Who Was Behind Friday's Massive Block Trades?

Who Was Behind Friday's Massive Block Trades?

Image by Arek Socha from Pixabay.

The buzz around Friday's mysterious block trades continues to grow ahead of the new trading week as traders hold their breath, wondering if the sales were a one-off event or if there is more to come on Monday.

What Happened

Speculation has been rampant all weekend over whether one or more hedge funds or family firms started unraveling last week and was forced to liquidate, triggering block trades that affected a diverse range of shares. Block trades typically are negotiated privately between two parties and involve a large number of shares. They are not uncommon, but the especially large size of these trades drew attention.

Bloomberg and the Financial Times reported that the sales, executed separately by Goldman Sachs Group Inc (GS) and Morgan Stanley (MS) amounted to about $20 billion worth of shares in total. The sales were executed in five blocks, FT said. The speculation began with a posting by IPO Edge on Friday pointing a finger — albeit loosely — toward Archegos, citing unnamed sources. Other outlets soon followed with similar reports, also based on people familiar with the matter.

Then this afternoon, Bloomberg and the Financial Times each published stories saying more definitively that Archegos Capital was behind the trades, again citing unnamed sources. Archegos is the family office of Bill Hwang, a so-called "Tiger cub," as acolytes of Julian Robertson's Tiger Management hedge fund are known as. Hwang was busted on charges related to illegal trading of Chinese bank stocks and pleaded guilty in 2012, according to Reuters.

The Financial Times reported that the $3 billion equity raise announced by ViacomCBS (VIAC) on Monday, when the stock was at an all-time high, may have triggered everything. The company's share price took a dive in the days following the announcement, which also included an analyst downgrade.

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