Fund Manager Chae Eunchae (2)
Rumors about Makers began circulating after the Yuseong Steel acquisition battle.
Lee Jaseung had started a company, people said. He'd done some consulting, they whispered.
At first it was little more than casual interest—small talk over dinner among the business elite, idle chatter inside golf carts.
Before long, though, that interest turned into pure entertainment.
It started when Lee Jaseung and Chae Eunchae took opposing positions on the Facenote IPO.
Everyone already knew Chae Eunchae had gone long. Then word spread that Lee Jaseung had quietly built a massive short position of his own.
"Who's going to be right?"
They settled in for what promised to be delicious spectating…
But the showdown everyone expected never quite materialized. Instead, the fun mutated into curiosity.
Chae Eunchae—who until then had been loudly promoting the Facenote listing—suddenly dissolved her fund and poured the money straight into Lee Jaseung's.
"The person who was supposed to take IPO allocation is suddenly shorting through the same vehicle?"
A flip that dramatic was bound to become the talk of the town. After all, it amounted to a public declaration that his fund was the better opportunity than her own.
In finance, it was unprecedented.
The questions only multiplied.
What does Lee Jaseung know that made Chae Eunchae reverse her entire position?
Is there some hidden landmine under Facenote?
The once-hottest deal of the year suddenly took a bucket of cold water to the face.
Seo Minju gritted her teeth.
"Lee Jaseung…"
Their last meeting flashed through her mind. The icy pressure he had turned back on her the moment she suggested he stop dealing with Seo Minjae was still vivid.
Before they parted, she had made herself perfectly clear.
"Seo Seong Securities has been mine since I was a child. Touch it and neither you nor Seo Minjae will ever set foot in this industry again."
"Gladly."
His reply had been infuriatingly light. The consequences were anything but.
Lee Jaseung was squeezing her without even needing Seo Seong Securities in the picture.
Openly taking the opposite side of Seo Seong Securities—and dragging Chae Eunchae in for good measure?
How desperately had Chae Eunchae begged for that IPO allocation? Just the other day she had been kissing every ring in sight and walking away with a three-hundred-million-dollar commitment. Now she had flipped like a pancake.
That alone would have been enough to set tongues wagging. The timing made it nuclear.
The moment Chae Eunchae pulled her money, a major advertiser cancelled its contract. Then the risk factors in the securities registration statement ballooned overnight.
Inside Seo Seong Securities the mood turned grim.
A knock, and the head of ECM walked in.
Equity Capital Markets was the core division that handled IPO underwriting and distribution.
"Managing Director, the market atmosphere is terrible. Institutions have all gone into wait-and-see mode."
"How much firm demand do we have so far?"
"Across Asia, one-point-one billion dollars."
Seo Minju's eyebrow climbed.
"Fifty-five percent of target."
"Yes. Only a few weeks ago institutions were screaming for more allocation…"
The underwriting agreement already bore Seo Seong Securities' seal. There was no way to cancel now. Every term was locked; only the market mood had flipped.
They were holding a hot potato they could neither sell nor throw away. Sitting still meant losses that would snowball by the hour.
"The probability of Facenote dropping has risen sharply. Right after an IPO the volatility is always extreme. Everyone seems to be waiting for the dip before they jump in."
"How far do they think it can fall?"
"Thirty dollars should hold. This is still Facenote. The bid side remains solid."
Seo Minju ran the numbers in her head.
As underwriter, Seo Seong Securities had bought two billion dollars' worth at thirty-one dollars a share—seven dollars under the public offering price.
"Tell the clients we'll sell at thirty-three."
"Thirty-three? Then our margin…"
The department head's eyes went wide.
Buying at thirty-one and selling at thirty-three left a six-percent spread; after costs it was effectively a loss.
"I know. But it's better than inventory. Instruct Research to raise the target price by fifty percent and flood the street with buy reports. Lobby the institutions and shove the paper. We need eighty percent of the inventory gone before listing day."
Buy-side research, investor forums, television appearances—every lever to reverse sentiment. Rebates to friendly houses to force the paper out. Textbook playbook. The department head still looked worried.
