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The Archegos Capital was founded by the former Tiger Management equity analyst, Bill Hwang. Archegos Capital, the “home office” hedge fund owned by Bill Hwang, lost an unbelievable $110 billion in just five days. The strategy was the classic leverage using
SWAPS. They never purchased shares of stocks in companies like ViacomCBS. Archegos Capital was entering into equity swaps with numerous different banks and investment banks in a similar manner to what would be called money laundering where we borrow from one bank to pay off another.
By engaging
SWAPS, Archegos Capital never actually owned shares of the underlying stock. What they did was effectively leveraged themselves by as much as 500%, which would prove to be their undoing. The problem with such hedge funds is that they really take a personal view of the performance of the market going forward. This is
Credit Suisse unloads $2.3 billion of stocks tied to Archegos Capital
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Last Updated: Apr 06, 2021, 07:13 AM IST
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Synopsis
The unwinding of Bill Hwang’s Archegos portfolio has turned into one of the biggest fund flameouts since Long-Term Capital Management’s demise in the 1990s.
Reuters
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By Drew Singer, Sridhar Natarajan, Crystal Tse and Gillian Tan
Credit Suisse Group AG unloaded about $2.3 billion worth of stocks tied to the Archegos Capital blowup more than a week after some rivals dumped their shares and skirted losses.
The Swiss bank hit the market with block trades tied to ViacomCBS Inc., Vipshop Holdings Ltd. and Farfetch Ltd., a person with knowledge of the matter said. The stocks traded substantially below where they were last month before Bill Hwang’s family office imploded.
T
here are two things that should be understood about the global financial markets as the world faces what is being called the Great Reset, or Bretton Woods 2.
The first is that the US dollar rules the world (as distinct from the US nation).
The second is that the system is insane.
Sure, it may look rational with all those numbers, charts, ratios, algorithms and impressive-sounding technical terms. But collectively the whole thing is mad. As the great British writer GK Chesterton said:
The madman is not the man who has lost his reason. The madman is the man who has lost everything except his reason.
Archegos: Snowflake That Triggers the Avalanche? - The Daily Reckoning dailyreckoning.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from dailyreckoning.com Daily Mail and Mail on Sunday newspapers.