TYLER DURDEN, 31 March 2021
As more details from the now infamous debacle surrounding Tiger cub Archegos, whose massive derivative-based exposures spilled out into the open and transformed into the biggest and most painful rolling margin call to hit Wall Street since Lehman, we now know that at least six Prime Brokers scrambled to unwind the biggest hedge fund blowup since LTCM without hammering the overall market.
To “make a living in this business… be first, be smarter, or cheat…”
We previously noted that Morgan Stanley and Goldman Sachs were the “first” to break ranks and rejected the efforts of Credit Suisse’s emissaries who tried to create consensus to unwind the positions without sparking a panic.
As we now also know, Nomura and Credit Suisse which dithered and were unsure what to do, seeing their stock crushed and their counterparty risk hedge premia explode higher..
And today we get confirmation that Deutsche Bank was among the early game-theoretical defectors, as Bloomberg reports the big German bank sold about $4 billion of holdings seized in the implosion of Archegos Capital Management in one large private deal on Friday.
It’s unclear whether Deutsche Bank’s sale was to one firm or a consortium. If it was a single buyer, it would be the largest known transaction to emerge from the messy unwind of Hwang’s huge portfolio.
It also brings to almost $30 billion the known value of Archegos investments that have been liquidated so far.