The Last Thing We Needed: Breaking Down the Archegos Capital Blowup

The Razor’s Edge

The Archegos Capital blow-up at the end of Q1 marked the second huge non-fundamental market event, mirroring the GameStop/Melvin Capital/vintage investing short squeeze dynamics of January. While these can feel like localized events, making or spoiling GSX or VIAC investors' quarters, they at the very least offer important reminders of risk management and understanding your underlying investments. We break down how something like this might happen and what it means for bystanders and active investors.

Topics Covered

• 2:30 minute mark - The Archegos and GameStop echoes
• 10:00 - The scaling of the short squeeze strategy
• 13:30 - Lone actor or market reflexivity at work?
• 16:00 - What fundamentally changed during COVID for these sorts of names
• 21:30 - The lack of an exit strategy
• 27:00 - Aftershocks of this action
• 33:00 - Adjusting to an elevated valuation environment and the leverage factor
• 39:00 - The company and prime brokers’ perspective on this situation
• 45:00 - Where do we go from here
• 54:00 - The danger of consensus
• 1:00:00 - Time to make weight for certain stocks

Bonus: Article from Michigan Radio on sewer issues