The Conglomerate Family Became A Villain [EN]: Chapter 276

Big Short (2)

Jeong Hyun-woo and Sarah returned to their lodgings.

“So, we’re retreating for now?”

Jeong Hyun-woo lay down on the sofa in response to Sarah’s question.

“It’s not easy.”

Knowing the future and investing seemed simple, but boosting a declining stock price was not so easy.

‘Am I missing some details?’

The hotel suite was meticulously finished with silk wallpaper up to the ceiling.

‘Well, this place has all the details.’

He smiled faintly.

Seeing Jeong Hyun-woo’s smile, Sarah raised her voice.

“What are you smiling about? Did you come up with a good idea?”

Jeong Hyun-woo answered her question.

“I think the hotel is better than me.”

“Better than Charlie?”

“In terms of details.”

“What is that supposed to mean…”

Sarah made a sulky face.

“We’re going public.”

At Jeong Hyun-woo’s words, Sarah narrowed her eyes.

“Didn’t Peter say that Victoria Corporation’s value would fall further if he listed Victoria Fund?”

“That would be the case if we went public right now.”

“Hmm, so you mean you’re going to list it in a few years.”

Jeong Hyun-woo shook his head.

“Not really.”

“Not really?”

“We said the assets under management are $150 billion and the market capitalization is $20 billion. If we increase the assets under management to $300 billion, wouldn’t the market capitalization rise to $40 billion?”

Sarah puffed out her cheeks and replied.

“That’s arithmetically correct, but where are you going to get $150 billion from?”

She thought it was impossible.

“Let’s open the Victoria Fund.”

Fund opening.

Sarah blew the air out of her mouth.

“Huh? You’re going to open the fund to the general public?”

“I thought that should come before the IPO [Initial Public Offering].”

Sarah frowned slightly.

“Is it okay in the current situation?”

Jeong Hyun-woo got up and replied.

“Even though Victoria Fund’s performance isn’t as good as last year, it still far surpasses ordinary funds. I think it’s still an attractive investment for the general public.”

Investing in Victoria Fund could yield much higher returns than putting money into savings or investing in fund products at Citibank.

“Charlie, if we enter the fund market, existing funds will try to keep us in check.”

Jeong Hyun-woo did not deny her words.

“If we open the fund to the public, everyone will become our enemy. But I think that’s the only way.”

“Charlie, you’ve chosen a dangerous path.”

“It’s simple. High risk, high return.”

Sarah walked over and sat next to him, saying.

“Still, we need to set limits.”

“Are you talking about fundraising?”

“If we go unlimited, our clients won’t stand still.”

Victoria Corporation’s biggest clients were Citibank, Bank of America, and JP Morgan, known as the three major banks in the United States.

“The media won’t stay quiet either. They’ll say we should stick to financial network services and not venture into the financial industry, which isn’t our area of expertise.”

Sarah nodded at his words.

“That’s right. They’ll definitely say that. Charlie, do you have a plan?”

“Let’s limit it to $10,000.”

“The fund investment amount?”

“Shouldn’t we name the fund the $10,000 Fund?”

Limiting the minimum investment amount.

It wasn’t a bad approach, but it wouldn’t be enough to avoid competition from rivals.

“Hmm…”

As Sarah sighed softly, Jeong Hyun-woo said.

“Sarah, don’t worry too much about the banks. They might not care about us that much.”

Sarah widened her narrowly opened eyes and asked.

“The banks don’t care about us?”

“If they thought of us as seriously as Sarah thinks, our stock price wouldn’t be like this.”

“So you’re saying the banks think of our investment as a temporary success?”

“I think that’s one of the reasons why our company’s stock price has fallen so much.”

Jeong Hyun-woo got up and said.

“Sarah, let’s go see Jeremy.”

He wanted to meet Jeremy Spin and proceed with the discussion.

* * *

17 hours ago.

Jeremy Spin was sharing a drink with Howard Robinson, his former boss at Morgan Stanley.

“Howard, welcome back to New York.”

Howard Robinson replied in a bright voice.

“I’m not completely back yet.”

“Do you have more work left in Tokyo?”

“I’ll be there for about two more years.”

“Two years?”

Howard Robinson laughed loudly.

“Hahaha, Tokyo is the best city. It’s overflowing with alcohol, women, and money.”

Jeremy Spin was not a hedonist, so he said with a lukewarm expression.

“I’ll pass on that.”

Howard Robinson stopped laughing and said.

“I heard your friend is also in Tokyo.”

He knew John Peer, the CEO of Victoria Fund. In fact, he had come to see Jeremy Spin because he was friends with John Peer.

“Are you talking about John?”

“Yes, that friend from JP Morgan.”

“Howard, do you need something from John?”

Howard Robinson shook his head and replied.

“I don’t need anything. I’m just worried.”

“You’re worried about John?”

