Quantian: 4. Everyone (including me) underestimated the…

Allegedly, there were massive assets on swap that were never reported. I have heard various numbers swirl around re: the size of his SK Hynix position that went unreported but they are similar in size to his entire AUM

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Quantian

31 июл., 01:07

5. Apparently he was still accepting capital in a very big way and not closed to new investors. He couldn’t re-deploy that into the Anthropic stake so he doubled down on the public companies at basically the exact end of June peak in all of them.

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Quantian

31 июл., 01:09

In conclusion: a very good stockpicker and a very bad portfolio manager, and the latter was sufficiently disastrous he wound up destroying most of his assets and probably causing the largest trading loss of all time. If the reported numbers are true, going $45bn -> $10bn is 3x the size of Archegos.

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Dan Davies

31 июл., 01:12

Also a certain degree of kudos to the primes, who this time managed to work the whole thing out without losing money themselves and without contagion to the wider market.

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Dan Davies

31 июл., 01:13

(this does not mean that I now like or rate prime brokerage as an industry)

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Metro North Capital

31 июл., 01:13

Benevolence of Kenny G helped there

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Dan Davies

31 июл., 01:17

I don't think he did it out of charity. Given the absolute proliferation of thematic AI ETFs, it would not have been difficult to hedge the whole thing

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Dan Davies

31 июл., 01:18

Kenny G KennygALT: Kenny G Kennygstatic.klipy.com

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Metro North Capital

31 июл., 01:18

Of course not, he fucking scalped him. Total coup

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Quantian

31 июл., 01:13

Oh, bonus: his investors were very sophisticated people, including senior leadership at prominent trading firms etc who are regarded as extreme sharps. He wasn’t raising money from random dentists or even VC funds and people assumed that they had done their diligence (another classic tale)

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Quantian

31 июл., 01:22

Also, disclaimer: when these things happen there’s gossip, rumors, conjectures, friends of a friend who work at Nintendo who say so and so, anonymous Bloomberg chats getting recycled and passed around as fact by brokers, etc. It may have gone down very differently than initial appearances!

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lewburton

31 июл., 01:39

All he needed was a Jeremy Irons

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Hylen S

31 июл., 04:24

I'm afraid I don't hear any music at all.

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lewburton

31 июл., 23:55

Apparently he had what he needed, updating

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labsoftwaredev

31 июл., 02:29

None of this reads any different than my initial reaction: 25 year old gets wads of money thrown at him, loses his head & loses it all. The fault is not in the 25 year old but in the ones who threw wads of money at him.

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ellenahzulu

31 июл., 03:59

bsky.app/profile/lopa...

Elizabeth Lopatto

help me oh my god I can't breathe I am laughing too hard www.ft.com/content/5fb4...

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Quantian

31 июл., 17:14

Update from the WSJ this AM: official number per SALP is -67%, meaning a $30bn loss. $10bn of privates plus $5bn of remaining unlevered equity positions remain, and they plan on continuing to run an unlevered equity LO sleeve going forward. Still up 80% YTD!

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Jonesy

31 июл., 17:27

Short sellers. Even when it was leverage, I knew it was short sellers

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Flying Mezerkis

31 июл., 17:29

Like. My dude. You put on like $10bn in new investment in a month to positions that were getting tons of press. And now you’re like, we became targets. Is this the thing where people are learning the most basic lessons very publicly and then being like “my bad”.

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Flying Mezerkis

31 июл., 17:30

“I can’t believe leverage works both ways. You’re telling me this thing could go down too!?”

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derelict515

31 июл., 17:36

It’s not like we’re talking about someone with deep academic and professional experience in the field. Combined with the idiocy/arrogance of 20 something VC culture mindset? Recipe for success.

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Flying Mezerkis

31 июл., 17:38

I don’t have any experience. But I know this stuff. That’s why people cap funds. Been doing so for 30 years.

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eggnog slut

31 июл., 20:35

when we're up huge it was because of smart leverage but when we lose money it was those evil short sellers

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Baron Von Trapp Star

31 июл., 17:33

“blamed short sellers” f’ing loser bagholder behavior

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John “Old Oxcart” Ireland

31 июл., 17:45

What’s your estimate of Leo’s net worth this morning?

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Berkshire Haddaway

31 июл., 17:48

"we were targeted by short sellers" 😂

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bagholdercapital

31 июл., 18:38

Being a LP in a hedge fund has such bad risk to reward. Path of returns is a bitch, fees are terrible, incentives are bad. You better really really trust the manager. I say this as a lp in a l/s tech fund.

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Brian

1 авг., 12:28

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Wes

31 июл., 01:49

Network effect, and we're all dumb money in the end. Welcome to America, bud!

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hoerpi

31 июл., 01:21

Running insane leverage and similar risk in both short and long book have never really worked out. He will not be the last victim to this I fear though.

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Wes

31 июл., 01:35

Does this guy even have a series 7 or anything?

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Quantian

31 июл., 01:36

You don’t need a series 7 to run a hedge fund, you aren’t facing retail clients. You may need a 65 but you also may not, it depends.

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Wes

31 июл., 01:38

Right. My point is 1. Did he have any certs, and 2. Did the 'investors' even care, and if not, why not?

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Quantian

31 июл., 02:24

He didn’t and accredited investors usually don’t care if you are SEC registered. Series exams are mostly intended to prevent boiler rooms preying on Grandma’s account and completely unskilled advisors, not hedge fund blowups in the hundreds of millions.

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Quantian

31 июл., 02:26

(Syntactic ambiguity resolution: investors VERY MUCH do care that you are SEC/FINRA registered, once that box is checked they generally don’t about like series exams or state registration or whatever)

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Wes

31 июл., 01:49

Largest loss by total size, not by drawdown 🤣

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Ea-nāṣir

31 июл., 02:26

How do you make a small fortune?

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DC Leclair

31 июл., 04:08

Start with a large one.

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Ea-nāṣir

31 июл., 04:20

BOOM 💥

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Derek Barker

31 июл., 03:29

Fascinating story. If I understand it all, he still ends up with $5B of Anthropic, not bad considering the initial seed capital was $200M. Just didn't think to take some chips off the table.

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HudsonRiverCroc

31 июл., 03:42

How long has he been trading? Because someone trading the hot stocks of the moment for a year or two is not an incredible stock picker.

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Fred, His Enemy Getting a Vote

31 июл., 03:44

Two years? And he's 24.

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HudsonRiverCroc

31 июл., 03:50

Yeah, that's the thing. There's a thousand people who made a ton of money trading the hot stocks for a year or two. He got super lucky that he had access to large investors.

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Udarnik 🇺🇦

31 июл., 12:26

This is a classic case of people, who should’ve known better, focusing on metrics that can be manipulated, and not caring at all about the substance and experience of the people doing the trading. And the AI angle certainly played a role in pulling the wool over the eyes of allegedly smart people.