(Bloomberg) – While Wall Street speculated on the identity of the mysterious seller behind the massive $ 10.5 billion in block deals carried out on Friday by Goldman Sachs Group Inc., investors also pondered how unprecedented the sale it was – and if there is more to come.
The sales lit up the chat rooms of traders from New York to Hong Kong and were part of an extraordinary wave that wiped out $ 35 billion of indicator stock values ranging from Chinese tech giants to US media conglomerates.
“I have never seen anything 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 in shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. before the market opened in the United States, according to an email sent to customers by Bloomberg News. That move was followed by the sale of $ 3.9 billion in shares of ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.
Block trades – the sale of a large chunk of shares at a price sometimes traded outside the market – are common, but the size of these trades and the various blocks that hit the market during normal trading hours are not.
“This was highly unusual,” said Oliver Pursche, senior vice president at Wealthspire Advisors, which manages $ 12 billion in assets. “The question now is: are they done? Is that over? Or on Monday and Tuesday, will the markets be hit by another wave of bloc trading? “
Read more: Goldman sold $ 10.5 billion in shares in a block-trade wave
The negotiations triggered price fluctuations for all the shares involved in high-volume transactions, shaking traders and leading to rumors that a hedge fund or family office was in trouble and being forced to sell.
The situation is worrying “because we do not have all the answers as to whether this was the liquidation of just one fund or more than one fund, or whether it was a fund liquidation to begin with and the reason behind it,” said Pursche.
“It can be difficult for a manager in terms of positioning. Another wave of bloc trading can force fund managers to reevaluate their commitment to some actions, ”he said.
‘Unprecedented’
Frederik Hildner, portfolio manager at Salm-Salm & Partner GmbH in Wallhausen, Germany, called the move “unprecedented”. He added: “The question is why did these bloc negotiations take place? Does a company know something that others don’t or have they been forced to reduce risk in some way?
More of the unlisted share offerings would be managed by Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the transactions exceeded $ 1 billion in individual companies, according to calculations based on data from Bloomberg.
Read more: Block-trade gang eliminates $ 35 billion in stock values in one day
Wall Street is now trying to find out who the seller is.
Several large investment banks linked to the hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the drop in share prices of ViacomCBS and Discovery, the IPO Edge reported, citing people it did not identify. CNBC reported that Archegos’ forced sales were probably related to margin calls in highly leveraged positions. Archegos is controlled by Julian Robertson’s former protégé and Tiger Management analyst Bill Hwang.
Maeve DuVally, a spokesman for Goldman Sachs, declined to comment. A Morgan Stanley spokesman declined to comment. A person contacted at Archegos’ New York office on Friday declined to comment. An email sent to Hwang asking for comments has not been returned.
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