This content is from: Portfolio

The Numbers Are In: Big Banks Dumped 100 Million Shares of Bill Hwang’s Top Stocks During the First Quarter

Sales of GSX alone amounted to over $1 billion as Archegos Capital’s portfolio was liquidated.

The big banks that helped Bill Hwang’s Archegos Capital propel several stocks to new heights earlier this year dumped around 100 millionof those shares during the liquidation of his portfolio in late March, new filings show.

The banks sold more than 37 million shares of the Chinese online education company GSX Techedu during the first quarter, according to the latest 13F filings of publicly traded U.S. stocks by investment managers.   

Hwang’s liquidation also torpedoed stocks like ViacomCBS and Discovery, and banks dumped those shares too. They sold over 50 million shares of Viacom, and more than 21 million shares of Discovery.

It’s not clear that the bank selling is over either, as all three stocks have continued to fall since the end of the quarter.

But nowhere was Hwang’s effect as pronounced as it was in GSX, which had soared on the back of Hwang’s buying despite numerous short sellers claims that it was a fraud. 

GSX’s Top Eight Shareholders Were Banks

Hwang, a so-called Tiger cub who got his start with Julian Robertson’s Tiger Management, placed his bets via total return swaps that, as Institutional Investor has previously reported, were only disclosed as holdings of the banks that sold them to Hwang. 

By the end of 2020, the top eight shareholders of GSX were Hwang’s banks. (The next biggest holder was another Tiger Cub, Chase Coleman’s Tiger Global, which sold its entire stake of3 million shares during the first quarter.)

It’s not clear what the bank’s GSX losses amounted to during the Archegos liquidation, but at the date of the heaviest selling, March 29, the stock closed at $31.78. That would amount to almost $1.2 billion in sales had all those shares been sold at that time. The losses could have been considerably higher for some, as the stock had risen as high as $149 earlier in the year.

Goldman Dumped 17 Million GSX Shares

The biggest sales came from Goldman Sachs, which was widely reported to be the first bank to unload the stocks it beneficially owned for Hwang. Goldman dumped 82 percent of its GSX position during the quarter. 

At the end of 2020 Goldman had been the largest owner of GSX shares, with over 20 million shares, but it had sold almost 17 million by March 31. By that time, it had slid to ninth place among GSX owners.

Nomura Holdings sold 77 percent of its GSX stake, or8.25 million shares, dropping from fifth place to thirteenth. It still had 2.4 million shares at the end of the quarter.

Meanwhile, Morgan Stanley, formerly the second-largest owner of GSX stock, sold 53 percent of its shares, or 7.8 million. It remained the third-largest owner, with 6.8 million shares, at the end of the quarter.

The next largest seller was UBS, which sold 31.5 percent of its GSX stock and owned7.8 million at the end of the quarter. But because Goldman and Morgan Stanley dumped such big stakes, UBS ended up in second place as of March 31.

Credit Suisse appears to be the big loser. By the end of March, it had managed to unload only 6 percent of its stake, or 700,904 shares. That gave it the distinction of becoming the top owner of GSX, with 10.8 million shares.

Since the end of March, GSX shares have continued their slide. As of Friday afternoon they were down another 35 percent, trading around $22 per share.

Morgan Stanley Was the Biggest Viacom Seller

Elsewhere Hwang’s apparent ownership via the banks was less concentrated, but still prominent.

Viacom’s top holders were Vanguard and Blackrock as of March 31. But banks that wrote swaps for Hwang also ranked among some of the biggest owners. 

The biggest seller during the quarter was Morgan Stanley, which dumped 86 percent of its stake, or 37 million shares. It now owns only 6 million shares. It was the third-biggest owner during the prior quarter.

Goldman sold 26 percent, or 2.7 million shares, to own 7.6 million at the end of March. 

Credit Suisse, now the fourth-largest owner of Viacom, dumped 24.7 percentof its Viacom holdings, or almost 9 million shares. It still owns over 27 million shares.

Nomura, now Viacom’s fifth-largest shareholder, sold only 4.6 percent of its Viacom stake, or 948,298 shares. It and now owns about 19.5 million shares.

Viacom has not yet recovered from the plunge. As of Thursday, shares were still down about 8percentsince March.

Discovery was another big name hurt by the liquidation, with Nomura and Morgan Stanley ranking as the biggest sellers during the quarter. Nomura sold its entire 7.6 million stake, while Morgan Stanley dumped 73 percent, or almost 7 million shares, to end the quarter owning 2.5 million shares.

Credit Suisse sold 33 percent, or 4.9 million shares, leaving it with 9.8 million. It is now the fourth-largest owner of Discovery shares.

Meanwhile Goldman unloaded 61.6 percent of its shares, or 1.7 million, leaving it with 1 million shares.

As of Thursday, Discovery was down another 27 percent since the end of March.

Related Content