“Isn’t he selling off Japanese real estate one by one? How can I not be worried when he’s selling gold nuggets at bargain prices with his own hands?”

The real estate sold by Victoria Fund had all increased in price after the sale.

Wall Street investors were criticizing it as a bad investment.

‘Those who talked about the Japanese bubble are now talking about Japan’s glory.’

It seemed that when a bubble became too big to handle, people couldn’t give it up.

“The sale of Japanese real estate is Charlie’s order, not John’s.”

“Charlie? Really?”

“Yes.”

Howard asked tentatively.

“Jeremy, can you handle his dictatorship?”

Jeremy Spin read the intention in his question and chuckled.

“If it’s a scout, stop it. I like New York.”

He had no intention of returning to Morgan Stanley.

‘This side is different from Howard.’

After leaving Morgan Stanley, Howard Robinson drifted from one minor position to another before being scouted as the Tokyo branch manager, after which he returned to Morgan Stanley without hesitation.

But Jeremy Spin was different. He was receiving a high salary as COO [Chief Operating Officer] at Victoria Fund.

“You’re saying the treatment at Victoria Fund is better than Charlie Jung’s dictatorship.”

“Charlie Jung is not a dictator.”

“Are you defending the owner?”

“It’s not defending, I’m just stating the facts.”

Howard Robinson smiled.

“You were always a model student.”

“Please say I’m diligent.”

“Yes, excessively diligent.”

The fact that Victoria Fund was operating smoothly even after John Peer left for Tokyo was thanks to Jeremy Spin’s skills.

Jeremy Spin emptied his glass and raised his right hand.

“One more of the same, please.”

As the bartender nodded and prepared the drink, Howard Robinson said.

“You don’t seem to have any questions for me.”

Jeremy Spin said in a low voice.

“What I was most curious about was whether Howard was alive.”

“I wasn’t driven into that much of a corner.”

“Wasn’t it?”

“I just ran out of money.”

Howard Robinson was not a man of luxury. Nevertheless, he became penniless because he failed in stock investments after leaving the company.

He, who had served as the head of the strategic planning team at Morgan Stanley, failed in stock investments.

Jeremy Spin interpreted this result as follows.

‘It’s because he was too greedy and tried to climb the stairs several steps at a time.’

If he had invested diligently, Howard Robinson would not have become penniless.

‘Of course, if that had happened, there would be no Howard now.’

Howard Robinson was boasting that he had received a large bonus for his success in Tokyo.

“Are you well-off now?”

Howard Robinson smiled.

“Tens of millions of dollars in my account have been converted into Japanese real estate.”

He invested in Japanese real estate with Morgan Stanley’s money and bought buildings with his own money.

“Is that okay?”

Howard Robinson raised his voice and replied.

“Of course, it’s okay! Japan is a gold mine itself.”

Jeremy Spin listened to his shout and thought.

‘I didn’t know Howard would change this much.’

He could see through Howard Robinson how money changes people.

“You should invest in Japan too.”

Jeremy Spin shook his head at Howard Robinson’s suggestion.

“I like America.”

Howard Robinson raised his glass and said.

“Let’s bomb Japan with money! Like in World War II.”

Jeremy Spin chuckled as he received his glass from the bartender.

“You could end up like Aogashima [a small Japanese island and site of a fierce battle during WWII].”

In Aogashima, a fierce battleground in the Pacific War, the U.S. military suffered significant casualties.

“That’s why you can’t make big money.”

“It’s okay if I don’t make big money. Life is a slow step.”

“You’re such a boring friend.”

Jeremy Spin shrugged his shoulders and tilted his glass.

‘Life isn’t about having fun.’

He was like a cold-blooded philosopher.

* * *

It wasn’t the first time Jeong Hyun-woo and Jeremy Spin had met. But it was the first time he had met with Sarah.

“I’m Jeremy Spin.”

“I’m Sarah Hilton.”

After a brief greeting, Jeong Hyun-woo and Sarah sat down.

“I’ve heard the story to some extent.”

Jeong Hyun-woo had told him that he wanted to take Victoria Fund public before visiting him.

“We want to take Victoria Fund public.”

Jeremy Spin brought his hands together in the middle and asked.

“May I ask why?”

He had only heard over the phone that they were going public, but he hadn’t heard the reason.

“Because Victoria Corporation’s stock price is falling too much.”

Jeong Hyun-woo answered honestly.

Like an investor in New York, Jeremy Spin knew Victoria Corporation as well as the major companies on the Dow [Dow Jones Industrial Average] and Nasdaq [National Association of Securities Dealers Automated Quotations].

“Recently, expectations have disappeared a lot. Charlie is trying to raise expectations by going public with Victoria Fund.”

Jeong Hyun-woo asked Jeremy Spin the same question he had asked Peter Lynch.

“What do you think will happen to Victoria Corporation’s stock price if Victoria Fund is listed?”

