‘Unprecedented’: Wall Street Ponder Goldman’s Block-Trade Spree

Photographer: Michael Nagle / Bloomberg

While Wall Street speculated on the identity of the mysterious seller behind the massive $ 10.5 billion in block trades made Friday by Goldman Sachs Group Inc. were carried out, investors also wondered how unprecedented the sell-off was – and whether more was to come.

The sale lit up merchants’ chat rooms from New York to Hong Kong and was part of an extraordinary wave that erased $ 35 billion from the values ​​of bell stocks, ranging from Chinese technology giants to American media conglomerates.

“I’ve never seen anything like it in my 25-year career,” said Michel Keusch, portfolio manager at Bellevue Asset Management AG in Switzerland.

Goldman sold $ 6.6 billion in shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. before opening the US market, according to an email to customers seen by Bloomberg News. That move was followed by the sale of $ 3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.

Block trades – the sale of a large portion of the stock at a price that is sometimes negotiated outside the market – are common, but the size of these trades and the multiple blocks that enter the market during normal trading hours are not.

“This was highly unusual,” said Oliver Pursche, a senior vice president at Wealthspire Advisors, which manages $ 12 billion in assets. “The question now is: are they ready? Is this over? Or come Monday and Tuesday, will markets be hit by another wave of block trades? “

Read more: Goldman sold $ 10.5 billion worth of shares in Block-Trade Spree

The trades caused price swings for every stock involved in the high-volume trades, rattling traders and sparked talks that a hedge fund or family office was in trouble and forced to sell.

The situation is alarming “because we don’t have all the answers as to whether this was the liquidation of just one fund or more than one fund, or whether it was a liquidation of the fund in the beginning and the reason behind it,” said Pursche.

“It can be difficult for a manager from a positioning standpoint. A new wave of block trades could force fund managers to reassess their bets on some stocks, ”he said.

‘Unknown’

Frederik Hildner, a portfolio manager at Salm-Salm & Partner GmbH in Wallhausen, Germany, called the move “unprecedented”. He added, “The question is why these blockages took place? Does one company know something that others don’t know or were they somehow forced to take risks?