Poor Risk Management: Lessons From The Man Who Lost $20B!

Poor Risk Management: Lessons From The Man Who Lost $20B!

Dive into the story of Bill Hwang. A great investor who risked and lost it all because he had poor risk management.

Bill Hwang started out working for Julian Roberts, a former hedge fund manager and American investor best known for founding Tiger Management in 1980, which became one of the most notable hedge funds of its generation.

Later on, in Bill’s career, he started his fund – Tiger Asian management, where he managed over $5b in assets. It was typical of him to borrow money to invest, make outsized returns, pay back, and still have a lot of profit to himself. As time went on, he had made so much money with this approach.

In 2012, it would seem like it was all a house of cards as he was accused of insider trading in Chinese bank stocks. After pleading guilty to the charge, he had to pay $44M to settle the case with the regulators. This event led him to draw the curtains on his fund; he was blacklisted and couldn’t borrow money from the investment banks anymore.

One year later, he got back into the game. This time, he started his family office – Archegos capital management. At this time, all he managed was $200m of his own money. He ran his family office for 8 years, and in that time, he turned his $200m to $20b by 2021. On March 26, 2021, one of his holdings, ViacomCBS(VIAC) dropped 20% in days. Bill didn’t use any risk management strategy and his entire portfolio was wiped out.