Connect with us

Business

Bill Hwang of Archegos at center of massive margin call

Published

on

[ad_1]

Despite being a rarefied “Tiger cub,” Bill Hwang was not well known on Wall Street until he blew up in what might be the biggest margin call of all time, causing billions in losses.

Hwang, a former protege of noted Tiger Management founder Julian Robertson, ran family office Archegos Capital Management, which was so under-the-radar that he wasn’t even initially spotted as the cause of seismic shifts in trading that sent shares of Discovery down 21 percent on Friday.

Hwang has since emerged as the man at the center of a multibillion trading fiasco that is now expected to result in upward of $6 billion in losses for some of his trading partners, including Nomura and Credit Suisse.

Wall Streeters are admittedly stunned by the speed of the crash and the size of the damage left behind even as they brace for a potential battle with lawmakers over regulation of secretive family offices like the one run by Hwang.

“I’ve never seen anything like this — how quiet it was, how concentrated, and how fast it disappeared,” Mike Novogratz, a career macro investor and former partner at Goldman Sachs told Bloomberg News. “This has to be one of the single greatest losses of personal wealth in history.”

“You have to wonder who else is out there with one of these invisible fortunes,” Novogratz added. “The psychology of all that leverage with no risk management, it’s almost nihilism.”

Because Archegos is a family office and not a regulated bank or hedge fund, the details of its crash remain a mystery. What is known is that Hwang established Archegos after he shuttered his hedge funds — Tiger Asia Management and Tiger Asia Partners — following an SEC probe in 2012 alleging insider trading.

The firm then reportedly used derivatives contracts with brokers to supercharge its trades, structuring them in such a way that Archegos’s positions were placed on banks’ balance sheets.

Such contracts, which  don’t need to be disclosed, reportedly allowed Hwang to turn his net worth, estimated at around $10 billion, into trades worth an estimated $50 billion or more.

At some point last week the trades went awry, forcing his trading partners to start selling his positions to pay off his debts to them. It was a margin call turned bad.

Archegos finally broke it’s silence on Tuesday, saying: “This is a challenging time for the family office of Archegos Capital Management, our partners and employees. All plans are being discussed as Mr. Hwang and the team determine the best path forward.”

Sen. Elizabeth Warren, however, is already calling for greater scrutiny.

“Archegos’ meltdown had all the makings of a dangerous situation — largely unregulated hedge fund, opaque derivatives, trading in private dark pools, high leverage, and a trader who wriggled out of the SEC’s enforcement,” Warren tweeted Tuesday.

888 7th Ave, a building that reportedly houses Archegos Capital.
Archegos finally broke it’s silence on Tuesday, saying it was a “challenging time.”
REUTERS

“Regulators need to rely on more than luck to fend off risks to the financial system: we need transparency and strong oversight to ensure that the next hedge fund blowup doesn’t take the economy down with it,” she said.

Analysts have pegged Credit Suisse’s losses tied to Archegos, as well as the smaller collapse of financial startup Greensill from earlier this month, at $4 billion, threatening a year of profits tied to one month’s trading.  Nomura has pegged its losses at $2 billion.

Wells Fargo, by contrast, said it didn’t experience any losses, while Goldman Sachs has reportedly told investors that its losses will be immaterial.

Despite the chaos, Hwang’s former boss, founder of esteemed hedge fund Tiger Management, suggested he’s still rooting for the guy.

“I’m just very sad about it,” Robertson, 88, told Bloomberg in a Monday interview. “I’m a great fan of Bill, and it could probably happen to anyone. But I’m sorry it happened to Bill.”



[ad_2]

Source link

Continue Reading

Business

Glasses retailer Warby Parker eyeing IPO as soon as this year

Published

on

By

[ad_1]

Hipster glasses retailer Warby Parker is eyeing an initial public offering.

The 11-year-old business, which started out as an e-tailer before rolling out some 130 stores across the US, is considering an IPO as early as this year, Bloomberg reported on Wednesday.

