Penn Wealth Publishing

2021.08.22 Penn Wealth Report Vol 9 Issue 03

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8 penn wealth Report volume 9 issue 03 22 aug 2021 Copyright 2021. All Rights Reserved. tactical Awareness A lot of chapters are yet to be writtin in the story of one of the greatest meltdowns of personal wealth in recent history, but plenty of intrigue is already bubbling to the surface. At the center of the storm is one man and his family office group which were able to operate virtually undetected despite building enormous—and highly leveraged—positions in a few concentrated media stocks. 2012 was not a good year for Bill Hwang. A protege of Tiger Management's Julian Robertson, Hwang had successfully launched his own hedge fund, Tiger Asia Management, a decade earlier with seed money from Robertson. After amassing impres- sive returns in 2011, the wheels began to fall off the cart in 2012. Accused of insider trading and wire fraud, Hwang was forced to pay a $44 million fine and shutter his hedge fund—sort of. In reality, he simply morphed the platform into a family office group (FOG), thus freeing it from the pesky regula- tory scrutiny of the SEC. Archegos Capital Management, like most of the over 7,000 family office groups in existence (which manage around $6 trillion in wealth), was set up to serve the needs of one wealthy family. In a 2010 carve-out within Dodd-Frank legislation, FOGs which serve primarily one family and do not offer investment advice are able to make major trades without the typical filings required by other financial institutions. Hence, a major lack of transparency for both investors and regulators. Meanwhile, prime brokerages, lenders which bundle services for hedge funds, are in a heated com- petition to serve these groups. Fat fees and lucrative potential profits have driven this mad dash, with many firms trying to break into the rarefied air where the likes of Goldman Sachs and JP Morgan reside. How a family office group was able to build massively-leveraged and concentrated positions undetected by investors and regulators alike. Lenders to Archegos were forced to make tens of billions of dollars in block trade unwinds in one week, pummeling the likes of ViacomCBS Capital Markets Archegos: Ripple Effects From a Cavalier Trader e contents of this report reflect the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. is is not a solicitation to buy. Always consult your investment professional before investing any money.

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