The man at the heart of the Archegos fiasco is a ‘Tiger cub’ and devout Christian who pleaded guilty to insider trading. Meet Bill Hwang.

Bill Hwang
Archegos co-CEO Bill Hwang.

  • Bill Hwang’s Archegos fund was reportedly hit by margin calls, sparking a brutal sell-off.
  • The “Tiger cub” is deeply religious and believes he’s doing God’s work by investing.
  • Hwang previously pleaded guilty to insider trading and was slapped with a trading ban.
  • See more stories on Insider’s business page.

Bill Hwang is the talk of the financial world after several Wall Street banks reportedly slapped his family office with margin calls last week, declared him in default when he didn’t pay up, and executed a $20 billion fire sale of his positions that hammered stocks including ViacomCBS and Discovery.

The deeply religious founder and co-CEO of Archegos Capital Management has run into trouble before. He pleaded guilty to insider trading in 2012, forked over $60 million to settle related charges, and closed down his fund. He was also banned from trading securities in Hong Kong for four years in 2014.

Here’s a quick look at Hwang’s life so far.

A religious upbringing

Hwang was born in the mid-1960s and raised as a devout Christian. His father was a church pastor and his mother served as a missionary in Mexico, he said in a 2018 interview promoting communal bible readings.

The fund manager smiles a lot, cracks jokes, and comes across as humble in the interview. He doesn’t take himself too seriously, but clearly feels a burning desire to spread the gospel.

Faith has guided Hwang’s entire career. He sees investing as his calling, and believes God “loves” when he backs companies that contribute to humanity’s progress. “It’s not all about money,” he said in another 2018 interview.

Hwang gave the example of one of his larger investments, Linkedin. He suggested that God loves the social-media group’s goal of helping people to find jobs and realize their potential.

“I’m like a little child looking for what can I do today, where can I invest, to please our God,” he said. Inspired by Jesus Christ tirelessly working for his father, Hwang added, “I’m not going to retire until he pulls me back.”

Hwang is involved in several Christian organizations. He’s the cofounder of the Grace and Mercy Foundation, a contributor to Focus on the Family, and a trustee of the Fuller Theology Seminar, the three groups’ websites show.

Becoming a tiger cub

Hwang holds an economics degree from UCLA and a MBA from Carnegie Mellon, an online biography shows. He worked as a stock salesperson at Peregrine Securities and Hyundia Securities early in his career, until he caught the eye of one of his clients, Julian Robertson. He soon went to work under the veteran investor at his storied hedge fund, Tiger Management, and became one of his protégés.

Robertson closed his fund in 2000, but handed Hwang about $25 million to launch his own fund, Tiger Asia Management. One of several “Tiger cubs,” Hwang grew his firm’s assets to over $5 billion at its peak, The Wall Street Journal says, and delivered an annualized return of 16%, according to Bloomberg.

However, Hwang shuttered the fund in 2012 after pleading guilty to insider trading in federal court that year. He paid a total of $60 million to settle civil and criminal charges of manipulating Chinese stocks, and his fund forfeited about $16 million in related profits.

Going private

Hwang converted Tiger Asia into a family office, Archegos, in 2013. The switch meant he no longer managed any outside money, slashing the regulatory disclosures required of him.

Archegos roped in several major banks to place leveraged bets on multiple stocks. However, the markets turned against the fund last week, prompting brokers to issue “margin calls” or demand more money as collateral. When Hwang failed to comply, the banks liquidated over $20 billion worth of his positions to recover their money, sparking a brutal sell-off across a dozen stocks.

The full scale of the fallout from Archegos blowing up won’t be known for a while. Yet it’s safe to say that Hwang is at the center of another fiasco that he would have preferred to avoid.

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US stocks fall after a $30 billion wave of selling tied to hedge-fund Archegos rattles traders

NYSE trader worried
  • US stocks fell on Monday as traders braced for the after-effects of a selling-spree tied to hedge fund Archegos.
  • Archegos is the family office of former Tiger Management trader Bill Hwang.
  • Nomura and Credit Suisse shares tumbled after the banks warned of large losses linked to the fire-sale.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US futures edged lower on Monday after an extraordinary $30 billion selling-spree by the hedge fund of Tiger Management trader Bill Hwang rattled investors around the world, while the refloating of a giant container ship stuck in the Suez Canal weighed on oil.

Futures on the Dow Jones, S&P 500, and Nasdaq fell between 0.4% and 0.6%, suggesting a lower open for US indices at the start of trading later in the day.

The sell-off appears to have been caused by Archegos Capital, run by the South Korean billionaire Hwang, which uses a long-short equity strategy that reduces exposure to movements in the overall market.

Typically under such a strategy, if long positions decline in value by more than the shorts, this puts them in a risky situation because they won’t have enough money to cover their shorts. The fund’s brokers, including Goldman Sachs and Morgan Stanley, realized this was about to happen, and so initiated margin calls. When Archegos couldn’t make them, the banks then forcibly sold off large holdings in the fund to stop the bleed.

Archegos had large long positions in Chinese and US stocks, including media firm ViacomCBS and Discovery. Both stocks saw their largest-ever daily declines on Friday, with each falling by more than 27%. Traders are now scrambling to figure out whether these fire-sales are over and seeing how much more the hedge fund has to offload.

A number of banking stocks tumbled after Nomura and Credit Suisse warned of large losses following Archegos’ extraordinary fire-sale. Nomura fell 16%, Credit Suisse fell 9.5%, Deutsche Bank fell 5%, and UBS fell 4%.

Wall Street’s VIX Index – popularly known as the ‘fear gauge’ – rose 10% to 20.78 on Monday, signalling a rise in the market’s expectations of volatility in the coming 30 days. The higher the index, the more nervousness is in the market.

Separately in the US, President Joe Biden is due to deliver a speech on Wednesday unveiling his new $3 trillion infrastructure plan that is part of his “Build Back Better” agenda.

Investors are still worried over concerns of rising number of COVID-19 cases in multiple regions in Europe, raising the prospect of further restrictions and curbs on economic activity. The continent is faced with a potential third wave driven by new variants. German Chancellor Angela Merkel said in a Sunday interview she would use federal law to take control of the pandemic response.

Lockdown restrictions in the UK have now eased slightly as groups of up to six people are allowed to meet outdoors. But markets displayed a lack of enthusiasm. “This early reticence may be tied to the Archegos Capital situation,” Connor Campbell, a financial analyst at SpreadEx, said. It remains to be seen which companies might be the next to announce they too have been stung, he said.

The UK’s FTSE 100 fell 0.4%, the Euro Stoxx 50 rose 0.1%, and Germany’s DAX rose 0.2%. The VDAX-New, the German equivalent of the VIX, was last up nearly 6% on the day.

Oil prices fell after the Ever Given container ship blocking the Suez Canal was successfully refloated, according to Inchcape Shipping Services. The ship, which has been stuck for almost a week, is currently being secured. Brent crude futures fell 0.6% to $63.99, while West Texas Intermediate dropped 1.2% to $60.27. The vessel, which is said to be longer than the Eiffel Tower, had obstructed the canal – one of the world’s most important shipping passages – since Tuesday.

Asian equity markets rose despite Chinese geopolitical worries and the forced liquidations on Wall Street, perhaps from the boost that the container ship has been refloated. Roughly 12% of total global trade passes through the canal, a large portion of that is from Asia’s big exporters to their customers in Europe. China’s Shanghai Composite rose 0.5%, Japan’s Nikkei rose 0.7%, and Hong Kong’s Hang Seng was about flat.

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