This Guy Lost $20 Billion In Two Days And Is Somehow Still Alive
Bloomberg - From his perch high above Midtown Manhattan, just across from Carnegie Hall, Bill Hwang was quietly building one of the world’s greatest fortunes.
Even on Wall Street, few ever noticed him -- until suddenly, everyone did.
Hwang and his private investment firm, Archegos Capital Management, are now at the center of one of the biggest margin calls of all time -- a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink.
Hwang’s most recent ascent can be pieced together from stocks dumped by banks in recent days -- ViacomCBS Inc., Discovery Inc., GSX Techedu Inc., Baidu Inc. -- all of which had soared this year, sometimes confounding traders who couldn’t fathom why.
One part of Hwang’s portfolio, which has been traded in blocks since Friday by Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co., was worth almost $40 billion last week. Bankers reckon that Archegos’s net capital -- essentially Hwang’s wealth -- had reached north of $10 billion. And as disposals keep emerging, estimates of his firm’s total positions keep climbing: tens of billions, $50 billion, even more than $100 billion.
It evaporated in mere days.
“I’ve never seen anything like this -- how quiet it was, how concentrated, and how fast it disappeared,” said Mike Novogratz, a career macro investor and former partner at Goldman Sachs who’s been trading since 1994. “This has to be one of the single greatest losses of personal wealth in history.”
It's still unclear on just how many billions Billy Hwang lost last week. Some are speculating $20 Billion. Some as much as $30 Billion. There are reports that at one point this guys portfolio was $100 Billion strong to quite strong. But the fact that he suffered a swing that bad in just two days has to be one of the biggest kick in the dicks in the history of dick kicks.
One minute you're riding high, scrooge mcducking it, and the next thing you know you crapped out.
The craziest part of this all, from my understanding, is that Hwang's money was as close to liquid as you could get. His net worth was actually $20 Billion, it wasn't tied up in businesses or assets.
The most fucked up part of it all, at least for a dummy like me, is how he was able to amass this amount of wealth so stealthy.
People knew this guy was killing it, but not to the extent he was because he exposed a loophole (of course) by classifying his firm as "a family office". Wait what?
How could someone take such big risks, facilitated by so many banks, under the noses of regulators the world over?
One part of the answer is that Hwang set it up as a family office with limited oversight and then employed financial derivatives to amass big stakes in companies without ever having to disclose them. Another part is that global banks embraced him as a lucrative customer, despite a record of insider trading and attempted market manipulation that drove him out of the hedge fund business a decade ago.
What chaps my ass even more, and yours as well most likely is that this fuckin guy got pinched back in 2012 for insider trading and manipulating the Chinese market. He paid $44 Million in fines and agreed to be barred from investment banking.
Then he went and set up his Archegos firm, classified it as "a family office" and went right back to work. This time with even less oversight or requirements to disclose his positions.
What fucking planet am I on?
These Archegos guys never appeared in any regulatory filings. Ever. Billy Hwang used swaps, which is apparently a derivative that exposes an investor to gains and losses without actually owning the asset directly. This concealed the size of his positions and his identity.
Can somebody on the Barstool Finance team or a big shot wall-streeter please explain to me why this is allowed and the logic behind making it legal?
After the bailout in 2008 weren't laws supposed to be put in place requiring transparency and disclosure of all this shit to prevent the bottom from falling out again?
The biggest question here is how have the people investing with this guy not offed him yet?
At the very least we should have heard of a Roger Podacter like incident occurring by now.
