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[Nueva York / Zúrich / Tokio, 29 de Reuters]- The market may not yet have a complete picture of the issue of Maple Capital Management, a family office founded by former hedge fund manager Bill Juan. I’m burning with anxiety about it.
Archegos, a weakly regulated family office, benefits from complex and opaque derivative transactions and high leverage. Concerns have been raised in the market about potential systemic risk.
Regulators in the US, UK, Switzerland and Japan have said they are watching the situation.
According to people familiar with the matter, Arkegos was involved in a derivatives transaction called a “total return swap.” This is a contract that allows you to receive income from the price movements of the underlying asset without having the underlying asset. Rather than buying the underlying asset directly for cash, the company provided a guarantee for the underlying asset.
The company’s position was highly leveraged. The company’s assets were around $ 10 billion, but it had more than $ 50 billion in positions, according to people familiar with the matter.
According to Thomas Hayes, president of Great Hill Capital LLC (New York), Juan was known for his “centralized and highly leveraged” deals.
The shares of the underlying asset are held by Prime Broker, a client of Arcegos. The lead broker financed Arkegos and built and processed the transactions for the company.
These top brokers included Goldman Sachs, Morgan Stanley, Deutsche Bank, Credit Suisse, and Nomura.
After closing the position, the financial institution sold a large number of shares through a block operation. Shares of media giants ViacomCBS and Discovery tumbled about 27% last weekend. The share prices of US-listed Chinese internet companies Baidu and Tencent Music also plunged 33.5% and 48.5% last week, respectively.
Arkegos was originally a hedge fund called “Tiger Asia” that Juan managed from 2001 to 2012. After that, he changed the company name to Archegos Capital and changed the business form to a family office that manages the assets of the rich.
Hedge fund managers noted that Juan was “confident.” He says he doesn’t know why he invested so much money in ViacomCBS and Discovery. The two companies were not considered high-growth stocks, unlike other media stocks whose share prices rose due to the novel coronavirus epidemic, according to people familiar with the matter.
In 2012, Juan and the company he ran paid a $ 44 million settlement to the Securities and Exchange Commission (SEC) on suspicion of insider trading.
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