Position Flipping (1)
Makers Office.
Lee Jaseung leaned back against the sofa at an angle, reading through the performance report.
Plenty of people had taken part in executing the investment. Jaseung had drawn up the strategy, Seo Minjae had designed the investment structure, and brokers from other securities firms had carried out the trades.
How precisely did the design translate into results?
Even the most flawless strategy lost yield if it hiccuped at the execution stage. This time they had been forced to use brokers other than Minjae, so Jaseung was curious about their skill as well.
Proprietary capital profit: 67.291 billion won
Total commission revenue: 15.781 billion won
Total profit: 83.072 billion won
Total return: 118.67% (vs. proprietary capital)
A detailed report was attached beneath.
— Market volatility at the time exceeded projections. Slippage occurred on the final liquidation day as execution prices ran high; however, we narrowed the variance from target price to within roughly 2% and ultimately realized a profit of 67.291 billion won…
Jaseung snorted.
He could see exactly what mindset had produced this report.
They left a 2% error margin and still patted themselves on the back for raking in hundreds of billions.
In the previous operation, Seo Minjae had held the error margin to around 0.1%.
Jaseung summed up every excuse in a single sentence.
As expected, Minjae is better.
Quite apart from the brokers’ skill, the result itself was overwhelming. Proprietary capital that had started at 70 billion won had come back as 150 billion in three months.
“A hundred and fifty billion is enough for seed money. So we’ve only just reached the starting line.”
He had seed money now. Beyond that, Jaseung felt no particular thrill. Money was only a means. What he truly wanted was influence.
From the moment he conceived succession consulting and founded the family office, what he had always wanted was people.
Prevent a major loss. Deliver a major gain. Become the savior in a moment of crisis. There was no surer way to win a person’s trust.
The short fund had been a stage on which to test Jaseung’s own ability, but it had also been a measuring stick for judging Han Juhyeong.
— How far does Han Juhyeong trust me?
Unlike Chae Eunchae, who had flipped out and stormed into Makers, Juhyeong had not so much as sent a single text.
That means primary trust has already formed. Going forward, he’ll accept my advice smoothly through the succession process as well.
And as for Chae Eunchae—
A fund manager with no self-conviction. Yet her goal is crystal clear.
The project to bring the Loan Shark King into the light of day. Eunchae was running a private equity firm for that very purpose. Desire was sharp, but she had no idea which way to go. Swaying someone without a compass was truly easy.
Those two were enough for now.
Only the last slice of the cake remained.
Seo Seong Securities.
The number-one conglomerate in the business world: the Seo Seong Group. Seo Seong Securities was the gateway into that vast ecosystem.
But Seo Minju stood in the way. The words she had thrown at him as she stormed out of their last dinner had been an unmistakable threat.
Seo Seong Securities has been promised to me since I was a child. Touch it, and I’ll make sure neither you nor Seo Minjae can ever set foot there again.
Never set foot in Seo Seong Securities?
Hearing something like that only made a person want to do the exact opposite.
They had been forced to use other brokers for this operation, but if Minju kept obstructing every single move from here on, it would become thoroughly exhausting.
“While I’m at it, maybe I should snag a seat at Seo Seong Securities.”
Conveniently, he already knew the shackle that held Minju’s ankle.
The unsold Facenote inventory.
Shares they had failed to dispose of thanks to the Nasdaq system error and the plunging price. At current levels they were sitting on roughly 150 billion won in mark-to-market losses.
The plan was already fully drawn up.
Jaseung picked up his phone and dialed Seo Minjae.
It was time to work together again.
Seo Minjae stepped into the Makers office.
“Congratulations. Your first fund was a huge hit, I hear?”
“Exactly as expected. Sit down. Let’s finish this.”
In practical terms, only one task remained.
— How to handle the short fund.
The fund had existed solely for a short position targeting Facenote. Now that the purpose had been achieved, two options lay open.
One: liquidate the fund and return every last won of profit to the investors.
Two: propose a new investment.
“What are you going to do? Liquidate? Or change the investment objective?”
Jaseung chose the latter.
“We’re changing the investment objective. Prepare a long-fund service.”
“A long fund?”
Instead of answering, Jaseung pulled a document from the shelf and handed it over.
The moment Minjae read the first page, he could not help asking.
“You remember shorting Facenote last week, right?”
“Hard to forget a return like that.”
“And now you’re going to scoop Facenote back up? After shorting the hell out of it until just now?”
A casual tilt of the chin. Minjae let out a long sigh.
“…You vicious bastard.”
