Chapter 10 from 10 Disasters That Ruined Smart People
Bill Hwang: Twenty Billion in Two Days
In late March 2021, a series of very large stock sales hit the market. Shares of ViacomCBS, Discovery, and other companies fell sharply. For a few days, Wall Street tried to work out who was selling and why.
The answer was a group of banks, unloading positions held on behalf of a single client: Archegos Capital Management, the private investment firm of Sung Kook “Bill” Hwang.87
Hwang was not widely known outside finance, but within it he had a long record. He studied at UCLA and earned an MBA from Carnegie Mellon. He worked for Julian Robertson at Tiger Management, one of the most successful hedge funds of its era, and Robertson backed him to launch his own fund, Tiger Asia, which grew to more than $5 billion at its peak. In 2012, Tiger Asia admitted to illegally using inside information to trade Chinese bank stocks, and Hwang and the firm paid tens of millions of dollars in penalties. Hwang then closed Tiger Asia and opened Archegos to manage his own family’s money.88
According to the SEC, between March 2020 and March 2021 the value of Archegos grew from about $1.5 billion to more than $36 billion, and its exposure to the stock market grew from about $10 billion to about $160 billion.89 How could a firm with $36 billion control $160 billion in stock?
The rest of this chapter is in the complete book.
It continues with the mechanism behind the loss and ends with The Pattern, plus the sources for every claim.
Notes and sources
- U.S. Attorney’s Office, Southern District of New York, “Founder and Head of Archegos Capital Management Bill Hwang Sentenced to 18 Years in Prison,” press release; “Archegos Capital Management,” Wikipedia. ↩
- “Bill Hwang,” Wikipedia, for his education, career, the Tiger Asia penalties (reported at $44 million paid to the SEC, with criminal and civil settlements totaling more than $60 million), and the founding of Archegos. ↩
- U.S. Securities and Exchange Commission, “SEC Charges Archegos and Its Founder with Massive Market Manipulation Scheme,” press release 2022-70, April 27, 2022. These figures were SEC allegations. ↩
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