Credit Suisse is still unloading shares of Discovery from Archegos
Credit Suisse is still liquidating its positions following the Archegos Capital Management explosion, CNBC trader David Faber said, putting more pressure on a rundown media stock.
The investment bank bought blocks of various Discovery share classes on Tuesday, Faber reported. Discovery was one of the stocks that fell sharply in late March when hedge fund veteran Bill Hwang’s family office failed to fulfill its margin call. Discovery’s Class A shares were down more than 4% in expanded trading.
Discovery and ViacomCBS, a senior media colleague, saw their shares soar rapidly in the first few months of the year, apparently pushed up by the heavily indebted Archegos. Discovery’s Class A share rose from $ 30 per share in late December to $ 77 per share in mid-March before the air drained. They closed at $ 40.38 on Tuesday.
Credit Suisse was one of the banks hardest hit by Archegos’ risky trading. The bank reported a $ 4.7 billion burden of trading losses and announced that two of its C-suite executives would be stepping down.
Credit Suisse and other Wall Street banks will sell swap positions to hedge funds and family offices so clients can get exposure to a stock even though the bank technically owns the stock. If the stock goes down and the fund fails to meet its obligations, the bank can hang on to the stock’s losses.
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