{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"Curiosity Chronicle","title":"The Archegos Saga","html":"","width":"100%","height":180,"duration":383,"description":"The story of the last few weeks in finance has been the secretive rise and rapid downfall of Archegos Capital Management.A thread on the underlying mechanics of the Archegos saga and how a $20 billion fortune vanished into thin air... First, let’s set the stage.Archegos Capital Management is the family office of Bill Hwang, a former prodigy of hedge fund legend Julian Robertson.Hwang previously built Tiger Asia Management - a so-called “Tiger Cub” fund due to its lineage from Robertson’s Tiger Management.Bill Hwang grew Tiger Asia Management into a highly successful hedge fund, reaching ~$10 billion in assets under management in the 2000s.He was a bit of an anomaly in the world of high finance - known as a devout Christian with simple tastes (seriously, he drives a Hyundai!).After winding down Tiger Asia Management following a few bad bets and a run-in with regulators, Hwang opened Archegos (a Greek word for “one who leads the way”) in 2013 with ~$200 million in personal capital.He began doing what he does best - trading and investing.Going long innovation, he scored big wins on stocks like Netflix and Amazon.Soon, Archegos’ capital had grown to $4 billion.But Hwang, a private and deeply religious man, was not one for the spotlight. He just appears to have genuinely enjoyed his work.Fortunately, there were features of the strategy that allowed the firm to remain anonymous.As a family office, it was not required to disclose its holdings on a 13F filing (as with all hedge funds).It used swap contracts to quietly amass large, leveraged positions.The 13F loophole is self-explanatory: Archegos was a family office with a specific structure, so it did not have to file quarterly 13Fs disclosing its holdings.Swap contracts (“swaps”) are a bit more complicated. Let’s simplify them here for everyone to understand...In simple terms, a swap contract is an agreement between two parties to exchange (swap!) the values or cash flows of one asset for another.Archegos entered...","thumbnail_url":"https://img.transistorcdn.com/4nO1oo__jWE5MpZsRfwEO_6q4py16kwv8WwJybce4FA/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS9zaG93/LzMxOTcwLzE2NzEx/MzU5MDctYXJ0d29y/ay5qcGc.webp","thumbnail_width":300,"thumbnail_height":300}