Archegos Capital Management is a hedge fund company that recently collapsed after it lost BIG on margin calls. When I say BIG I mean that with a capital B because they lost billions, around $20 billion to be more accurate. This happened because Archegos had leveraged positions on ViacomCBS (VIAC) and GSX Techedu Inc. and when the stock prices of these companies started falling, it triggered margin calls. This left Archegos in a bad position where they needed to sell off $20 billion in shares of those companies to take care of the margin calls.
A number of big banks were involved in this debacle. Goldman Sachs and Morgan Stanley were among the first banks to sell off Archegos’s holdings, and they both appear to have avoided taking major hits. Credit Suisse and Nomura Holdings on the other hand were not as lucky as sold their shares after the price had already tumbled. Both Credit Suisse and Nomura Holdings have told shareholders their businesses face “significant” losses.
One of the biggest impacts of this fiasco was ViacomCBS (VIAC) share prices dropping around 50% in value, from a $90-100 range down to its current value around $44. Now that the Archegos meltdown has forced the price of ViacomCBS down, is this a good time to buy? Some analysts are saying to sell, some are saying to buy. I’m not a professional analyst or financial advisor but I personally think it is a buy a this price.
ViacomCBS is the parent company of CBS, Paramount Pictures, MTV, Nickelodeon, Comedy Central, Showtime, and numerous other TV channels. They have moved towards streaming services with Paramount+ and PlutoTV. The stock price was definitely questionable when it quickly skyrocketed to around $100 per share, but at $44, I think it’s a good buy. Leave me a comment and let me know your thoughts on the Archegos Capital collapse or whether you think it’s a good time to buy some ViacomCBS or to stay away from that mess.