He was an avid follower of hedge fund legend Julian Robertson – one of the single-player stars of the vaunted Tiger Empire. Now Bill Hwang is at the center of an extraordinary frenzy of giant stock trading that spill over into financial markets and rock Wall Street.
Morgan Stanley and Goldman Sachs Group Inc., along with other major banks, forced the liquidation of more than $ 20 billion in stakes for New York-based Archegos Capital Management in Hwang on Friday, people familiar with the transactions say. . Among the sales were shares of ViacomCBS Inc., GSX Techedu Inc., Farfetch Ltd. and Discovery Inc.
The unprecedented sale is the latest twist in Hwang’s long and controversial career. About two decades ago, he was a peer at Chase Coleman’s Robertson firm, which was Wall Street’s most profitable hedge fund manager last year. Today, having long since ceased to manage external money, he is facing his second big scandal.
How and why reputable banks embraced Hwang after his first fall – an insider plea in 2012 – and allowed him to generate so much leverage is an open question on Wall Street, though his frequent trading and use of l borrowed money meant he was a profitable customer.
Much of the leverage was provided by banks through swaps, according to people with direct knowledge of the transactions. This meant that Archegos did not have to disclose its holdings in regulatory deposits, as the positions appeared on banks’ balance sheets. Swaps are also an easy way to add a lot of leverage to a portfolio.
Market participants estimate that its assets have grown from $ 5 billion to $ 10 billion, and total positions may have exceeded $ 50 billion.
Hwang has not responded to several emails since Friday’s market moves, and other Archegos employees contacted by phone declined to comment on the liquidation of his positions or the losses.
Despite his roots at Robertson’s Tiger Management, Hwang has never been a household name on Wall Street or in New York social circles.
A devout Christian, he is a director of Fuller Evangelical Theological Seminary in California and a co-founder of the Grace and Mercy Foundation, according to Fuller’s website. The charity is dedicated to the fields of Christianity, art, education, justice and poverty.
After leaving Tiger Management when the company was dissolved by Robertson, Hwang, who is in his mid-fifties, spent a decade running his Tiger Asia Management – backed by his former boss – and turning it into a company of several billion with superior returns.
In 2012, he closed the hedge fund after admitting on behalf of the company in federal court in Newark, New Jersey, trades in inside information. According to the Department of Justice, Tiger Asia raked in $ 16 million in illicit profits in 2008 and 2009.
Hwang bounced back almost immediately, opening a family office named Archegos – in Greek for ‘he who leads the way’.
top rated seller
After earning a degree in economics from the University of California, Los Angeles in 1988 and an MBA from Carnegie Mellon University, Hwang became an institutional equity seller. He was at Hyundai Securities Co. in the early 1990s when he caught the attention of Robertson, who was one of his clients. One year, Tiger Management awarded Hwang $ 50,000 for the charity of his choice – an annual award for the person outside the company who Robertson said had benefited Tiger the most.
“He was the best salesperson we’ve had,” Robertson said in an interview in 2006. “He introduced us to Korea. No one was focusing on Korea at the time and we hired him soon after. After Tiger Management closed, Robertson invested Hwang with around $ 25 million for his own business. “He’s had a meteoric rise,” Robertson said at the time.
As the manager of his own fund, Hwang did not provide much transparency to investors about his positions or what contributed to returns, said a person who invested with him. Even so, the clients stayed because it was a money maker, with an annualized return of 16% over the life of the fund.
At Archegos, his fortune grew with his outsized bets and quick deals, a style Hwang never spoke of.
“It’s not just about the money, you know,” he said in a rare interview with a Fuller executive in 2018, in which he spoke about his vocation as an investor and his faith. “It’s about the long term, and God certainly has a long term view.”