The sales lit up trader chat rooms from New York to Hong Kong and were part of an extraordinary spree that erased $35 billion from the values of bellwether stocks ranging from Chinese technology giants to US media conglomerates.
“I’ve never seen something of this magnitude in my 25-year career,” said Michel Keusch, portfolio manager at Bellevue Asset Management AG in Switzerland.
Goldman sold $6.6 billion worth of shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. before the market opened in the U.S., according to an email to clients seen by Bloomberg News. That move was followed by the sale of $3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.
Block trades — the sale of a large chunk of stock at a price sometimes negotiated outside of the market — are common, but the size of these trades and the multiple blocks hitting the market during the normal trading hours aren’t.
“This was highly unusual,” said Oliver Pursche, a senior vice president at Wealthspire Advisors, which manages $12 billion in assets. “The question now is: Are they done? Is this over? Or come Monday and Tuesday, are markets are going to be hit by another wave of block trades?”
The trades triggered price swings for every stock involved in the high-volume transactions, rattling traders and prompting talk that a hedge fund or family office was in trouble and being forced to sell.
The situation is worrisome “because we don’t have all the answers on whether this was the liquidation of just one fund or more than a fund, or whether it was a fund liquidation to begin with and the reason behind it,” Pursche said.
“It can be difficult for a manager from a positioning standpoint. Another wave of block trades may force fund managers to reassess their commitment to some stocks,” he said.
Frederik Hildner, a portfolio manager at Salm-Salm & Partner GmbH in Wallhausen, Germany, called the move “unprecedented.” He added, “The question is why did these block trades occur? Does one firm know something others don’t or were they somehow forced to cut risk?
More of the unregistered stock offerings were said to be managed by Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the trades exceeded $1 billion in individual companies, calculations based on Bloomberg data show.
Wall Street is now trying to work out who the seller is.
Several major investment banks with ties to hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the slump in share prices of ViacomCBS and Discovery, IPO Edge reported, citing people it didn’t identify. CNBC reported forced sales by Archegos were probably related to margin calls on heavily leveraged positions. Archegos is controlled by former Julian Robertson protege and Tiger Management analyst Bill Hwang.
Maeve DuVally, a Goldman Sachs spokeswoman, declined to comment. A spokesperson for Morgan Stanley declined to comment. A person reached at Archegos’s New York office on Friday declined to comment. An email sent to Hwang seeking comment wasn’t returned.