Goldman Sachs Group Inc. and Morgan Stanley were quick to move big blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge funds losses emerged, according to people with understanding of the deals. The technique helped restrict the U.S. companies losses in last weeks epic stock liquidation, they said.
Losses at Archegos, run by former Tiger Asia manager Bill Hwang, have triggered the liquidation in excess of $30 billion in value. Banks were continuing to offer blocks of stocks linked to Archegos Monday, traders said.
“This is a challenging time for the household office of Archegos Capital Management, our partners and workers. All strategies are being gone over as Mr. Hwang and the team determine the very best course forward,” a business spokesperson said in a statement Monday evening.
Archegos took huge, focused positions in companies and held some positions in a mix of stock and swaps. Swaps are a typical arrangement in which a trader gets access to the returns generated by a portfolio of shares or other assets in exchange for a fee.
Losses threatened to overflow into the so-called prime brokerage businesses that have been handling the firms trading. The group of big Wall Street banks includes Goldman, Morgan, Credit Suisse Group AG, Nomura Holdings Inc., UBS Group AG and Deutsche Bank AG, said people acquainted with the companys trading.