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Here’s why Wall Street is terrified of Tiger Cub’s surprise portfolio

The blue burst of whale investor Bill Hwang’s investment portfolio has Wall Street looking over both shoulders.

“If there is one thing we have learned in the last 12 years (since the financial crisis), it is that large positions held by large investment investors tend to be crowded positions. In other words, the concern right now is that there may be other leveraged players in the global system who have very similar positions, ”warned Miller Tabak’s chief marketing strategist Matt Maley.

“Therefore, ‘forced sales’ that took place late last week could spread and become even more pronounced. Of course, that would not be good for a stock market that is already one of the most expensive in history.”


How long Wall Street stays on standby due to the Hwang rash is unclear. But the anxiety on the street is palpable, and with good reason.

Hwang’s Archegos Capital Management experienced forced closure of $ 30 billion on Friday, according to Wall Street Journal. Sharp sales in the high-flying shares of Discovery, ViacomCBS, GSX Techedu and Baidu (allegedly the favorites of Hwang, known as ‘Tiger Cub’ as he is a disciple of the legendary hedge fund manager Julian Robertson from Tiger Management) and others were seen on Friday.

Bill Hwang

Bill Hwang

ViacomCBS shares alone crashed almost 28% on the session alone, continuing the slide from earlier in the week on news of a new share offering (which reportedly first put pressure on Hwang).

The selling pressure persisted in all four of these shares on Monday. Banks that allegedly did business with Hwang – Goldman Sachs, Credit Suisse and Nomura – were also swept into the sales wave today. Credit Suisse and Nomura warned that profits would be hit in the last quarter due to the liquidation extravaganza at Hwang’s family office.

Investors are now worried that some of Wall Street’s hottest trades – especially high-tech plays and high-flying tech / media mashups such as those bet on by Hwang – could be wound up in the middle of a wake-up call on the street. That concern applies not only to straight stocks in these frothy sectors, but also to more sophisticated strategies when using swaps and options on juice returns (like Hwang).

“Think about it. We saw that Softbank had problems. Now they are bigger [than Archegos]. And even in August and September, when things went more smoothly when you did not have this interest rate problem, you saw that they had some problems when it came to playing alternatives, explains Interactive Brokers chief marketing strategist Steve Sosnick. on Yahoo Finance Live.

The trigger for a new round of sales in hot shares could be double, experts claim.

First, the Hwang inflation awakens investors to the realization that many parts of the market look overvalued and it’s time to sell – and quickly. And secondly, it will be more difficult to drive speed in 2021 as the return is on the upside. It is during the last two years of super low prices that investors have really taken advantage of seemingly unable to miss trades (see technical complex) in an attempt to maximize returns.

It is a little harder to draw success from an increasing return background.

“I think there are some exaggerations. I covered technical stocks back in the 1990s, and where valuations seemed too good to be true they really are,” said Homrich Berg, chief investment officer Stephanie Lang at Yahoo Finance Live. “The technologies specifically, FAANGS, Tesla are out there – if the basics do not support the stock, you will eventually see a correction. And that’s what we see now with many of these names.”

Brian Sozzi is editor by and large anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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