Tag: Archegos

Archegos Founder Bill Hwang Has Been Arrested with 11 Criminal Counts

Bill Hwang has been arrested with 11 criminal counts
Market News: Bill Hwang has been arrested for market manipulation

Archegos founder Bill Hwang and CFO Patrick Halligan were arrested and charged with 11 criminal counts.

Federal prosecutors said Bill Hwang used Archegos as an “instrument of market manipulation and fraud.”

The hedge fund managed to inflate its portfolio from $1.5 billion to $35 billion before its collapse, causing massive losses for banks and investors.

Let’s break down everything that’s happening, together.

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Bill Hwang and Patrick Halligan arrested for market manipulation

Bill Hwang gets arrested

Before he lost it all, Bill Hwang was worth $20 billion and was known as one of the greatest traders you could have heard of.

Hwang’s $20 billion net worth was almost as liquid as a government stimulus check.

And then, in two short days, it was gone.

The sudden implosion of Hwang’s Archegos Capital Management in late March is one of the most spectacular failures in modern financial history.

No individual has lost so much money so quickly, via Bloomberg.

Bill Hwang’s wealth briefly peaked at $30 billion.

He used swaps, a type of derivative that gives an investor exposure to the gains or losses in an underlying asset without owning it directly. 

Another leverage tool hedge funds have access to, which concealed both his identity and size of his positions.

You’d think a regulatory agency would exist right?

Don’t count on the SEC.

On March 26th, investors learned that Archegos had defaulted on loans used to build a $100 billion portfolio.

Credit Suisse, one of Bill Hwang’s lenders, lost $4.7 billion.

How did Archegos manipulate the stock market?

Bill Hwang’s Archegos essentially used a ton of leverage to pump stock prices up.

As the price of stocks rose, they would buy more shares with those profits, and continue to borrow money from the bank to further pump the prices.

Archegos only held a small portfolio consisting of a few selected companies, of which whom they had many shares of.

When a few companies’ share prices began to plummet, Hwang’s entire empire crumbled almost instantaneously.

As the value of their portfolio sank, the hedge fund was forced to liquidate even more assets due to margin calls, further escalating the situation, and losses.

Archegos was forced to default, causing investors and banks billions of dollars.

Bill Hwang already had a troubled history with hedge fund Tiger Asia, who was shut down by the U.S. for insider trading and for manipulating Chinese stocks.

Still, Bloomberg vouches for Bill Hwang publishing an article he has done nothing wrong.

What was Bill Hwang charged with?

Hwang and Chief Financial Officer Patrick Halligan were charged with 11 criminal counts overall, including racketeering conspiracy, market manipulation, wire fraud and securities fraud. 

Hwang was arrested early Wednesday and was expected to appear in Manhattan federal court later in the day. 

This is a developing story.

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Tiger Global Hedge Fund Sinks a Massive 34% This Year

Tiger Global Hedge Fund Sings 34%
From left, Chase Coleman III, Scott Shleifer, and John Curtius. Photos by Bloomberg. Art by Mike Sullivan, Edited by Frank Nez

Tiger Global has an AUM of $95 billion, that’s $57 billion more than Citadel’s AUM of approximately $38 billion.

The monster hedge fund is managed by Chase Coleman, 46, who was up until now considered to be a hedge fund legend.

Tiger Global Management had a rough 2021 according to sources and losses are piling up in 2022.

Hedge funds seem to be in a lot of distress recently.

Let’s break it down together.

franknez.com

Welcome to Franknez.com – if you haven’t joined the newsletter, be sure to do that below. I’m publishing market news and updates daily.

Let’s dive right into it!

Join the newsletter to become part of an activist group fighting for market transparency!

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Hedge funds face turbulence in 2022

Tiger Global

This year we’ve seen many hedge funds face massive adversity.

Hedge funds have been dealing with significant losses this year, probes from the DOJ, and scrutiny from retail investors.

Hedge fund managers once deemed leaders in their industry now have their reputation on the line.

Gabe Plotkin was named a great trader by Citadel’s Ken Griffin although the hedge fund had to bail Melvin Capital out due to the ‘meme stock’ frenzy.

Citadel pulled $2 billion from Melvin Capital in recent months.

Chase Coleman is in a sticky situation too.

Tiger Global Management is down 34% this year through March.

The speed of the reversal has shocked just about everyone, considering that Coleman is celebrated as one of his generation’s brightest stars, a standout among the elite money managers mentored by the famed Julian Robertson, Bloomberg.

Tiger Global Management treads rocky waters

The bad run has been fueled by massive bets on stocks that have been hammered, such as fast-growing tech companies in the U.S and China.

Tiger Global hedge fund lost 7% last year, its first annual drop since 2016 and its third total, according to Bloomberg.

Tiger Global told clients in a letter that it’s opening up both its hedge and long funds to a limited amount of capital from existing investors to bolster positions in stocks that underperformed

However, we see the results in the first quarter of 2022 has not been what the hedge fund anticipated.

Built by Coleman and his partner Scott Shleifer, Tiger Global has long been seen as a throwback to the industry’s glory years, when double-digit returns were the norm and ‘hotshot managers’ unerringly backed winning companies and shorted the losers.

Across the firm’s $35 billion in funds focused on public companies, this year’s losses have triggered a more than $10 billion hit to investors that include foundations, endowments and pension funds, as well as Tiger Global insiders.

Coleman’s personal wealth has dropped by $1.3 billion, according to calculations by the Bloomberg Billionaires Index. 

Coleman’s hedge fund headed towards worst year

Tiger Global hedge fund may be on track for one of its worst years yet.

Tiger Global Hedge Fund

The blue in this chart indicates the hedge fund’s losses in 2008, 2016, 2021, and 2022.

The firm’s first serious bump was during the 2008 financial crisis, when it lost 26%, followed by a 1% gain the next year.

While markets were already jittery this year due to high inflation and expectations of rate hikes, Russia’s war against Ukraine triggered a flight from risk. 

The Russia-Ukraine conflict has affected every corner of the financial sector.

Earlier we saw Citadel and other hedge funds faced default on Russian bonds from tech company Yandex.

But Tiger Global Management isn’t the only hedge fund struggling.

Investors are pulling out $250 million from Coatue Management and the hedge fund cannot meet its investors demands.

We’re beginning to see this domino effect of losses begin to catch up to even the biggest hedge funds in the world.

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