What is Archegos Capital, the firm that liquidated 30,000 million pesos and shook the markets?

Until recently, the Archegos Capital Management website, the firm behind a liquidation sale of almost 30 billion dollars that is hitting the shares worldwide, contained a giant image of Central Park Park.The view shown on the Archegos website was an appropriate tribute to the views of its offices at the top of a Manhattan skyscraper on 57th Street, until the site was shot down when the company was settled.

Archegos was a giant in the financial markets of the United States, apparently had tens of billions of dollars in values, including mass exhibitions to companies such as Viacom CBS, Discovery Communications and Baidu.He negotiated with the largest brokerage of Wall Street and was based in a expensive direction that housed many powerful investment firms.But when it came to routine financial disseminations, Archegos was practically non -existent.

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Forbes searched for a trace of Archegos in the storage of stock files of the stock exchange and values (SEC), called electronic data analysis, analysis and recovery (known as EDGAR in English).Surprisingly, almost nothing arose.

Edgar is sunlight in US financial markets.Companies must disseminate material information in files loaded on the site.Corporate connoisseurs and large investment funds report on their participations and any change in their positioning.Most public capital increases are documented in Edgar, and all kinds of entities are revealed in it.Edgar is a treasure of information.

That is, except when it comes to Archegos and its founder and co-zo Sung Kook (Bill) Hwang Forbes could not find a single presentation of Archegos, despite its positioning the size of a whale that banks such as Goldman Sachs and Morgan Stanleynow they are in the process of getting rid.It would have been good to know about Hwang and the apparently impressive risks that he and his company were taking.

Educated in the United States, Hwang made a name in the 1990s and early 2000s in the famous Tiger Management Coverage Fund by Julian Robertson.After building a curriculum in Tiger, he separated and founded his own coverage fund called Tiger Asia in 2001, supposedly with Robertson's support.

Hwang's firm was a “tiger puppy”, a term that connoisseurs use to describe the dozen coverage funds with DNA that goes back to Robertson's legendary firm.Tiger Asia became one of the largest investors in Asian financial markets, managing billions of dollars in assets at its maximum point.Then everything collapsed.

In 2012, the stock exchange and securities commission presented a case of market manipulation and use of privileged information against Hwang and Tiger Asia.The firm and its founder agreed to pay 44 million dollars in total fines and penalties.Tiger Asia Management, the management company, admitted to having violated the law.The SEC's investigation effectively put Tiger Asia to bankruptcy.

Then, in 2013, HWang turned the company into a “family office”, created to administer its private assets.That family office is Archeos Capital Management, which seems to be huge, not only in size and scope, but also in appetite for risk.However, her family office condition exempts her from the requirements for the presentation of reports before the stock exchange and values commission for investment companies.

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Historically, family offices were not obliged to register with the SEC according to the Investment Advisors Law of 1940 due to an exemption granted to companies with less than 15 clients.When the Dodd-Frank law was promulgated in 2010, the exemption of 15 clients was eliminated, which drastically increased the transparency of coverage funds and private capital companies.The law included a provision that explicitly exempts the family offices for reporting requirements.Therefore, as a family office, Hwang's firm was not obliged to reveal much.

But billionaires who have turned their coverage funds into family offices still report a lot.Wall Street legends such as George Soros, Leon Cooperman, John Paulson, Michael Platt and David Tepper report on their participations in the United States shares.In quarterly presentations of values.Its shares of shares and derived from negotiable shares in stock market exceed 100 million dollars, the threshold that investment companies must reveal their participations in presentations 13-F.

However, it seems that HWANG's family office had no dissemination obligations according to the information requirements of the SEC.That is despite possessing tens of billions of dollars in exposure to companies that quote on the United States bags.

Archegos seems to have built its position almost exclusively through exchange operations and its relationship with a handful of stock market houses.Based on Bloomberg and the Wall Street Journal, Hwang's team supported Swaps to build their positions such as Viacomcbs.

Swaps are an effective tool to assume large risks without revealing much.Total profitability swaps, for example, allow an investor to negotiate an exchange with its corridor to possess the total performance of an action, or basket of shares, for a predetermined size and period of time, and at an agreed cost agreed.They require a fraction of cash when buying an action directly and are discreet.Swaps are not included in the 13-F information requirements of the SEC, so Hwang's huge portfolio was mostly hidden from view."It seems that they obtained most, but all their exposure to the various values through SWAP agreements," says Robert Willens, expert in tax law and values.

A look at the greatest shareholders of Viacomcbs reveals a rarity: Morgan Stanley, Credit Suisse, Nomura, UBS and Goldman Sachs are mass shareholders.In fact, the only most important headlines are the Blackrock and Vanguard indexed fund giants.The same names appear for GSX Techedu, a Chinese education company that is the objective of short vendors, such as Muddy Waters from Carson Block.

On Twitter, Block said he believed that Archegos and a fund founded by a former investor in Tiger Asia were greatly the actions that are now collapsing.These stock market houses also occupy an outstanding place as headlines of Discovery Communications.The three companies collapsed between 27% and 41% since Friday, since runners allegedly got rid of Archegos.

Bloomberg reported that Goldman Sachs felt uncomfortable working with Hwang after his problems with the SEC, but finally yielded when the business went to competitors on the other side of the street.Now the shareholders of Goldman Sachs, Morgan Stanley and other slides expect the details of the losses suffered by their mysterious client.The news does not seem particularly good.

In a statement from Sunday night, the Japanese broker Nomura revealed that she has a claim of 2 billion dollars against a single client due to commercial losses.Revelation caused their actions to sink into night operations.On Monday morning, Credit Suisse warned his shareholders that "an important coverage fund with headquarters in the United States breached the margin calls made last week by Credit suisse and some other banks" and added "the impact could be veryimportant and material for our first quarter of results ".

The questions that arise from the sale of Archegos are important: Do the big bag houses of Wall Street perform a real risk management before implosion?Were there any concern about the intensive use of swaps by Archegos and the opacity of its positioning, or for the risks of offering billions of dollars in bilateral transactions to an entity with an injured history on issues such as market manipulation andThe use of privileged information?Did the high rates of the complex SWAP operations and loan agreements that generate performance drowned the concerns of compliance officers and risk administrators?

The most disconcerting of everything, how could a company based in New York with such a surprisingly large portfolio and an appetite for the risk not reveal almost any financial information?