Wall Street Reflects on Goldman’s Block Trading Wave


(Bloomberg) – As Wall Street speculated on the identity of the mysterious seller behind the massive $ 10.5 billion in block deals executed Friday by Goldman Sachs Group Inc., investors also pondered how unprecedented the sell-off was and whether there is any more to come.

The sales lit up traders’ chat rooms from New York to Hong Kong and were part of an extraordinary spree that wiped out $ 35 billion of the values ​​of leading stocks ranging from Chinese tech giants to American media conglomerates.

“I’ve 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 US, 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., according to the email.

Block trades (the sale of a large number of shares at a price that is sometimes traded outside the market) is common, but the size of these trades and the multiple blocks that hit the market during normal trading hours do not. are.

“This was very unusual,” said Oliver Pursche, senior vice president at Wealthspire Advisors, which manages $ 12 billion in assets. “The question now is: Are they finished? Is this over? Or will markets be hit by another wave of block trading on Monday and Tuesday? “

Read more: Goldman sold $ 10.5 billion worth of shares in a wave of block trading

The trades sparked price swings for all stocks involved in high-volume trading, shocking traders and sparking talk that a hedge fund or family office was in trouble and forced to sell.

The situation is concerning “because we don’t have all the answers as to whether this was the liquidation of a single fund or more than one fund, or if 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 deals may force fund managers to reassess their commitment to some stocks, ”he said.

‘Without precedents’

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 trades occur? Does one company know something that others do not, or were they forced in some way to reduce risk?

Morgan Stanley was said to be managing more of the unregistered share offerings, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the operations exceeded $ 1 billion in individual companies, calculations based on Bloomberg data show.

Read More: Block-Trade Bevy Eliminates $ 35 Billion Of Stock Values ​​In One Day

Wall Street is now trying to figure out who the seller is.

Several major investment banks with ties to hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the drop in ViacomCBS and Discovery stock prices, IPO Edge reported, citing people it did not identify. CNBC reported that Archegos’ forced selling was likely related to margin calls in heavily leveraged positions. Archegos is controlled by former Julian Robertson protégé and Tiger Management analyst Bill Hwang.

Maeve DuVally, a spokeswoman for Goldman Sachs, declined to comment. A Morgan Stanley spokesperson declined to comment. A person contacted at Archegos’ New York office on Friday declined to comment. An email sent to Hwang seeking comment was not returned.

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