As Wall Street speculated on the identity of the mysterious seller behind the massive $ 10.5 billion block transaction executed by Goldman Sachs Group Inc. on Friday, investors also wondered how unprecedented the sale was – and if there was more to come.
The sales lit up traders’ chat rooms from New York to Hong Kong and were part of an extraordinary frenzy that wiped out $ 35 billion in the value of top stocks ranging from Chinese tech giants to US media conglomerates.
“I have never seen anything of this magnitude in my 25-year career,” said Michel Keusch, portfolio manager at Bellevue Asset Management AG in Switzerland.
Goldman sold shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. for $ 6.6 billion. before the market opened in the United States, according to an email to customers seen by Bloomberg News. The move was followed by the sale of $ 3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.
Block trades – the sale of a large portion of shares at a price that is sometimes negotiated off the market – are common, but the size of these trades and the multiple blocks that hit the market during normal trading hours do not. are not.
“It was very unusual,” said Oliver Pursche, senior vice president of Wealthspire Advisers, which manages $ 12 billion in assets. “The question now is: are they over? Is it over? Or come Monday and Tuesday, will the markets be hit by another wave of block trading? ”
Read more: Goldman sold $ 10.5 billion in shares in block-trading frenzy
The trades triggered price swings for every stock involved in the high volume trades, rattling traders and prompting them to say that a hedge fund or family office was in trouble and forced to sell.
The situation is worrying “because we do not have all the answers on whether this was the liquidation of a single fund or more than one fund, or whether it was ‘a liquidation of funds initially and the reason for it,’ said Pursche.
“It can be difficult for a manager from a positioning point of view. Another wave of block trades could force fund managers to reassess their commitment to certain stocks, ”he said.
Frederik Hildner, portfolio manager at Salm-Salm & Partner GmbH in Wallhausen, Germany, called the move “unprecedented”. He added: “The question is why did these block transactions take place? Does a business know something that others don’t or have they been forced to reduce risk?A larger portion of the unregistered stock offerings were reportedly handled by Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some transactions have exceeded $ 1 billion in sole proprietorships, calculations based on Bloomberg data Display.
Read more: Block-Trade Bevy wipes out $ 35 billion worth of its shares in one day
Wall Street is now trying to figure out who the seller is.
Several large investment banks linked to the hedge fund Archegos Capital Management LLC liquidated stakes, contributing to the fall in the prices of shares of ViacomCBS and Discovery, IPO Edge reported, citing people he did not identify. CNBC the forced sales reported by Archegos were probably linked to margin calls on heavily leveraged positions. Archegos is controlled by former protégé of Julian Robertson and Tiger Management analyst Bill Hwang.
Maeve DuVally, a spokesperson for Goldman Sachs, declined to comment. A Morgan Stanley spokesperson declined to comment. A person contacted at Archegos’ New York office on Friday declined to comment. An email sent to Hwang requesting comment was not returned.
– With the help of Matthew G Miller