One of World's Greatest Hidden Fortunes Is Wiped Out in Days

[Warpy]

Hwang and his private investment firm, Archegos Capital Management, are now at the center of one of the biggest margin calls of all time -- a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink.

Hwang’s most recent ascent can be pieced together from stocks dumped by banks in recent days -- ViacomCBS Inc., Discovery Inc., GSX Techedu Inc., Baidu Inc. -- all of which had soared this year, sometimes confounding traders who couldn’t fathom why.

One part of Hwang’s portfolio, which has been traded in blocks since Friday by Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co., was worth almost $40 billion last week. Bankers reckon that Archegos’s net capital -- essentially Hwang’s wealth -- had reached north of $10 billion. And as disposals keep emerging, estimates of his firm’s total positions keep climbing: tens of billions, $50 billion, even more than $100 billion.

It evaporated in mere days.

https://www.bloomberg.com/news/articles/2021-03-29/one-of-world-s-greatest-hidden-fortunes-is-wiped-out-in-days?utm_source=pocket-newtab

This is such a weird story. I've been following it for a few days. The article outlines part of what happened: Hwang was bounced out of the hedge fund industry for playing fast and loose, then set up a company that used every trick in the book to dodge SEC scrutiny, then played every game in the book to inflate its paper worth. It looks like Goldman Sachs was initially the one to pull the plug.

It shows how quickly some of these fast money billion dollar fortunes can go "poof" when somebody notices how much debt is propping them up. I sincerely doubt Hwang is unique, although his degree of brass might be.

The SEC needs to hire him on its forensic team since he knows all the tricks.

[samnsara]

1. poof...thats gotta hurt.

[empedocles]

2. Wild times!

[UpInArms]

3. Arch Egos

How quickly they get their arses handed to them.

[3Hotdogs]

4. Besides Hwang, who gets hurt? With Maidoff, we had the names. ... even got a movie....

Who are Hwang's marks?

[Warpy]

5. Well, theoretically, I did

because dumping all that stock affected some of the prices of the stuff I've got.

I say theoretically because I've never paid much attention to net worth on paper. I'm not going to sell any time soon and I don't need to use it to leverage debt. Income is what I look at, and that has actually gone up a bit.

[3Hotdogs]

6. See? That's what's wrong wit'cha.

Only little people don't leverage debt.

You'll never have Michael Douglas do a movie about you.

[PatrickforB]

7. Hwang and the rest of these lizards are just parasites.

They don't produce a thing, and whoever had invested in Hwang's fund was wiped out.

We have to pull the fangs of these Wall Street people by insisting on getting rid of the doctrine of shareholder primacy, and adopting a stakeholder model for corporate conduct.

And, of course, a progressive tax model, complete with wealth tax and per-transaction tax on equity trades.

Geez.

[Warpy]

8. If you read the article, this was basically a family operation

and I think the imaginary fortune was all Hwang's.

However, yes, these guys are parasites, sucking money out of the system and providing nothing but numbers for the already stupidly rich and most of them are doing it on borrowed stock. The Game Stop fiasco nicely exposed that part.

This particular fiasco is exposing just how quickly these billion dollar hedge funds can evaporate.

Your prescription is accurate, but I think we'll most likely need a big crash to bust the billionaires back to mere millionaires before any of it is permitted to happen.

Speculative mania goeth before a crash. This tells you about some of it:

I started reading up on SPACs and NFTs and it's quite a rabbit hole, one with flashing neon red "SCAM" at the entrance. People who have more money than brains seem to be desperate for bragging rights and the prospect of maybe someday a financial killing.

[PatrickforB]

9. Thanks for reply!

Yeah, the bubble thing is very real. Sigh. Greed is such an illusion. This earth could be such a wonderful, warm, hospitable, healthy place for all life if we could just shed the greed.

I know - that is unrealistic, almost utopian. What can I say? I have never, ever really fit in...