were quick to move large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to people with knowledge of the transactions. The strategy helped limit the U.S. firms’ losses in last week’s epic stock liquidation, they saidports Wall Street Journal.
Losses at Archegos, run by former Tiger Asia manager Bill Hwang, have triggered the liquidation in excess of $30 billion in value. Banks were continuing to sell blocks of stocks linked to Archegos Monday, traders said.
“This is a challenging time for the family office of Archegos Capital Management, our partners and employees. All plans are being discussed as Mr. Hwang and the team determine the best path forward,” a company spokeswoman said in a statement Monday evening.
Archegos took big, concentrated positions in companies and held some positions in a mix of stock and swaps. Swaps are a common arrangement in which a trader gets access to the returns generated by a portfolio of shares or other assets in exchange for a fee.
Archegos broke its silence on the matter late Monday.
“This is a challenging time for the family office of Archegos Capital Management, our partners and employees,” Karen Kessler, a spokesperson for the firm, said late Monday in an emailed statement. “All plans are being discussed as Mr. Hwang and the team determine the best path forward.”
Kessler works at Evergreen Partners, which specializes in crisis communications and reputation management, according to its website.
The U.S. Securities and Exchange Commission has been monitoring the forced liquidation in holdings linked to Archegos, a spokesperson said. If you want to read more , visit bloomberg.com.
Forced liquidation of stocks leads to one of the biggest hedge-funds debacles since Long Term Capital Management in 1998. Archegos built posistions using total return swaps, derivates that allows family offices to hode their leveraged stocks bets from public view. Credit Suisse bid to head off Archegos Crisis ends with rival banks brawling before Goldman sets off fung implosion, writes Bromberg and Reuters. Shares in the Swiss bank fell again Tuesday, while Japanese bank MUFJ warned of a $300 million loss, according to Wall Street Journal tuesday.
Credit Suisse Group AG Chief Executive Thomas Gottstein made getting a tight grip on risk-taking one of his first moves after starting the job last year. It wasn’t enough to prevent two big blowouts: at Archegos Capital Management and Greensill Capital.
Bank shareholders are bracing for a multibillion-dollar hit from a fire sale of positions held by hedge fund Archegos and analysts downgraded its stock Tuesday over the reputational damage.
Shares in the Swiss bank fell another 2% as investors estimate the scale of the damage. Its shares are now down 10% for the year, even as crosstown rival UBS Group AG’s shares have risen 15%.
Credit Suisse hasn’t said exactly what size of a loss it is likely to take from liquidating positions at the fund, run by former Tiger Asia manager Bill Hwang. It is expected to say more this week, according to a person familiar with the matter. In a profit warning Monday, it said the losses could be “highly significant and material” to its first-quarter results, writes Wall Street Journal.
