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In the months leading up to March 2021, [[Archegos|Archegos Capital Management]] took [[Synthetic equity swap|synthetic]] positions [[Margin loan|on margin]] on a handful of comparatively [[Illiquidity|illiquid]] stocks — ViacomCBS, Tencent Music, Baidu and Vipshop — in sizes that, across multiple [[prime broker]]s, were big enough to move the market sharply up. As the stocks appreciated, so did Archegos’ profit, and thus the [[net equity]] it held with its [[prime broker]]s. [[Archegos]] used that [[net equity]] to double down, buying the same stocks, pushing them up yet ''further''. The higher they went, the thinner their trading volume, and the more of the market [[Archegos]] represented. | |||
Now, hindsight is a wonderful thing, but really there was only one way this was ever going to turn out. | Now, hindsight is a wonderful thing, but really there was only one way this was ever going to turn out. |