The name Bill Hwang may not ring a bell for most people, but the low-profile hedge fund manager might just have earned a very unwanted distinction. Here is how industry expert Mike Novogratz sums it up to Bloomberg: "I've never seen anything like this—how quiet it was, how concentrated, and how fast it disappeared. This has to be one of the single greatest losses of personal wealth in history." The numbers are hard to fathom: The 57-year-old Hwang amassed a fortune of about $10 billion through his Archegos Capital Management investment firm. And as Bloomberg and the New York Times explain, he lost most of it in a matter of days late last month. The spectacular implosion has rippled through Wall Street, which "is sifting through the aftermath of the biggest single-firm meltdown since the financial crisis," per the Wall Street Journal.
The details get wonkish, but the above sources, as well as CNBC, have explainers. Hwang apparently flew under the radar of regulators because he set up his firm as what's known as a (supposedly small-scale) family office. In the Times' telling, Hwang "borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks," notable among them ViacomCBS. "But few knew about his total exposure, since the shares were mostly held through complex financial instruments, called derivatives, created by the banks." The problems for Archegos started when ViacomCBS's share price dropped from about $100 to $47 in a matter of days in late March. The Journal explains Archegos likely then unloaded other stock it had "to cushion the blow" to its portfolio, with those sales triggering a drop in the price of other stocks it held. "Suddenly, the collateral Archegos had given the banks was no longer enough to back the loans." (Want to read more on the story? Check out the Journal's report.)