Is Archegos the missing puzzle piece?



I’ve had a burning question in my mind planted a few days ago when I stumbled upon a comment I made that was screen-shotted, submitted, and earned more karma and awards than my account had accumulated over the last 7 years of casual Redditing.

A bunch of 🦍s found the original comment and chatted with me about the topic. It felt like people really wanted to understand (for lack of better terms) “what sound it makes in the market when a hedge fund or other financial institution dies.” Do some stocks skyrocket, and others crash? Does it take a few days? Weeks? It seemed like a topic that was under-researched with a lot of pent-up demand. I thought it’d make for really good investment vs required effort — sort of a deep value topic for Superstonk. So, I figured I’d put my wrinkles on it and investigate. There’s not a lot of data to go on, though, so I started by investigating Archegos. It’s one of the only financial institutions (if you can call it that) that I know of that collapsed recently, and I was interested in trying to determine why bagholders would still be reporting losses “2 months after it collapsed.” The MOASS was supposed to be slow because it’s huge, right? So it seemed like a small collapse should be fast. Peculiar, no?

Anyway, I’m prefacing with all this because what I’m about to say is a lot.

I think Archegos was actually effectively short $GME, died on January 27th (possibly the margin call was on the 27th & failed on the 29th), due to being squeezed not just by the stocks they admitted in the news, but also meme stocks. I think those who were left holding bags exited their meme stock short positions VERY SLOWLY over ~45 days, because a congressional investigation was underway, and that the announcement of Archegos’s death was delayed until March 26th, 2021 (made possible by the fact it was a ‘small family office’)… and finally, I think that date of announcement was because that was the date the bag holders had finished exiting their effectively-short positions that Archegos had left them.

I’ll cut to the chase because it’s late. I have two pieces of primary evidence in support of this:

1) All the news reports list two stocks Archegos had exposure to (‘exposure’ as a description could go either way, short or long) via total return swaps. Pull up the YTD charts for these stocks and check out what they’ve done since January: VIACDISCA. Also, looking at March against the YTD graphs look a hell of a lot more like a short squeeze that ended on March 26th than anything else… and with those blips on January 27th-29th for both? Sure, lots of stocks had blips back then as the Superstonk Quants will tell you… but these blips were price increases, like GME and AMC saw, not decreases like SPY and most of the market saw.

Other stocks Archegos reportedly had exposure to include mostly ones I think they were actually long on, like Farfetch and Vishop. Those charts look much more like what I’d naively expect from a bagholder dumping long positions around or up to the date of March 26th.

That alone got me interested enough to dig more into it… but then I stumbled almost immediately across this second piece of evidence:

2) The DOJ opened up an investigation into Archegos on May 26th, 2021. The moment I saw the date I realized our favorite company, GameStop also had something to say about that date. Not back in May, but weeks later after the Shareholder AGM:

> “May 26th, 2021 GameStop received request from SEC for voluntary documents and information regarding SEC investigation..into trading activity in securities and securities in other companies..GameStop intends to cooperate fully with SEC staff.”

Links for Superstonk Thread & GameStop primary source

So, reporting mentions Archegos was under investigation, opened May 26th… Supertstonk notices and some discussion happens, but we didn’t care much because it’s not directly GME related.. Either those are two ends of the same investigation, or it’s a pretty fucking big coincidence, especially when you factor in the January 27th bump. I feel like the Superstonk Quants should probably take a look at some of this? To extend the speculation, it’s also possible a portion of the late Feb / early March $GME run-up was thus due to Archegos closing positions, and at this point I’m actually starting to think history books will actually cite January 27th as the start of the MOASS, and that we’re still currently feeling the reverberations throughout the market in $GME’s price (and beyond). If I’m right on that, allow me to be the first to say: “Welcome to the MOASS and I’m sorry it’s a lot slower moving than we’d all hoped…”, but I’m pretty sure it’s still unstoppable.

Anyway, I’ve got to go get some sleep… I just wanted to dump off some of my preliminary DD results here and report back to everyone: I still don’t know what it sounds like when a hedge fund or other financial institution dies in this market, but I have a hunch that I know what it sounds like when it lies.

Edit 1:

Someone has brought up the ‘birthday problem’, which I agree with: If we assume a lot of family funds, hedgies, etc., get investigated (Thanks SEC! Keep up the good work!) A DOJ investigation into Archegos and an SEC investigation into $GME advancing on the same day isn’t noteworthy (if we can call leaking/hitting the news ‘advancing’). We can’t read too much into it without any supporting evidence, because there’s probably lots of investigations into all kinds of things both corrupt and squeaky clean… right?

Also, I found out the SEC and DOJ are totally different organizations and it’s not the SEC under the DOJ, so it’s actually even an implicit leap there… though they do work together when there’s overlap, and I guess Citadel/Virtu seem to have a duopoly…

So, don’t jack your tits yet: We know GME was connected to a SEC investigation as of May 26th. Archegos was connected with a DOJ investigation as of May 26th. Nobody’s connected GME to any DOJ investigations, right?

Someone hold my crayons… and buckle up.

Edit 2: BTW, I make memes and stuff, too. For your enjoyment while I dig up broviet’s new account. (or check my profile pinned ones if you’re still waiting, 🤷‍♂️)

Edit 3: here’s former financial industry insider Broviet saying he was going out to get drinks with a DOJ (not SEC) employee and Bloomberg reporter earlier this week to talk about the GME thing off the record:

I remember thinking it was odd that he said DOJ but I figured (wrongly) that the SEC must just be under them. So, possible it’s all coincidental… but with pretty clear paths forward to discover more.

EDIT 4: d2blues has pointed out that Nomura Holdings, (reportedly an Archegos bagholder) is showing $GME options on the books since the collapse:

Also worthwhile noting that Nomura Holdings popped up with 200,000 Puts and 300,000 Calls in GME as reported in their 13F filings on 17th May, for the period ending 31st March (Source: Fintel)

I’m pretty convinced even without seeing statistical correlations at this point.

EDIT 5: I also wanted to encourage 🦍s to consider buying and holding $GME directly instead of risking anything with dates and CALL options. I’ve heard reports of 🦍s being paid to hype GME dates, and have gotten messages trying to encourage me to look into specific future dates. I won’t be looking into them, as I’m only interested in past dates and holding real $GME shares. I’m an 🦍 investor, not a speculator. Also, selling 🦍s calls is one way Options Market Makers can generate phantom shares to keep the game going.

EDIT 6: My estimation of them dumping some short positions over ~45 days before the announcement is just casual speculation regarding why announce when they did. The fact that VIAC and DISCA prices spiked up and returned to normal right before they pronounced Archegos dead makes me think those were the last positions they exited. I don’t think their bag-holders have shed their $GME exposure… but it’s all just wild speculation. The only thing I’m pretty sure of is that Archegos died long before March 26th, and I strongly suspect the investigations are related.

The Quants will hopefully be able to answer the kinds of questions people have about how it relates (or doesn’t) to specific stocks.

TADR: there are a number of coincidences between the collapse of Archegos and GME-related events. Enough I think the Superstonk Quants should take a look (or anyone with ideas on how to research farther) to see if they can find evidence for/against a connection. 🦍 think we overlooked it because it collapsed long ago, and didn’t connect new info back to it. Quants help please, because apes 🦍 together strong.

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