Yet Jaseung remained perfectly composed, as if explaining the most natural thing in the world.
“Right. You said it yourself. Right after listing, the share price is…”
“…determined by speculation and market psychology. And you’re the speculative force.”
Jaseung chewed the words lightly.
“Facenote is a company with high growth potential. It just happened to drop to seventeen dollars, so of course we buy. Acquire at this price and hold long-term, and we can generate solid returns.”
“……”
The logic itself was sound. It was simply not something a man who had been shorting until moments ago should say. Still, Minjae accepted it.
Most institutions kept a long fund for long-term investment as their baseline. And since they already had the capital raised, redirecting it to another purpose looked better than liquidating.
“Fine. How much capital are you thinking of raising?”
Minjae asked the practical question, expecting something similar to the roughly 300 billion currently in the fund, or perhaps a modest increase.
Instead—
“One trillion.”
“Hegh!”
Minjae coughed hard.
“Wait—what did you just say? One trillion?”
“Yeah.”
“Won?”
“Why, should we do it in dollars?”
Jaseung asked with complete seriousness. Suddenly unsettled, Minjae waved both hands.
“No, that’s not—damn it, one trillion won? Even after the jackpot we just hit, one trillion?!”
One trillion won put a fund among the very top tier domestically. And Makers was a brand-new firm that had only just succeeded at its first investment.
“Isn’t that too big? That means we have to raise at least another 700 billion…”
“Don’t worry about that. The capital-raising plan is already in place.”
“Is it?”
Minjae flipped through the document he had just received, but nothing of the sort appeared. Absence from the paperwork meant it was unofficial—and in unofficial matters Jaseung displayed considerable creativity.
…Better not ask for now.
He took out a pen and began noting the portfolio composition.
“First we invest in Facenote—have you looked into any other targets? Or should I put together a list?”
One trillion demanded diversification. A long fund of this size normally spread across twenty to thirty names.
Once again Jaseung defied expectation.
“No. We’re going all-in on Facenote.”
“Huh?”
Minjae froze with the pen still in his hand. Thinking he must have misheard, he asked again.
“The entire one trillion into Facenote?”
“That’s right.”
“Uh… I really want to talk you out of that.”
Minjae’s face turned serious. As a broker, this was something he absolutely had to flag.
“First, the investors will push back. Even after the hit you just scored, if you say you’re dumping one trillion into a single name they’ll call you insane. Basic risk management out the window. And one trillion by itself becomes a factor that lifts the share price. If the price rises while we’re buying, we end up paying more.”
Minjae’s explanation was logical and sound. Jaseung remained just as unruffled.
“You don’t need to worry about that.”
“Why not?”
“Seo Seong Securities still has unsold inventory left.”
Minjae’s mouth fell open. He understood exactly what Jaseung intended to do.
Who would willingly hand over one trillion in capital?
Who would supply a massive block of Facenote shares?
Seo Seong Securities itself.
“…You son of a bitch!”
Even a one-trillion fund was, to Jaseung, nothing more than a ticket into Seo Seong Securities.
The timing was perfect. Rumors of Seo Minju’s successive failures had spread through Yeouido in vivid detail—Seo Minjae’s handiwork.
The arrangement between Jaseung and Minjae ran as follows: Minjae designed the investments and introduced brokers; in return, Minjae was free to use every scrap of information gained in the process however he liked.
I didn’t get performance this time, so I might as well grab something else.
On the Facenote deal Minjae had earned not a single won in commissions. Worse, pressure from Minju had nearly twisted his relationship with Jaseung. Undermining his older sister’s standing on this opportunity was not such a bad idea.
In Yeouido Plaza, where the securities firms clustered, brokers heading out for after-lunch cigarettes murmured among themselves.
“You hear about NB Securities? Commission revenue of twenty billion on this one. Twenty billion on a single trade.”
“What? How?”
“Makers. They hit it big this time. Word is they put in 150 billion and walked out with 300.”
“Damn, I’m jealous as hell.”
In Yeouido, where tens of billions changed hands over a single cup of coffee, news that money had doubled was the finest gossip of all. The brokers’ eyes lit up.
“But didn’t Makers originally deal with Seo Seong Securities? That illegitimate kid used to handle them exclusively.”
“They did. But Seo Seong was the underwriter this time. Seo Seong refused the Makers trades, and NB scooped them up.”
“Atmosphere over at Seo Seong must be absolute chaos. Lost the client, lost the commission. And Facenote didn’t go well either.”
“‘Didn’t go well’? It tanked.”
