Remember Archegos Capital Management? You know, the firm that collapsed and tanked ViacomCBS and Discovery with it? Well, now it’s being investigated by the SEC for market manipulation. 🕵️♂️
The SEC is investigating Archegos’ trading activity to find out if the firm attempted to hide the size of its bets — it’s possible that the hedge fund bought multiple stakes in the same companies through different banks to avoid detection.
Archegos’ impressive portfolio of over $100 billion was amassed with borrowed money. However, when the fund’s lenders finally got scared of Archegos’ tremendous leverage, they issued a margin call and started selling off the fund’s assets.
Mike Weiss, Deputy chief Investment Officer at Weiss Advisers, commented on Archegos’ risky strategy: “Such stacking and mirroring of positions not only obscured portfolio clustering, but also created vulnerability to a domino effect whereby, even on a single-name basis, an involuntary liquidation would almost certainly have a cascading impact.”
Bill Hwang, former head of Archegos Capital Management, is reportedly lying low in New Jersey after losing $20 billion in 2 days earlier this year. 🙊