"We also have to prepare for the worst case. If they take losses, the institutions won't sit quietly."
"Then write a staged response manual. If the stock hits thirty, Level One. If it hits twenty-five, Level Two. Promise priority on the next quality deal, and review fee discounts if necessary."
Seo Minju herself feared a drop. At the same time she remained certain.
Even this is only contingency planning. Nothing can break the long-term uptrend.
"Our clients already understand that IPO investing comes with short-term volatility. What matters is the one-year return. And we are Seo Seong Securities."
That single sentence carried weight: Korea's top brokerage, twenty years of accumulated trust, and above all the halo of the Seo Seong Group.
"A temporary loss of this size can be soothed with fee discounts or preferential allocation on the next IPO. Twenty years of relationships don't shatter over something this small."
"Understood. I'll issue the sell orders immediately."
There was no room left to argue. Her logic was airtight, and the decision rested with her alone.
And then Facenote's listing day dawned.
With the eyes of the world fixed on it, Nasdaq delivered the worst possible clusterfuck.
Listing day.
The Nasdaq exchange went dark.
The system simply collapsed under the avalanche of orders.
The ECM head sprinted down to the trading floor.
"What happened to our unsold inventory?"
"We can't tell. The system still isn't responding."
"…What the hell does that mean?"
"We entered a million-share sell order, but the system only shows half a million filled."
He shoved his way to a screen and stared.
"And the other half million?"
"We can't even tell if it filled or if the order simply vanished. The whole system is dead."
"This is insane."
They had clawed through sales for weeks, yet Seo Seong Securities still sat on more than three hundred billion won of unsold stock. Every last share had to be gone by the close of listing day. Uncertainty like this was intolerable.
"What do we do?"
"Enter another half-million sell."
"Yes, sir."
Five minutes later a chime sounded. The trader peered at the screen and went paper-white.
"All one-point-five million shares filled. Wait—what? I clearly entered at thirty-eight. Why did it fill at thirty-six?"
"What?"
The original million plus the fresh half-million had both executed—below the offering price, at thirty-six.
The department head who had just dumped inventory cheaper than planned exploded.
"Fuck! Those Nasdaq idiots. What kind of garbage system is this? Enter another sell order!"
"Yes, understoo— Wait! No!!!!"
"Now what?"
"I entered a sell and it registered as a buy! We just bought half a million shares!"
"What the hell are you talking about? Cancel everything before it fills!"
The trader hammered the keys, punched cancel, hit confirm, and waited.
Five seconds. Ten. Thirty. Nothing.
"Cancel… cancel won't go through. The system's locked up again!"
"Goddamn Nasdaq!"
He immediately escalated to Seo Minju. She began mapping the damage.
Every house—global investment banks, domestic NB Securities, Seum Securities—was bleeding from the same wounds.
Orders that never processed.
Fills that came in far below the intended price.
Cancels that simply vanished into the void.
Every flavor of catastrophe imaginable.
On the first day of trading, Nasdaq freezes?
She forced her spinning mind to focus.
"How much inventory do we still hold?"
"The system is completely dead. We can't get an accurate count."
Inventory tied up capital. Taking additional risk while they couldn't even see the number was impossible.
"Dump every confirmed share before the price falls further. Right now."
"Managing Director, we can't!"
The department head cut in desperately.
"We're underwriters. We have a thirty-day market-stabilization obligation after listing. If we flood the market now the stock could crater. That's a contract breach."
"But…"
Every other institution is going to dump…
They weren't underwriters. They had no reason to hold. While the entire street was selling, were they supposed to stand alone and catch the falling knife?
11:47 a.m.
Nasdaq came back online and Facenote's price finally appeared on the screens.
It had opened at thirty-eight. Three minutes later it was thirty-five.
At this rate the shares they had bought at thirty-one would slide into the red.
Seo Minju's face went bloodless.
No!!!!
"Hell yes!"
Chae Eunchae snorted at the chart, a little heh-heh-heh of pure glee.
First day of trading.
The stock closed up a pathetic twenty-three cents.
Only because the lead underwriter had been buying like a madman to prop the price.
Han Juhyeong, sitting beside her, let out a long whistle.
