in2ebook Chapter 397 Shorting US Stocks Again
Chapter 397 Shorting US Stocks Again
June 18, 2001, 10:00 AM. Ling Yun arrived at San Francisco's financial district. The car came to a smooth stop in front of an office building. The building in front of him was one of the tallest in the financial district, with a deep blue glass curtain wall that reflected the shadow of the building opposite.
Sophia stood in the doorway, behind her stood seven or eight people, all dressed in dark suits, men and women, their hair neatly combed. Sophia wore a black suit skirt and a white shirt, her hair styled in an updo, revealing a pair of pearl earrings. She saw Ling Yun get out of the car, take a few steps forward, and extend her hand.
"President Ling."
Ling Yun shook her hand; it was a little cold. He glanced at the people behind Sophia, some he recognized, some he didn't. Sophia stepped aside and began introducing them one by one. "This is the Investment Director, this is the Risk Control Director, this is the Operations Director, this is the Chief Trader." Each person came up, shook hands, said "Hello, Mr. Ling," and then stepped back. Ling Yun nodded, saying nothing more.
Sofia led him inside. The lobby had white marble floors that gleamed like mirrors. Behind the reception desk hung the Icecloud logo: a blue cloud surrounded by lightning bolt patterns.
Sofia walked ahead and pushed open a glass door, revealing an open-plan office area.
There weren't many people, maybe thirty or forty workstations, and more than half were occupied. Some were on the phone, some were typing, and some were working in front of their screens. The desks had laptops, documents, coffee cups, and sticky notes—no different from any other company. But the atmosphere was different; it wasn't the lifeless quiet kind, but a busy one. Everyone was working; no one was chatting, no one was browsing the web, and no one was daydreaming. The phone calls weren't loud, and the keyboard clicks weren't loud either, but they were frequent.
Sofia led Ling Yun through the office area. Someone looked up, saw Ling Yun, paused for a moment, then stood up and said, "Hello, Mr. Ling." The person next to them also stood up and said, "Hello, Mr. Ling." One after another, like dominoes. Ling Yun nodded without stopping.
At the end of the corridor, Sophia pushed open a door leading to an office. It wasn't large, containing a desk, a few chairs, a bookshelf, and a floor-to-ceiling window. Outside, San Francisco Bay stretched out, its waters a deep, almost blackish blue, with several white sailboats moving slowly by.
Sophia sat down across from the desk and placed the folder she was holding on it. Ling Yun sat down opposite her, while Zhao Hu stood in the doorway.
"Mr. Ling, let me report on our work." Sophia opened her folder and began to read, "We started building our position last March, shorting the Nasdaq. The total capital was 80 billion, divided into three parts. The first part was 30 billion in futures. The second part was 10 billion in options. The third part was 40 billion invested in Internet technology constituent stocks. The futures portion was used to short the Nasdaq index futures, with an average entry point of 4800 points. Now the Nasdaq is at 2200 points, down 54%. With ten times leverage in futures, the profit was 540%, or 162 billion. This part has already been closed out and the profits secured."
She paused for a moment and took a sip of water.
"For the options portion, we bought put options with a strike price of 4500 points and a one-year expiration. After the Nasdaq fell below 4500 points, the options started to make money. Now that it has fallen to 2200 points, the value of the options has increased eightfold. The unrealized profit is about 8 billion. We are also preparing to take profits on this part and complete the liquidation by the end of this month."
She paused again and turned a page.
"For individual stocks, we're focusing on internet sector stocks, including Yahoo, Amazon, eBay, Priceline, and a few others. The average decline is around 70%. A 40 billion investment has yielded a 26 billion unrealized profit. We're still holding."
She closed the folder and looked at Ling Yun.
"I made 162 billion in futures and 80 billion in options. In total, I made 242 billion. Adding the principal of 80 billion and the unrealized gains of 26 billion in individual stocks, my total cash on hand is 348 billion. After deducting taxes, management fees, and transaction costs, my net cash is probably less than 300 billion."
Ling Yun nodded. "Your work lately has been excellent."
Sofia said with some emotion, "This result is only so-so. It's not that we didn't do well, it's that we didn't dare to. We didn't dare to short sell openly, for fear of being investigated, so we could only do it secretly. According to the timeline and strategy you gave us, boss, we could actually earn more, but you didn't agree. Otherwise, we only needed this one wave to become one of the top funds."
Ling Yun said noncommittally, "What you said is all true, but don't forget, your boss is Chinese. I'm afraid I might get robbed one day."
Sofia was also helpless, "It's such a pity. With the boss's ability, our company could have become the world's number one investment company very soon."
Ling Yun picked up the water glass on the table, took a sip, looked at Sofia, and said, "The company registered a company in the Cayman Islands and acquired a chip factory and a screen manufacturing factory."
Sophia nodded and jotted it down in her notebook. "Okay, Mr. Ling, I'll arrange for someone to register the company later. Are there any size requirements for the chip factory and screen manufacturing plant?"
Ling Yun patiently explained, "A general scale is fine. The main thing is to have a mature team, production lines, and upstream and downstream manufacturers."
"Okay, I'll contact my friends in the semiconductor industry and ask them to recommend someone."
Sofia continued, "We currently have too much capital on hand. Should our strategy be to continue observing, or wait for the direction to emerge before taking action?"
Ling Yun nodded. "We'll establish short positions at the end of the month, mainly in financial and banking futures and constituent stocks."
Sofia paused for a moment, then asked, "What? Finance, banking? You think this dot-com bubble will spread to the financial and banking sectors?"
Ling Yun said, "The financial and banking sectors haven't fallen much yet, but they can't possibly remain unaffected. Also, internet companies keep falling, so their performance will decline as well."
Sophia stared at him, her eyes wide. She opened her mouth, then closed it again. After a few seconds, she asked, "Mr. Ling, shouldn't the impact on performance have been apparent for a while now?"
Ling Yun didn't answer. He stood up, walked to the window, and looked at the sea for a while. Then he turned around, walked back, and sat down. He looked at Sophia and said, "Get ready. Clear out your positions before the end of the month. Prepare cash, and establish short positions before September. Futures, options, and individual stocks—do it all. Besides finance and banking, short airline stocks, insurance stocks, and tourism stocks, and go long on military stocks, oil stocks, and gold stocks. This is hedging."
Sophia scribbled quickly in her notebook. When she finished, she looked up at Ling Yun.
"Mr. Ling, does anyone else know about this?"
Ling Yun said, "You. Only you."
Sophia nodded, closed her notebook, and placed it on the table. She stood up, walked to the door, and closed it. Then she came back, sat down, and looked at Ling Yun.
The two stared at each other for about ten seconds.
Ling Yun spoke up. He said, "You don't need to tell them. You do what I say. You do your thing, and they do theirs. What they don't know won't affect them."
Sophia didn't speak. She lowered her head, opened her notebook again, and wrote a line. Then she looked up at Ling Yun.
"Mr. Ling, I understand."