How to Lose $20 Billion in Two Days

Bloomberg Originals・2 minutes read

Bill Hwang's rise to wealth through Archegos Capital Management ended in a $30 billion collapse due to ViacomCBS's stock decline, prompting calls for more transparency and oversight in family offices to prevent future disasters. His faith and leveraging of borrowed money played a significant role in his fearless investment approach, ultimately leading to the liquidation of his entire portfolio and significant losses for banks like Credit Suisse and Nomura.

Insights

  • Bill Hwang's rise from humble beginnings in South Korea to a Wall Street titan through Tiger Asia and later Archegos Capital Management showcases the journey of an individual who achieved remarkable success but faced a dramatic downfall due to risky investment strategies and reliance on borrowed funds.
  • The Archegos debacle, resulting in $30 billion in losses and impacting major banks like Credit Suisse and Nomura, underscores the dangers of leveraging borrowed money in financial markets and the necessity for enhanced transparency and disclosure regulations for family offices to prevent future catastrophic events, prompting regulatory bodies to reevaluate prime brokerage practices to mitigate systemic risks.

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Recent questions

  • Who is Bill Hwang?

    Bill Hwang is a former unknown figure turned wealthy investor.

  • What caused the downfall of Archegos?

    ViacomCBS's stock decline led to margin calls and liquidation.

  • How did Bill Hwang's faith influence his investments?

    Bill Hwang believed he was serving God's purpose through investments.

  • What impact did the Archegos collapse have on banks?

    Banks like Credit Suisse and Nomura faced significant losses.

  • Why did regulators scrutinize the prime brokerage business post-Archegos?

    Regulators emphasized the need for increased transparency and disclosure.

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Summary

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Bill Hwang: Rise, Fall, and Financial Disaster

  • Bill Hwang, a previously unknown figure, rose to become one of the world's wealthiest individuals, only to experience a rapid and significant downfall in 2021.
  • His firm, Archegos Capital Management, led to a financial disaster, resulting in $30 billion in losses within a week.
  • Bill Hwang's background is unique, coming from modest means in South Korea and eventually establishing himself in Wall Street through Tiger Asia, which was shut down due to insider trading accusations.
  • After the closure of Tiger Asia, Bill Hwang started Archegos as a family office, managing his own investments and achieving significant success through tech stock investments and leveraging borrowed money.
  • Bill Hwang's faith played a significant role in his investment decisions, believing he was advancing society on behalf of God and following a fearless investment approach.
  • The downfall of Archegos began with ViacomCBS's stock decline, leading to margin calls and demands for more collateral from banks, ultimately resulting in the liquidation of his entire portfolio.
  • The collapse of Archegos caused significant losses for banks like Credit Suisse and Nomura, totaling $30 billion, highlighting the risks associated with borrowed money in financial markets.
  • Bill Hwang's reliance on swaps allowed him to remain invisible in financial markets, benefiting from stock price movements without his name being publicly associated with the transactions.
  • The lack of financial disclosure surrounding Bill Hwang's current assets post-collapse raises questions about his remaining wealth and investments.
  • The Archegos incident has prompted regulators and politicians to scrutinize the prime brokerage business, emphasizing the need for increased transparency and disclosure rules for family offices to prevent similar financial disasters in the future.
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