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Shuli Ren

The Banks at the Wrong End of the Tiger Cub’s Paws

Goldman Sachs, Morgan Stanley and others are rushing to liquidate Bill Hwang’s heavily leveraged positions. Those who move fastest and sell first will have the best recovery rates.

Bill Hwang.

Bill Hwang.

Photographer: Emile Wamsteker

Hedge funds are having a tough 2021. In January, retail investors successfully short squeezed top-tier ones such as Melvin Capital Management. Just last Friday, we got an “unprecedented” margin call on New York-based Archegos Capital Management, a family office run by Bill Hwang, a protege of Julian Robertson’s legendary Tiger Management and one of the so-called Tiger cubs. Now, the big question is who will absorb billions of dollars in trading losses. 

Hwang, who was also margin called in 2008 after the collapse of Lehman Brothers Holdings Inc., unleashed chaos again on Wall Street. Heavily leveraged, his assets are anywhere from $5 billion to $10 billion, but his total positions may have topped $50 billion, Bloomberg News reported. Last Friday, two U.S. banks, Morgan Stanley and Goldman Sachs Group Inc., liquidated over $20 billion of his holdings