- Shares of ViacomCBS, Discovery fell as much as 35% Friday
- Goldman Sachs offered very large block shares of ViacomCBS Friday afternoon – Sources
- Multiple prime brokers sold shares aggressively Friday afternoon
- Archegos typically employs high leverage on its stock positions
- ViacomCBS earlier this week conducted large secondary offering
A liquidation of holdings at several major investment banks with ties to Tiger Cub Archegos Capital Management LLC contributed to an unseen daily decline Friday in shares of stocks including Discovery, Inc. and ViacomCBS Inc., according to people familiar with matter.
Shares of media conglomerate ViacomCBS fell 26% while Discovery dropped 27% Friday, recovering from far steeper losses. The degree of the declines was unprecedented and occurred in an otherwise orderly market.
Early selling came through so-called block trades from Goldman Sachs & Co., which offered over 30 million shares of ViacomCBS in midday trading. Morgan Stanley, earlier in the day, offered over 15 million shares of Discovery, according to people familiar with the matter.
The common thread is defunct Tiger Asia Management LLC founder Bill Hwang, who now runs Archegos Capital. His fund was and may still be an large owner of shares in both ViacomCBS and Discovery. Mr. Hwang did not respond to phone calls, emails, or Bloomberg messages sent by IPO Edge.
Mr. Hwang’s fund is known for employing leverage, meaning it borrows to invest in more securities than it could own with its own capital. One person familiar with the matter said Mr. Hwang’s fund received a margin call from one of the investment banks – not necessarily Morgan Stanley or Goldman Sachs – and was unable to meet it. As a result, that bank and others began to liquidate stocks owned by Archegos.
Several other stocks swooned Friday for no apparent reason, but may be related to Mr. Hwang’s fund, which focuses on telecom, media, and technology, or TMT.
Phone calls and emails to ViacomCBS, Discovery, Goldman Sachs, and Morgan Stanley were not returned late Friday evening.
John Jannarone, Editor-in-Chief