Who is Bill Hwang, the 'Little Tiger' Behind the Massive Sell-off in the New York Stock Market?

Bloomberg Identifies Korean-American Hedge Fund Investor Bill Hwang
Nomura's $2 Billion Loss, Credit Suisse Announces 'Significant Loss'
IB-Related Stocks Decline in Pre-Market Trading on the 29th

Bill Hwang (Korean name Hwang Sung-guk), Chief Executive Officer (CEO) of Archegos Capital Management

[Asia Economy Reporter Eunbyeol Kim] On the 26th (local time), Bill Hwang (Korean name Hwang Seong-guk), a Korean-American hedge fund investor, was mentioned as the figure behind the large-scale block deal (massive trade) that took place on the U.S. New York Stock Exchange, drawing attention.

He executed high-risk investments by leveraging up to five times his assets, faced a margin call (a demand to replenish collateral when investment principal losses cause insufficient margin), and as a result, was forced to carry out block deals during trading hours, a scenario gaining traction.

On the 29th (local time), Bloomberg reported that Archegos Capital Management, led by Hwang, was behind the unprecedented block deal. Archegos Capital, based in New York, is a family office-type company that manages the wealth of individuals or families.

Hwang was born in Korea but immigrated to the U.S. as a second-generation Korean-American. He majored in economics at the University of California, Los Angeles (UCLA) and completed an MBA at Carnegie Mellon University.

He later returned to Korea and worked at Hyundai Securities, where he connected with Julian Robertson of the famous hedge fund Tiger Management and joined his company. After Robertson liquidated Tiger Management, the young managers and analysts who worked under him became independent and established new hedge funds. On Wall Street, those who left Tiger Management to start their own funds were nicknamed "Tiger Cubs."

Hwang also became independent and managed Tiger Asia Fund, a hedge fund specializing in Asian investments. However, in 2012, he was caught using insider information during investments in Chinese bank stocks and paid $60 million in settlement for criminal and civil lawsuits, after which he was expelled from the industry.

Bloomberg explained that Hwang did not stop investing afterward and established Archegos, a family office, to engage in even riskier investments. Bloomberg reported, "Family offices generally have no external investors, so they can take on higher-risk investments and are subject to less regulatory scrutiny," adding, "He had been betting on the rise of certain stocks through swap contracts to gain additional profits."

Instead of paying fixed fees, he bet on the rise of certain stocks through swap contracts that take profits and losses from the stock portfolio. Recently, as stock prices fell, the prices of those stocks dropped more than expected, causing losses. Unable to cover the margin call amount, he ultimately liquidated the positions he had bet on, resulting in massive sell-offs.

The scale of stock liquidation during last week's block deal was estimated at $20 billion, and especially, investment banks (IBs) that traded with Archegos reportedly seized and sold the stocks pledged as collateral by Archegos, flooding the market with supply.

Japanese IB Nomura Holdings announced that its U.S. subsidiary incurred about $2 billion in losses from transactions with local clients, and Bloomberg reported that these losses were related to dealings with Hwang. Swiss major bank Credit Suisse also announced losses in its positions related to U.S. hedge fund trades. Credit Suisse stated, "We cannot quantify the exact losses, but it could have a very significant impact on our first-quarter earnings."

Before the New York Stock Exchange opened that day, Goldman Sachs was down 3%, Credit Suisse fell 11.2%, and Nomura showed a 14.5% decline. In European markets, Deutsche Bank dropped 3.09%, and UBS shares fell 0.12%.

This content was produced with the assistance of AI translation services.