By Lawrence Delevingne
(Reuters) - Bill Hwang’s comeback was nearly complete. Once punished by U.S. and Asian regulators for stock trading rule violations at his former hedge fund, the New York investor rebuilt his fortune to about $10 billion. Major Wall Street banks once again competed for his business. And his charitable foundation’s coffers swelled by hundreds of millions of dollars.
Hwang was making big money again, inspired by a renewed Christian faith.
“When we create good companies through the capitalism that God has allowed, it enhances people’s lives….God delights in those things,” Hwang said in a video posted online in 2019 https://www.youtube.com/watch?v=VcO5QVVtYiQ.
But Hwang’s image on Wall Street unravelled again in the last week as Archegos Capital Management LP, the so-called family office that handled his fortune, defaulted on margin calls and triggered a fire sale of stocks, according to sources. As a result, Japanese bank Nomura and Switzerland's Credit Suisse are facing billions of dollars in losses.
Hwang did not directly respond to messages seeking comment.
Karen Kessler, a spokesperson for Archegos, said in an emailed statement, “This is a challenging time for the family office...our partners and employees. All plans are being discussed as Mr. Hwang and the team determine the best path forward.”
The son of a Korean pastor father, Hwang moved to the United States as a child and earned business degrees at the University of California, Los Angeles, and Carnegie Mellon University.
He honed his stock-picking skills from 1996 to 2000 at Tiger Management, billionaire Julian Robertson’s pioneering hedge fund firm famed for betting on pairs of companies from the same industry, going long one seen as a winner and short the other identified as a laggard.
In 2001, Hwang launched his own hedge fund business, Tiger Asia Management, with seed money from Robertson, making him part of an elite group of Robertson proteges dubbed the Tiger Cubs.
Tiger Asia specialised in Asian securities and grew quickly to more than $8 billion in assets under management in 2007 after generating a dazzling 40% annualized return, according to a 2011 Institutional Investor arti https://www.institutionalinvestor.com/article/b150y1xsth7v2y/tiger-cub-bill-hwangs-strugglescle.
But investment losses and regulatory issues in Hong Kong and the United States ultimately pushed the firm to shut in 2012, when Hwang pleaded guilty to wire fraud relating to illegal trading of Chinese bank stocks and separately paid $44 million to U.S authorities to settle insider trading charges https://www.reuters.com/article/us-crime-insidertrading-tiger-idUSBRE8BB1RG20121212.
Hwang then turned the firm into a family office, renaming it Archegos Capital Management in early 2013. Little regulated, family offices are created to manage the wealth of private individuals and their families, as opposed to hedge funds, which traditionally manage money for outside clients such as pensions and wealthy individuals. He built the assets into $10 billion, according to a source familiar with the situation.
Hwang has spoken frequently about his faith and business and co-founded a charity, the Grace and Mercy Foundation, which "supports the poor and oppressed, and helps people learn, grow and serve," as well as encouraging the public reading of scripture, according to its website.
The foundation, where Hwang's wife Becky serves as a director, had nearly $500 million in assets in 2018, according to a public disclosure.
People who know Hwang professionally describe him as a hard- working, smart investor who is willing to make big bets.
"Bill Hwang... runs a very concentrated, highly leveraged book," said Thomas Hayes, chairman of Great Hill Capital LLC in New York.
The exact financial cost to Hwang of the recent turmoil was unclear. Now in his mid-50s with thick glasses and slicked-back salt and pepper hair, Hwang has previously leaned on the Bible in times of stress.
"I had really a bad business problem. And I knew no matter how much money I had, and I had a lot of money...and a lot of connections...but they couldn’t help me," he said at a Hawaiian Islands Ministries event in 2018 https://www.youtube.com/watch?v=4fPOaGkDGDg. "So one thing I knew is I had to go to the scripture."
(Reporting by Lawrence Delevingne. Additional reporting by Svea Herbst-Bayliss, Matt Scuffham, Herb Lash and Jane Merriman. Editing by Pravin Char, Megan Davies and Cynthia Osterman)