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George Soros Buys Millions' Worth of Stocks Linked to Bill Hwang's Archegos Collapse: Bloomberg

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George Soros Buys Millions' Worth of Stocks Linked to Bill Hwang's Archegos Collapse: Bloomberg

George Soros reportedly snapped up stocks that took a hit amid the collapse of Archegos Capital Management in March.

What Happened: Billionaire George Soros' investment firm Soros Fund Management bought shares of CBS Corporation (NASDAQ: VIAC), DISCOVERY COMMUNICATIONS INC (NASDAQ: DISCA) and Baidu Inc (NASDAQ: BIDU) as these stocks were at a discount after Bill Hwang's Archegos Capital Management collapsed, Bloomberg reports. 

Soros bought $194 million in ViacomCBS shares and $77 million in Baidu shares, the report said. The firm also bought $46 million worth of Vipshop Holdings Ltd (NYSE: VIPS) shares and $34 million of Tencent Music Entertainment Group's (NYSE: TME) shares.

A person familiar with the fund's trading told Bloomberg that the company didn't hold the shares before Archegos' implosion. 

Why It Matters: Hwang ran a family office that imploded in March and caused massive losses at a few big banks when Archegos couldn't meet margin calls. Archegos had more than $20 billion of capital and total bets exceeding $100 billion.

Hwang was very successful with his family office until he began to overutilize leverage, or borrowed money, to chase higher returns in the market. The problem with this strategy comes when investments start to lose money, and the banks lending the investor money begin to get nervous and initiate margin calls.

Subsequently, shares of Archegos investments ViacomCBS, Discovery and others temporarily crashed during the Archegos unwinding.

Global banks lost nearly $10 billion from the Archegos fallout. Credit Suisse Group AG (NYSE: CS), Nomura Holdings Inc (TYO: 8604) and Morgan Stanley (NYSE: MS) were among the hardest hit.

Image Credit: CC BY 2.5, Wikimedia Commons

 

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