Fabrice Coffrini/AFP/Getty Images
As Archegos Capital Management was imploding, billionaire investor
George Soros
went on a buying spree.
Soros Fund Management snatched up Archegos-tied shares of ViacomCBS (ticker: VIAC),
(BIDU),
(VIPS), and
Tencent Music Entertainment Group
(TME) in the first quarter, according to regulatory filings released Friday.
The fund didn’t hold the shares before Archegos was forced to liquidate its holdings after failing to meet a margin call, Bloomberg News reported over the weekend. Fund representatives didn’t respond immediately to requests to comment.
Investment firms with assets in excess of $100 million are required to report their long-equity positions with the Securities and Exchange Commission within 45 days from the close of the quarter. The report, known as Form 13-F, provides a picture — albeit a murky one — of how the so-called smart money is investing. But because only long holdings and options are disclosed, 13-F watchers are getting only a peek of a firm’s full portfolio.
Archegos, the family office of
Bill Hwang,
collapsed at the end of March due to highly-levered bets on a handful of companies including ViacomCBS and Baidu. Archegos had its outsized bets spread across several prime brokerages and was able to do so because it held its positions via total return swaps. Differences between how hedge funds and family offices are required to disclose positions is part of the reason why Archegos was able to amass such hefty positions without bankers realizing how overexposed it was.
“Frankly, the transparency and lack of disclosure relating to [family offices] is just different from the hedge fund institutions. And that’s something I’m sure the SEC is going to be looking at, and that’s probably good for the whole industry,”
James Gorman,
chief executive at Morgan Stanley (MS), said on an earnings call in April when discussing the $911 million hit that the bank took on Archegos.
All told, banks with exposure to Archegos, including Credit Suisse (CS) and Nomura, lost roughly $10 billion.
But while Archegos and its bankers had to feverishly sell stock, there were eager buyers on the other side. While Soros Fund Management’s plans for the Archegos-tied stocks are not yet known,
Dawn Fitzpatrick,
chief investment officer at Soros’ firm, told Bloomberg earlier in March that the firm was eager to invest in “dislocations in the market.”
“When there’s a dislocation, we’re prepared to not just double down but triple down when the facts and circumstances support that,” Fitzpatrick said.
Since the end of the first quarter, ViacomCBS and Vipshop shares are down roughly 13%. Baidu and Tencent have fallen 25% and 7%, respectively.
Write to Carleton English at carleton.english@dowjones.com
