Like most people, before last weekend, I’d never heard of Bill Hwang or Archegos. The name of his hedge fund that is now making headlines for spectacularly blowing up just doesn’t make much sense to me. Names are not just names, they come with an explanation or a story. For instance David Einhorn’s Greenlight (because his wife gave him the greenlight to start a fund) or Jim Chanos Kyknos (cynical in Greek, because his heritage is Greek but as a short seller it pays to be a cynic).
He’s not the Messiah
Apparently the story attached it to Bill Hwang’s Archegos is that it is biblical Greek. According to the FT the word means:
Archegos, an ancient Greek word meaning a leader. In the Bible, Jesus was described as the Archegos, the “author” of salvation.
But I spent 3 years at university studying koine Greek, and the word means nothing to me to me. ὁ υἱὸς τοὺ ἀνθρώπου “the Son of man” along with “Son of God”, and of course the Hebrew word “Messiah” (anointed one) are much more prevalent. I haven’t had to use Koine Greek in management consulting or equity research, so I have forgotten much and could be wrong. But other people in the comments sections of the FT have made a similar point about the name Archegos though.
A couple of years ago Matt Levine joked that it is becoming harder for hedge funds to find names.
One big problem in the hedge fund industry is that every imaginable figure from Greco-Roman mythology has already been pressed into service as a hedge fund name, so what are you going to call your fund? Just opening to a random page in Graves, or even Harrison, will no longer get you a unique name that conveys the seriousness, power and historical heft of your fund. Many other ancient traditions — Hindu, Egyptian, Norse, Babylonian, Akkadian and of course Elvish — have also been mined extensively for financial-company names. If you want to name a fund these days, you’re pretty much stuck with your street address.
He also posted a link to this fun website Quant fund or metal band – which gives you a random metal band or quant fund, and you have to guess which it is. Try it. It’s surprisingly hard to guess!
A Korean / American can choose any name he likes, but a Greek word with no underlying connection just sounds inauthentic. There’s no story behind it, presumably he doesn’t read the Gospel authors in the original language? Perhaps the name was not supposed to have a story attached, just something religious sounding giving nothing away? Often people say “This sounds like semantics” to infer that you are making a point that’s irrelevant or pedantic. But semantics in the original Greek means the opposite, σημαντικός sēmantikós, “significant”.
May you come to the attention of authority
Hwang’s previous hedge fund was accused of insider dealing and paid $44m in fines to the SEC. Then in 2014 he was banned from Hong Kong for insider trading, hence he needed to a find a new name that didn’t draw attention to itself. The events of the last few weeks though suggest we still don’t know the full story. We’ve just had one of the most volatile years in stockmarket history, yet this guy blows up his fund with (reportedly) $80bn of leverage despite the S&P hitting new highs and his fund owning stocks that were doing well (Discovery, ViacomCBS). I have a conjecture of what might have been going on, but I won’t share my speculation (I’d just be guessing and there’s no upside, even if I’m correct). Below is a chart of the Discovery Channel’s share price, since the start of last year. Hwang held a leveraged position in this stock, which had trebled since November, as they rolled out a successful new offer to customers. Yet he was a forced seller, (most recent, far right of the chart) where the share price dropped steeply. There must have been other leveraged positions that had gone wrong, otherwise the facts we have make no sense.
A SPAC called Gerova
I did have a similar experience with a weird named SPAC a few years ago. SPACS are in the news currently, but people forget that there was a SPAC boom just before the financial crisis in 2007-8. SPACs are supposed to do a deal, reversing into an unlisted company or return the money to investors.
This specific SPAC was linked to one of Stanley Ho’s (Macau gambling billionaire) daughters called Asia Special Situations Acquisition Corporation that had then changed its name and transformed into a reinsurance company worth (supposedly) ¾ of a billion dollars, formed in the Cayman Islands, then redomiciled to Bermuda, headquartered in the British Virgin Islands, but listed in New York. The SPAC had originally tried to buy an Australian coal mining company, but the deal fell through. Presumably the cash was returned to Stanley Ho’s daughter and others who had funded it. But this left an empty shell, whose name changed from Asia Special Situations Acquisition Corporation to Gerova when the Macau connections were no longer involved, and other, more shadowy figures had taken control of the company. The ringleader seems to have been Jason Galanis, who had already been fined and barred by the SEC for 5 years for forging a signature.
I was working at Seymour Pierce when the company received a bid approach from Gerova.
The name itself “Gerova” made no sense though. The only reference I could find to Gerova at the time was a tiny village in the Balkans. Gerova was obviously a fraud, it took me about 30 minutes to realise that. The financial disclosure just didn’t support the 3/4 billion dollar valuation. The management of the company were attempting to use their over valued paper to acquire Seymour Pierce at a price far above what a “normal” buyer would have offered for the stockbroking firm. If your paper is worthless, you can afford to use it as an acquisition currency to offer an attractive price, because you know you’re giving nothing of value away.
He’s a very naughty boy
It took a surprisingly long time for some other people working at Seymour Pierce to see what was going on. In the end the perpetrators Jason Galanis and Ymer Shahini have now been found guilty and sentenced and are in prison. Galanis’ heritage is Greek, so he could have chosen a Greek name for the entity, but chose not to. Then I discovered that his accomplice Ymer Shahini was a national of Kosovo, in the Balkans. He was the first defendant ever to be extradited from the Republic of Kosovo to the US, as the two countries didn’t have an extradition treaty until 2019. I’m guessing the name Gerova came from Shahini choosing an obscure village in former Yugoslavia that no one would have heard of. Either he took the name randomly from a map of former Yugoslavia (Gerova is in Croatia) or perhaps it meant something specific to him, but no one else. So while hedge funds that want to signal seriousness, power and erudition are running out of names, I’d suggest if you are trying to defraud investors then naming your corporate entity after a village in Croatia doesn’t signal much at all.
To be clear, I’m not saying that Archegos was a fraud, or insider trading, but there were good reasons that the people behind both companies wanted a bland obscure name, because they’d already been fined and barred by regulators so wanted to avoid coming to the attention of authorities.
Names tell us something even when they are supposed to tell us nothing.