Home Entrepreneur Morgan Stanley said it had lost nearly $ 1 billion after the...

Morgan Stanley said it had lost nearly $ 1 billion after the Archegos disaster


However, the company managed to report net sales of $ 15.7 billion for the first quarter.

April 19, 2021

2 minutes of reading


Despite announcing good results for the first quarter, Morgan Stanley lost nearly 1 billion dollars due to the partnership Archegos Capital management, according CNBC.

The company announced in an earnings call last Friday that it lost $ 644 million from a “credit event” to Archegos along with a $ 267 million trading loss. The $ 911 million combined loss was driven in part by Morgan Stanley’s role as underwriter. ViacomCBS share. The company was once one of Archegos’ top brokers and oversaw a failed $ 3 billion IPO in March.

Related: An investor made $ 20 billion, then lost it all in just 2 days

Morgan Stanley CEO James Gorman said in a call to analysts: “We liquidated some very large single equity positions through a series of block sales that culminated on Sunday night. date, March 28 “” That resulted in a net loss of $ 644 million, which represents the amount customers owe us under transactions they did not pay us for. ”

Gorman added that the company has decided to “completely eliminate the risk on remaining smaller short and long positions.” In an attempt to get rid of the risk as quickly as possible, Morgan Stanley suffered “losses increased to $ 267 million.”

Archegos was founded in 2013 by Bill Hwang, the patron of Tiger Management founder Julian Robertson. Despite his previous involvement with the SEC, he was able to secure lenders at Morgan Stanley, Credit Suisse, Nomura and Mitsubishi UFJ Financial Group Inc. to grow your home office portfolio.

However, last month, Archegos suffered a major setback when ViacomCBS – where the home office had massively staked and tripled its stock in four months – saw its stock offering. fall. The brokers immediately scrambled to exit positions on behalf of Archegos to prevent their losses, but Morgan Stanley waited until next Sunday to sell a block of the company’s shares. Even though the company subsequently lost money, it was still able to report net sales of $ 15.7 billion for its first quarter.

On the other hand, Hwang lost $ 20 billion in just two days. Other companies, including Credit Suisse, Nomura and Mitsubishi UFJ Financial Group Inc., were also hit hard. Based on CNBCCredit Suisse lost $ 4.7 billion while Nomura lost approximately $ 2 billion.

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