The fast rise and even faster fall of a trader who bet big with borrowed money.
Before he lost it all—all $20 billion—Bill Hwang was the greatest trader you’d never heard of.
Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world’s billionaires. There are richer men and women, of course, but their money is mostly tied up in businesses, real estate, complex investments, sports teams, and artwork. Hwang’s $20 billion net worth was almost as liquid as a government stimulus check. And then, in two short days, it was gone.
The sudden implosion of Hwang’s Archegos Capital Management in late March is one of the most spectacular failures in modern financial history: No individual has lost so much money so quickly. At its peak, Hwang’s wealth briefly eclipsed $30 billion. It’s also a peculiar one. Unlike the Wall Street stars and Nobel laureates who ran Long-Term Capital Management, which famously blew up in 1998, Hwang was largely unknown outside a small circle: fellow churchgoers and former hedge fund colleagues, as well as a handful of bankers.
He became the biggest of whales—financial slang for someone with a dominant presence in the market—without ever breaking the surface. By design or by accident, Archegos never showed up in the regulatory filings that disclose major shareholders of public stocks. Hwang used swaps, a type of derivative that gives an investor exposure to the gains or losses in an underlying asset without owning it directly. This concealed both his identity and the size of his positions. Even the firms that financed his investments couldn’t see the big picture.
That’s why on Friday, March 26, when investors around the world learned that a company called Archegos had defaulted on loans used to build a staggering $100 billion portfolio, the first question was, “Who on earth is Bill Hwang?” Because he was using borrowed money and levering up his bets fivefold, Hwang’s collapse left a trail of destruction. Banks dumped his holdings, savaging stock prices. Credit Suisse Group AG, one of Hwang’s lenders, lost $4.7 billion; several top executives, including the head of investment banking, have been forced out. Nomura Holdings Inc. faces a loss of about $2 billion.
Hwang is anything but the larger-than-life figure one might expect at the center of a financial fiasco. There’s no penthouse overlooking Manhattan’s Central Park, no hillside chalet at the Yellowstone Club, no private jets. “I grew up in a pastor’s family. We were poor,” he said in a video recorded at New Jersey’s Metro Community Church in 2019. “I confess to you, I could not live very poorly. But I live a few notches below where I could live.”
“I try to invest according to the word of God and the power of the Holy Spirit”
Hwang owns a suburban New Jersey home and drives a Hyundai SUV. His is the paradoxical story of a man devoted to his church and driven to give generously, with a consuming taste for casinolike risk in his professional life. For now, Hwang isn’t saying why he played such a dangerous game, and neither are his bankers. But pieces of the puzzle are falling into place.
Modest on the outside, Hwang had all the swagger he needed inside the Wall Street prime-brokerage departments that finance big investors. He was a “Tiger cub,” an alumnus of Tiger Management, the hedge fund powerhouse that Julian Robertson founded. In the 2000s, Hwang ran his own fund, Tiger Asia Management, which peaked at about $10 billion in assets.
It didn’t matter that he’d been accused of insider trading by U.S. securities regulators or that he pleaded guilty to wire fraud on behalf of Tiger Asia in 2012. Archegos, the family office he founded to manage his personal wealth, was a lucrative client for the banks, and they were eager to lend Hwang enormous sums.
On March 25, when Hwang’s financiers were finally able to compare notes, it became clear that his trading strategy was strikingly simple. Archegos appears to have plowed most of the money it borrowed into a handful of stocks—ViacomCBS, GSX Techedu, and Shopify among them. This was no arbitrage on collateralized bundles of obscure financial contracts. Hwang invested the Tiger way, using deep fundamental analysis to find promising stocks, and he built a highly concentrated portfolio. The denizens of Reddit’s WallStreetBets day trading on Robinhood can do almost the same thing, riding such popular themes as cord cutting, virtual education, and online shopping. Only no brokerage will extend them anywhere near the amount of leverage billionaires get.
To anyone who asked, Hwang liked to say he divided his time evenly among three passions: his family, his business, and his charity, the Grace & Mercy Foundation. “I try to invest according to the word of God and the power of the Holy Spirit,” Hwang said in a 2019 video for his foundation. “In a way it’s a fearless way to invest. I am not afraid of death or money.”
Sung Kook Hwang immigrated to the U.S. from South Korea in 1982 and took the English name Bill. Raised by his widowed mother, he attended the University of California at Los Angeles and eventually earned an MBA at Carnegie Mellon University. At a videotaped business school reunion that was posted online in 2008, Hwang recounted his one objective upon graduation: moving to New York. In 1996, after stints as a salesman at two securities firms, he landed an analyst’s job at Tiger Management.
Working for Robertson, a titan of the industry, was like playing for the New York Yankees. Many of Hwang’s colleagues at the time went on to start several of the world’s most successful hedge funds, including Andreas Halvorsen’s Viking Global Investors, Philippe Laffont’s Coatue Management, and Chase Coleman’s Tiger Global Management.
As Hwang recalled at the reunion, Robertson taught him a key lesson: to live with losses. At one point, Tiger had burned through $2 billion in a wrong-way bet against the Japanese yen, and “everyone was panicking.” Robertson entered the room and, according to Hwang, said, “Guys, calm down. It’s only work. We do our best.”
