Forced liquidation of Archegos Capital position contributes to the downfall of Viacom and Discovery

The ViacomCBS logo is displayed on the Nasdaq MarketSite to celebrate the company’s merger, in New York, on December 5, 2019.

Brendan McDermid | Reuters

Part of the strong selling pressure on select US media stocks and Chinese Internet ADRs on Friday was due to the forced liquidation of positions held by the billionaire family office, Archegos Capital Management, according to a source with direct knowledge of the situation.

Archegos Capital was founded by former Tiger Management equity analyst Bill Hwang.

Media stocks ViacomCBS and Discovery, which have seen massive gains this year, came under unusually strong selling pressure late this week and were said to be at least two of the stocks in question, along with the Chinese names. Internet Baidu, Tencent, Vipshop and several. others.

ViacomCBS and Discovery closed more than 27% on Friday, Viacom took a discount of more than 50% during the week, while Discovery fell 45%. Companies have come very short amid investor skepticism about their long-term prospects in a crowded media landscape.

During the week, Baidu was down more than 18%, Tencent more than 33% and Vipshop more than 31%.

CNBC contacted Archegos Capital, but the calls and emails were not returned. The source said the forced selling was likely related to margin calls due to heavily leveraged positions.

CNBC also learned that Teng Yue Partners, an Asia-focused fund run by another former Tiger Management analyst, Tao Li, was negatively affected by cuts in several of its key positions. Although the fund was said to have declined in March, it was still positive to date, according to the source.

CNBC has also reached out to Teng Yue.

– CNBC’s Leslie Picker contributed to this report.


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