ViacomCBS, Other Archegos-Linked Stocks Drop After New Block Trades

ViacomCBS and other stocks linked to the unwinding of equity positions within Archegos fall after a reported sale of additional blocks totaling more than $2 billion.

Author:: M. Corey Goldman
Publish date:: Apr 6, 2021 6:47 AM EDT

ViacomCBS (VIACA) - Get Report and other stocks linked to the unwinding of massive equity positions within Archegos Capital Management fell Tuesday after Credit Suisse (CS) - Get Report reportedly sold additional blocks of stocks that totaled more than $2 billion.

ViacomCBS was down almost 2% in premarket trading Tuesday, while Farfetch (FTCH) - Get Report, another big holding of Archegos, fell about the same. Vipshop (VIPS) - Get Report Holdings declined after the Swiss bank reportedly unloaded shares. Shares of Discovery (DISCA) - Get Report, another stock impacted by Archegos-related selling, was up 0.5%.

ViacomCBS and Discovery both posted double-digit percentage losses late last month, brought down by giant block trades initiated by Goldman Sachs and Morgan Stanley after Archegos - the family office of former Tiger Management trader Bill Hwang - reportedly failed to meet margin calls.

Archegos held large, concentrated positions in companies and held some positions via swaps. Swaps are contracts brokered by Wall Street banks that allow a user to take on the profits and losses of a portfolio of stocks or other assets in exchange for a fee.

The losses reportedly left Nomura Holdings (NMR) - Get Report and Credit Suisse facing potentially significant losses.

The cascade of trading losses has produced tremors in financial markets amid concern that banks’ exposure to the massive unwinding of Archegos’s leveraged equity bets may spark other margin calls and losses, leading to systemic liquidity issues similar to what happened to Long Term Capital Management, a highly levered hedge fund that imploded in 1998.

ViacomCBS and Discovery had skyrocketed threefold over the previous six months before the recent selloff, making them two of the best performers on the S&P 500 Index. Both stocks posted their steepest declines on record last Friday.

At last check, shares of ViacomCBS were down 1.84% at $42.11 in premarket, shares of Farfetch were down 1.81% at $48.79 and shares of Vipshop were down 1.98% at $29.19. Discovery shares were up 0.55% at $41.87.