When Tiger closed in 2001, Robertson urged Hwang to start a fund and offered to seed it with capital. In the early days, both Tiger Asia and Coleman’s Tiger Global were on the same floor at Robertson’s Park Avenue offices. Hwang and Coleman would sometimes have lunch together to share views on the market. One former Tiger Asia employee remembers Hwang returning one day. He and Coleman had decided against paring back some investments amid market volatility. “I think Chase and I are very similar. We need to go on the offense,” Hwang said, according to the former employee.
None of Hwang’s former colleagues or employees agreed to be named speaking about him. Some remain friends and don’t want to appear disloyal. Others are constrained by pledges of confidentiality. The people familiar with Archegos, both its accounts and positions, spoke on the condition of anonymity because they weren’t authorized to comment.
Hwang initially sought to differentiate himself by investing only in Korean, Japanese, and Chinese companies that generated all of their revenue domestically. Former clients and colleagues say Hwang concentrated the Tiger Asia portfolio in a small number of stocks and levered it. Some of his 25 or so positions were longs (bets on rising prices)and some were shorts (bets on declining prices). And he was secretive, often concealing particularly large holdings from his own analysts, the former employee says. He’d repeat these patterns years later at Archegos.
In 2008, Tiger Asia was shorting Volkswagen AG when takeover speculation sent the shares soaring. The stock quadrupled in two days, and Hwang had to close his position at a loss. He ended the year down 23%, and many investors pulled out, furious that an Asia-focused fund was gambling in European markets.
At least once, Hwang stepped over the line between aggressive and illegal. In 2012, after years of investigations, the U.S. Securities and Exchange Commission accused Tiger Asia of insider trading and manipulation in two Chinese bank stocks. The agency said Hwang “crossed the wall,” receiving confidential information about pending share offerings from the underwriting banks and then using it to reap illicit profits.
Hwang settled that case without admitting or denying wrongdoing, and Tiger Asia pleaded guilty to a U.S. Department of Justice charge of wire fraud. His mother, who’d become a missionary in Tijuana, Mexico, called to ask about the penalties. Hwang recounted the moment in a 2016 talk in South Korea. When he informed her that the fines and disgorgements totaled more than $60 million, she replied, “Oh, dear. You did well, Sung Kook. Our America is going through a difficult time. Consider the amount you are paying as a tax.” He had to close the fund.
In 2013, Hwang started Archegos as a family office. There were no outside investors this time, only his money. Some friends, thinking back, figured he wanted to prove himself after the SEC settlement. Others saw no interest in redemption. Risk-taking is to Hwang as basketball is to LeBron James, something in his nature.
Although little known on Wall Street, Hwang has been a pillar of his church community. His Grace & Mercy Foundation gave millions of dollars a year to mostly Christian causes. The Fuller Foundation and Fuller Theological Seminary in Pasadena, Calif., and Washington’s Museum of the Bible are two of its biggest beneficiaries. Others, in New York, include the Bowery Mission and the King’s College, a Christian liberal arts school.
Hwang hosted three Scripture readings a week at his foundation offices in Midtown Manhattan—a 6:30 p.m. dinner on Monday, a 12:30 p.m. lunch on Wednesday, and a 7 a.m. breakfast on Friday. He paid for another at Metro Community Church, too. Between listening to scripture and reading himself, Hwang said he spent at least 90 hours over the course of every year digesting the entire Bible.
Hwang is closely involved with a group called Liberty in North Korea, or Link, that has helped about 1,300 North Koreans escaping the regime. “He doesn’t use God as a cover,” says Jensen Ko, a colleague at Archegos. “He lives that out.”
In February 2016, Hwang’s name appeared on an invitation emailed to members of the Financial Services Ministry, a group affiliated with New York’s Redeemer Presbyterian Church that connects Christians in finance. It advertised a weekend retreat at the Princeton Theological Seminary “to explore the Gospel’s power to transform who we are and what we have been called to do in this industry.” The highlight was a dinner on a Saturday with three of the ministry’s advisers: Cathie Wood, whose ARK Investments was then a startup money manager; Paul Gojkovich, a former director at Merrill Lynch; and Hwang.
For a while, Wood and Hwang shared a similar trajectory. As Archegos piled up winning trades outside the public eye, she became an investing sensation. Wood’s flagship exchange-traded fund, a technology-heavy portfolio open to any retail investor, wowed the market with a 148% return in 2020. Hwang is also one of Wood’s investors, and, according to one of his former employees, Archegos and ARK collaborated on industry research. ARK declined to comment.
The seminary retreat offered a glimpse of how Hwang reconciled faith with finance. One person who attended recalls talking to him about the Archegos portfolio, which then included Amazon.com, Facebook, LinkedIn, and Netflix. As Hwang explained it, cutting-edge companies were doing divine work by advancing society. He told congregants in his 2019 appearance at Metro Community that God loved Alphabet Inc.’s Google because it provided “the best information to everybody.” Archegos had owned the stock for five years. “God also cares about fair price, because the scripture said God hates wrong scales,” Hwang says in the video, invoking the multiple references to just weights and balances in the Old Testament. “My company does a little bit, our part, bringing a fair price to Google stock. Is it important to God? Absolutely.”
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Source: Bloomberg, April 8, 2021