Bloomberg identified it as Archegos Capital Management, a New York-based family office that manages the wealth of Bill Hwang, a former hedge fund manager at Tiger Asia Management who was found guilty of wire fraud in 2012.
Investment banks that provided services to Archegos, such as Goldman Sachs and Morgan Stanley, dumped huge quantities of stocks including ViacomCBS and Chinese tech companies on Friday.
Archegos was forced into the stock sales, worth about $20 billion, after bets the fund made moved the wrong way, Bloomberg reported. Shares in ViacomCBS, one of Archegos’s positions, dropped 23 percent on Wednesday last week. On Friday, the share price plummeted a further 27 percent as the investment banks liquidated positions. ViacomCBS shares fell about 3 percent in early trading on Monday.
Shares in Goldman Sachs and Morgan Stanley opened about 2-3 percent lower on Monday. Shares in Deutsche Bank fell more than 3 percent, after it was said to also have some exposure to Archegos.
Credit Suisse has already been roiled this month by the collapse of Greensill Capital, a London-based financial firm it sold funds for, and to whom it extended loans of $140 million. The Swiss bank told investors it would probably report some losses on the loan.
“A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” the Swiss bank said on Monday. It did not yet know the exact size of the loss from exiting its positions but “it could be highly significant and material to our first quarter results,” the statement said.
Elsewhere in markets
Oil prices bounced around on Monday following news about the fate of the container ship that had been blocking the Suez Canal for nearly week. The ship was finally freed on Monday, raising the prospect that trade flows would be restored, but authorities said more work was needed before maritime traffic could restart.
Yields on 10-year Treasury notes fell 2 basis points, or 0.02 percentage point, to 1.65 percent.