"Still managed a toenail's worth of green. Wonder how many hundreds of millions the underwriter dumped in."
"Rumor says they poured a billion dollars into the last thirty minutes alone. But that's over. From here it only goes down."
Even this was already a weak start. A normal mega-IPO usually opens at least twenty percent above the offer price. Nasdaq's meltdown had been that critical…
Once the system recovered, investors finally received their settlement notices.
"I paid way more than I thought."
"I bought way more than I meant to."
"I was trying to sell and ended up buying."
Almost nothing had gone according to plan.
The result: cancel orders and sell orders flooded the market at once.
And the very next week, Facenote's share price smashed through the thirty-dollar floor.
Facenote was the world's largest social network. Hundreds of millions of users. Yet right after an IPO, price is driven less by fundamentals than by market psychology.
Confidence in Facenote began to crack.
Analysts reopened the business model and started cutting their targets.
Three months after listing, the stock sat at twenty-two dollars.
"…"
Han Juhyeong watched the carnage and breathed admiration.
"Damn. Lee Jaseung just saved two people."
Chae Eunchae turned with a puzzled look.
"Two?"
"You, and the idiot who almost invested with you—me."
"…"
She had no comeback. She had been thinking exactly the same thing.
If I'd forced it through, I'd have been wiped out.
At first she had assumed the Nasdaq glitch was simply making the drop steeper than expected. When the decline stretched into a full three months, a chill ran down her spine.
Even for a multi-year hold, a slide this deep…
I'd already be down a hundred billion won by now! Will it even get back to the offer price next year?
She had felt a flicker of guilt toward Seo Minju at the beginning. That last scrap of conscience was gone now.
Loyalty in the face of losses? You make money first—then loyalty follows.
Chae Eunchae's eyes sharpened.
All that's left is to cash in!
One more step remained—the step that would deliver a fortune.
"Facenote short!"
The short fund Lee Jaseung had created. Han Juhyeong had put in thirty billion won; Chae Eunchae ten billion.
"What's our break-even?"
"Twenty dollars! After borrow costs and fees, around there."
"Current price?"
"Twenty-two!"
"Just two more dollars!"
They shouted like a pair of gambling addicts.
"Fall. Fall. Fall."
When the price ticked up?
"Aaaaah no! We're losing money!"
When it ticked down again?
"Please please just a little lower—no, please go lower."
But the stock showed zero interest in cooperating.
Every time it bounced inside the range, Chae Eunchae bounced with it. Han Juhyeong, who had parked thirty billion, grew equally twitchy.
"Chae Eunchae, why the hell isn't it dropping?"
She had grown up reading ledgers; she was a fund manager to the bone. She could read market psychology.
"Looks like twenty dollars has become a psychological floor."
Twenty dollars was exactly half the offer price. That "half-off" number acted as a hard mental barrier.
In the options market a huge volume of puts clustered at the twenty-dollar strike. The banks that had sold those puts were now buying to keep them from finishing in the money. Famous value investors had decided the stock had fallen far enough and started building long positions of their own.
So the twenty-dollar line simply refused to break.
Put expiration is in three days. Time's almost gone…
The bid was getting dangerous. If the stock bounced from twenty, her entire ten-billion-won put position would be vaporized.
"I can't take it. I'm going to see Jaseung-oppa."
Han Juhyeong nearly jumped out of his chair.
"What? You're going to Lee Jaseung?"
"We need a plan. Even now we should hedge so we can salvage something."
"Don't. Just sit still. Like me. Have faith."
She couldn't understand his calm.
"How are you so relaxed? You put thirty billion in too. You okay watching it burn? If it bounces here, everything's over."
"Well… that's true, but…"
When he hesitated she dangled the bait.
"Want to come with me?"
"Hmm."
Han Juhyeong thought it over. Experience told him that visiting Lee Jaseung never ended with kind words. And he still believed in the man.
Lee Jaseung letting the first fund under his own name blow up? He'd rather drop a bomb on Facenote itself if that's what it took to crush the stock.
…It was a strange kind of faith, but still.
Better she goes alone and eats the scolding than both of us get yelled at.
He cut her loose.
"Have fun."
"Tch."