Jeremy Spin answered without hesitation.

“There won’t be much change.”

He used the expression “there will be no change” instead of “it will fall.”

Jeong Hyun-woo took his statement that there would be no significant change to mean that there would be no change in the downward trend.

“You’re saying it won’t be a solution to the current situation.”

So far, it was the same as the previous conversation. But Jeremy Spin had more to say.

“But if you change a few conditions, you can change the trend.”

You can change the trend.

At his words, Jeong Hyun-woo and Sarah raised their eyebrows.

“Are you saying you can change the trend of Victoria Corporation’s stock price?”

“Jeremy, this isn’t a strange story, is it?”

Jeremy Spin replied in a soft but cold voice.

“Charlie, Miss Hilton, there is a proper way, not a strange way.”

Jeong Hyun-woo lowered his eyebrows and asked.

“What is the method?”

Jeremy Spin held up two fingers, as if symbolizing Victoria.

“Broadly speaking, there are two methods.”

The reason he could offer a solution, unlike Peter Lynch, was not because his abilities were superior to Peter Lynch’s.

He was an insider, and Peter Lynch was an outsider, so there was a difference in the amount of information they had.

“Jeremy, I want to hear both methods in detail.”

Jeremy Spin nodded slowly and began to talk about the first method.

“The first is to buy back company stock.”

Victoria Corporation buys back Victoria Corporation stock with its own funds.

This was a method used by many companies and could have a similar effect to dividends.

Jeong Hyun-woo was slightly disappointed with his answer.

“Jeremy… A buyback of $100 or $200 million won’t be effective.”

Victoria Corporation’s total market capitalization was close to $90 billion, even though it had fallen significantly.

Even if they bought back $100 million, it was unlikely to have a big impact.

Jeremy Spin did not deny this.

“Of course, $100 or $200 million won’t be effective.”

Jeong Hyun-woo paused and raised his voice.

“Then are you saying we should use all the cash we have to buy back our own shares?”

Jeremy Spin shook his head at his question.

“Of course not.”

“Then what method are you suggesting for buying back our own shares?”

Jeremy Spin replied.

“Victoria Fund buys Victoria Corporation’s stock.”

Jeong Hyun-woo paused.

“Wouldn’t that be dangerous?”

He had withdrawn funds from Japan and invested them in Apple, Intel, and Microsoft.

This was because if Victoria Fund’s funds were invested in Victoria Corporation, the federal government could raise issues.

“It might have been a problem last year. But this year, the situation is different.”

Jeong Hyun-woo frowned and asked back.

“The situation is different this year?”

Unlike Jeong Hyun-woo, Jeremy Spin had no emotional fluctuations.

“Last year, Victoria Corporation’s stock price rose like Japanese real estate. But what about this year? Isn’t it down more than 30% from its peak? If the federal government or the New York Stock Exchange tries to make an issue of it, we can answer like this: Victoria Corporation’s stock has fallen to a sufficiently attractive price. Buying stock at this price is not unfair trading but value investing.”

He was suggesting using the decline in Victoria Corporation’s stock price as the reason for the buyback.

Sarah nodded after hearing his answer.

“Even if someone tries to find fault, there’s enough room to argue.”

Jeong Hyun-woo could also understand what he was saying. But he didn’t think there were no problems.

“I understand that we can boost the stock price by buying back Victoria Fund’s own shares. But wouldn’t that harm Victoria Fund’s IPO?”

Jeremy Spin answered his question immediately, as if he had thought about it in advance.

“If Victoria Corporation’s stock price rises due to the buyback of its own shares, Victoria Fund’s returns will also increase. This is not bad news for Victoria Fund.”

In theory, it was perfect.

But Jeong Hyun-woo had one more thing on his mind.

“If Victoria Fund owns more than 5% of Victoria Corporation’s stock, how will the ownership structure change?”

Jeremy Spin raised both hands lightly and replied.

“If it’s 5%, there won’t be any major problems. However, if it exceeds 10%, there may be some problems.”

If the stake exceeds 10%, there will be problems.

This was because of Jeong Hyun-woo’s stake.

If Victoria Fund’s stake grew to more than 10%, his stake and Victoria Fund’s stake would combine to exceed 50%, so he could handle matters unilaterally without the consent of other shareholders.

Of course, Victoria Fund was not solely owned by Jeong Hyun-woo.

Nevertheless, people could accuse Jeong Hyun-woo of trying to secure his management rights by using Victoria Fund.

“So, if we don’t exceed 5%, there won’t be any management control issues.”

Jeremy Spin nodded slightly.

“That’s what I think.”

Jeong Hyun-woo sighed briefly and asked.

“Then what is the second method?”

He wanted to know Jeremy Spin’s second ingenious plan.

‘Depending on the second story, Victoria Fund’s direction may change.’