Investment firms bet on stocks hit by Archegos unwind

(Reuters) -Several prominent investment management firms purchased shares in the first quarter of companies that plummeted when large banks sold them in a hurry amid the collapse of private investment firm Archegos Capital Management at the end March.

FILE PHOTO: Billionaire investor George Soros speaks to the audience at the Schumpeter Award in Vienna, Austria June 21, 2019. REUTERS/Lisi Niesner

Regulatory filings show that Soros Fund Management and hedge funds HG Vora Capital Management and Coatue Management entered positions in media stock ViacomCBS Inc after disclosing no holdings in the previous quarter.

The so-called 13F filings do not disclose the date the purchase was made but give a snapshot of what U.S. stocks fund managers owned at the end of the quarter.

Archegos, a family office run by ex-Tiger Asia manager Bill Hwang, was highly exposed to ViacomCBS, leaving the hedge fund facing a huge margin call from its prime broker banks. Global banks lost nearly $10 billion from the Archegos implosion.

Stock trading at the start of 2021 was shaped both by a sharp run-up in the shares of ailing video retailer GameStop and the fast collapse of Archegos.

Archegos’ prime brokers in March were forced to sell large blocks of shares of ViacomCBS, media peer Discovery Inc and Chinese search giant Baidu in the first quarter.

ViacomCBS plunged 57% in March while Discovery dropped 44% and Baidu fell 30%. All proved popular buying choices for hedge funds in the first quarter.

Soros Fund Management, founded by billionaire George Soros, bought $194 million in ViacomCBS shares according to its filing here, while HG Vora picked up $78.9 million and Philippe Laffont’s Coatue Management purchased $77.1 million over the same period.

British hedge fund firm Rokos Capital Management, run by former Brevan Howard partner Chris Rokos, also purchased $167.8 million of Baidu stock in the first three months of the year, the filings showed.

Laurion Capital Management added $231.6 million in Baidu over the same period while Soros picked up $77 million and Hong Kong-based activist fund Oasis Management raised its bet in the company by 42% to $46.5 million.

Soros, currently led by Chief Investment Officer Dawn Fitzpatrick, and London-based hedge fund behemoth Marshall Wace both picked up more than 200,000 shares in Discovery after holding no position in the previous quarter.

Many of the investment funds did not hold shares in ViacomCBS, Baidu or Discovery in the previous quarter, showed the filings.

Hedge funds Taconic Capital Advisors, Hunting Hill Global Capital and Hudson Bay Capital Management also disclosed put options on GameStop Corp over the same period.

Put options, which give the holder the right to sell at a specified price, can be used as a way for a hedge fund to short a stock without using equity markets.

Hedge fund bets against GameStop were hit hard by a retail-led rally in heavily shorted stocks at the start of the year.

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