Tag Archives: hedge

Is Musk turning Tesla into a cryptocurrency hedge fund? RT’s Boom Bust explores

Author: RT
This post originally appeared on RT Business News

US electric automaker Tesla reported a net profit of $ 438 million for the first quarter of this year, saying that the company’s sales of bitcoin made a positive impact of $ 101 million.

RT’s Boom Bust talks to Octavio Marenzi of Opimas LLC about the company’s report and the role of bitcoin there.

Tesla’s quarterly results are “pretty encouraging,” according to the analyst. “What is kind of weird, is this whole thing with bitcoin and a hundred million dollars of bitcoin gains added to the balance sheet and the income segment.”

Marenzi goes on: “That’s a bit strange overall, not very sure what Elon Musk is doing there. It seemed for a while like he’s going to turn Tesla into a cryptocurrency hedge fund… And maybe that will still come, who knows? But it looks a bit strange, a bit confusing to markets…”

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Credit Suisse ousts top execs, slashes bonuses amid heavy losses from US hedge fund meltdown

Swiss banking giant Credit Suisse said on Tuesday it expects a first-quarter pre-tax loss of around $ 960.4 million after taking a charge of $ 4.7 billion as a result of the US hedge fund Archegos Capital collapse.

“The significant loss in our Prime Services business relating to the failure of a US-based hedge fund is unacceptable,” said Thomas Gottstein, chief executive of Credit Suisse.

Investment banking CEO Brian Chin and the chief risk and compliance officer, Lara Warner, will step down from their roles with immediate effect, according to Credit Suisse.

It also said the executive board will forgo both short-term and long-term bonuses for the 2020 financial year, with Chairman Urs Rohner giving up his “chair fee” of 1.5 million Swiss francs ($ 1.6 million).
Also on rt.com Global banks bracing for losses amid US hedge fund collapse
Credit Suisse will be suspending its share buyback program and reducing its dividend, to be paid through a mix of capital and retained earnings. According to the bank, it won’t resume share purchases “before we have regained our target capital ratios and restored our dividend.”

READ MORE: Credit Suisse faces criminal charges over money-laundering for cocaine cartel

Credit Suisse was one of several lenders that acted as prime broker to the New York-based billionaire Bill Hwang’s Archegos Capital Management. The sudden liquidation of the hedge fund last month ignited a fire sale of more than $ 20 billion in assets that has left some of the world’s biggest investment banks bearing billions of dollars of losses. Credit Suisse was one of the last to try to unload its shares in the company, selling at just over $ 40 per share, compared with the $ 100 they were priced at earlier in March.

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Global banks bracing for losses amid US hedge fund collapse

World banks may lose over $ 6 billion from the downfall of the US investment firm Archegos Capital, sources told Reuters. Regulators are closely monitoring the situation as panic spreads about the possible scale of the fallout.

The sudden liquidation of the New York-based billionaire Bill Hwang’s Archegos Capital Management ignited a fire sale of more than $ 20 billion in assets that has left some of the world’s biggest investment banks bearing billions of dollars of losses.

According to billionaire investor Mike Novogratz, the collapse of Hwang’s Archegos fund could turn out to be “the most spectacular personal loss of wealth in history.”

The problems started last week when a disappointing stock sale by media giant ViacomCBS triggered devastating bank margin calls for Archegos, three people familiar with the matter said. Shares in ViacomCBS plummeted 23% last Wednesday after the media company sold shares at a price that diluted its value. The shares continued to decline, setting off alarm bells at Archegos’ prime brokers and prompting them to offload stock in all of Archegos’ investments.
Also on rt.com Wall Street banks ditch $ 19 billion of stocks in ‘unprecedented’ block trade selloff – media
According to the sources, Goldman Sachs and Morgan Stanley were quick to offload shares on Friday, forestalling a material financial impact.

Meanwhile, investment banks Nomura and Credit Suisse warned investors that they were facing huge losses from their exposure to Archegos. Shares in Japan’s Nomura plunged 16% and Credit Suisse dropped 14% amid analyst speculations on how much money they could lose.

Nomura has already warned it faces a possible $ 2 billion loss while Credit Suisse said its losses would be “highly significant and material.” Analysts estimate the Swiss bank’s losses could amount to $ 4 billion. In a statement, Credit Suisse said that “a significant US-based hedge fund defaulted on margin calls made last week,” and that meant it and other banks were forced into “the process of exiting these positions.”

Deutsche Bank said it had significantly de-risked its Archegos exposure without incurring any losses and was managing down its “immaterial remaining client positions,” on which it did not expect to incur a loss.
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The US Securities and Exchange Commission said on Monday it had been “monitoring the situation and communicating with market participants since last week” as panic spreads about the possible scale of the fallout from the forced liquidation of Hwang’s fund. Regulators in the UK, Switzerland and Japan also said they were following the developments. 

Investors are meanwhile raising concerns that the full impact of Archegos’ problem has not been realized. Market observers recalled that only in February, hedge funds took major losses on short positions during the run-up in GameStop stock. Hedge fund de-leveraging also contributed toward turmoil in the US Treasuries market in March 2020.

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