The New York-based company has amassed a huge customer following by offering less expensive prescription glasses. Warby Parker raised $120 million in its most recent funding round giving it a $3 billion valuation, according to the report.

“We’ve always explored various financing opportunities in both the debt and equity markets,” the company said in a statement. “To date, we have successfully and deliberately raised money within the private market on favorable terms and have plenty of cash on our balance sheet. We’ll continue to make strategic decisions in line with our commitment to sustainable growth.”

Founded by college buddies Dave Gilboa and Neil Blumenthal, who met at the Wharton School at the University of Pennsylvania, Warby Parker has attracted some large investors including the mutual fund company, T. Rowe Price.

It turned it first profit in 2018, Gilboa told The New York Times at the time.

Warby Parker co-founder Neil Blumenthal
Warby Parker co-founder Neil Blumenthal
Brian Ach/Getty Images

Customers can get prescriptions through their apps on their smartphones and use cameras to pick out frames. The company also has an optical lab in Sloatsburg, NY where it produces lenses.

While Warby Parker is not the least expensive option, it beats Costco in a recent comparison with Costco charging as little a $126 for a pair of prescription glasses compared with Warby Parker’s least expensive pair at $95.

“As consumer walk into a LensCrafters or Sunglass Hut, they see 50 different brands of glasses but don’t realize that all those brands are owned by the same company that owns the store that they’re standing in, that probably owns the vision insurance plan they’r using to pay for those glasses,” Gilboa said in a recent CNBC interview.

“And so, it’s no surprise that a lot of those glasses are marked up 10 to 20 times what they cost to manufacture,” he said.

[ad_2]

Source link

Continue Reading

Business

Dogecoin hits new high boosted by DogeDay hashtags

Published

on

By

[ad_1]

Dogecoin prices hit an all-time high on Tuesday, with a market capitalization above $50 billion, after social media fans used hashtags to fuel a rally in the meme-based cryptocurrency.

An 8,000 percent price surge this year has seen Dogecoin, which was launched as a satirical critique of 2013′s cryptocurrency frenzy, overtake more widely-used cryptocurrencies like Tether to become the fifth-largest coin.

While Dogecoin, whose logo features a Shiba Inu dog at the center of the meme, a represents only a fraction of bitcoin’s $1 trillion value, it can be traded on crypto exchanges and more popular mainstream trading apps.

“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto start-up Valour, after Dogecoin’s price soared by more than five-fold in the last week to a record 42 cents, according to CoinMarketCap.

“A meme coin created as a joke for early crypto adopters whose community found that kind of thing to be fun, with now a new generation of retail investors for whom memes are a native language,” Biggs added.

Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.

“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.

Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.

The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.

“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.

Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.

“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.



[ad_2]

Source link

Continue Reading

Business

Amazon is opening a beauty salon in London

Published

on

By

[ad_1]

Amazon is opening a hair salon in London — its latest odd lurch into new businesses as the pandemic continues to fuel the e-commerce giant’s torrid growth.

The Amazon Salon, unveiled in a Tuesday blog post, will occupy a two-story, 1,500-square-foot space in Spitalfields, a trendy neighborhood in East London that is also home to Amazon’s UK headquarters, which houses about 5,000 employees.

Indeed, the new salon, which will be open seven days a week, initially will only cater to Amazon workers. Members of the public will be able to make bookings in “the coming weeks” by calling, emailing or visiting the salon, the company says.

“This will be an experiential venue where we showcase new products and technology,” Amazon said in a blog post on Tuesday, adding that there are no plans to open other salons.

That will include making Amazon’s Fire tablets available at each station, allowing customers to use augmented reality technology to see what they look like as a platinum blonde, brunette or with highlights, the company said.

The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
Amazon

The salon will also test new “point-and-learn” technology, where customers can point at a product they are interested in on a display shelf and the relevant information, including brand videos and educational content, will appear on a display screen.

[ad_2]

Source link

Continue Reading

Trending