“Man, Seo Seong’s form has really dropped lately. Last time they got stuck with junk bonds, this time Facenote.”
“All the work of one person. The princess of Seo Seong Securities.”
Someone smirked and pointed upward. The Seo Seong Securities logo glowed on the building’s exterior wall.
On the top floor of that very building, heavy silence filled the Seo Seong Securities president’s office.
Seo Minju sat with her back ramrod straight, enduring her father’s silence. Ordinarily they would have been discussing countermeasures already, yet her father only exhaled long sighs with a rigid face. The situation was that bad—bad enough that even President Seo, who had always shielded his daughter, could do nothing.
“The institutional investors you dumped the Facenote inventory on are protesting. The scale of the losses is so large the audit committee is picking at it. Why did you buy such overvalued stock in bulk, they ask.”
“Father, they fully understood the risk when they accepted the deal. I didn’t force them. In exchange we promised priority allocation on good IPOs.”
President Seo shook his head.
“It’s already past the point where that can fix anything. The price you sold to the institutions was thirty-three dollars. The stock is at seventeen now. That means a fifty-percent mark-to-market loss on the books. Do you understand what that means? For the price to recover to its original level will take at least a year, maybe two. Do you think the institutions will patiently wait that long?”
Unlike ordinary long-term investors, institutions were subject to NCR—net capital ratio—regulations. Large unsold inventory worsened the NCR. And quarterly earnings announcements were right around the corner. A fifty-percent valuation loss would appear on the balance sheet, and net income for the period would naturally go negative. Would the shareholders simply sit still?
Why are we holding this much bad inventory? Isn’t this a management misjudgment? Questions like those would pour out. Institutions that got hammered at their own shareholder meetings would turn around and take it out on Seo Seong Securities.
Minju felt the walls closing in.
Where did it start going wrong?
Who could have known Facenote would crash like this? It had been a natural disaster. The problem was that Seo Seong Securities had dragged other people into the disaster with them. In a situation like this, saying “It was an unexpected disaster, so what can you do? Everyone just take your own losses”? That would be the end.
After a long silence Minju opened her mouth. She had a younger brother she had brought in for exactly this kind of moment.
“Seo Minjae…”
“No. Not Minjae.”
“Why not?”
“Lee Jaseung was originally Minjae’s client. And the rumor that Jaseung hit it big on the short has spread through every corner of Yeouido. What do you think people will say?”
They would immediately start guessing:
Seo Minjae must have known Facenote would underperform—so why did Seo Seong push the IPO through?
Did Seo Minju ignore the warning on purpose to keep her brother in check?
It was the same with the Yuseong Group junk bonds. Minjae warned them and Minju blocked him.
Minju felt the injustice.
“That isn’t true.”
“Results create the truth. Right now the results look like that.”
At this rate Minju was about to take the blame for Facenote on top of the junk bonds.
Isn’t there another way?
Just as the frustration peaked, the intercom from the secretariat rang.
“Mr. President, Representative Lee Jaseung of Makers is here.”
President Seo and Minju both lifted their heads at once. The president raised an eyebrow in mild surprise; Minju’s face filled with wariness.
“I don’t believe we had an appointment. What business did he say he had?”
“He says he would like to help us dispose of the unsold inventory.”
At those words Minju’s pupils trembled.
Lee Jaseung wants to “help”?
From the Yuseong Group junk bonds to the Facenote catastrophe—every time she got tangled with Jaseung she had taken losses. She must not get involved, no matter what. She absolutely could not allow him to set foot inside Seo Seong Securities.
The moment that bastard uses this as an excuse to walk into Seo Seong, it will become unmanageable.
“Father, Lee Jaseung definitely has some scheme. There’s no way that man moves without a reason.”
“Of course he has a scheme. In business, when is help ever free of calculation? But…”
President Seo paused and looked at his daughter.
“If you have a way to dispose of the unsold inventory, tell me right now. Then we’ll turn Jaseung away and do it your way.”
“…”
There was none. She had no solution whatsoever. Selling into the market would crystallize the loss; holding would only worsen the NCR. Only one choice remained.
“Send him in.”
Moments later the door opened and Lee Jaseung entered.
Seo Minju’s eyes met Jaseung’s.
A faint smile brushed the corner of his mouth. The instant she saw it, a chill ran down her spine.
On one side of the scale sat three hundred billion won of unsold inventory.
What, then, would be placed on the other side?
This work is a work of fiction. All characters, groups, place names, and events appearing in the work are entirely fictional and have no connection to anything that exists in reality. Specialized knowledge described herein has also been reconstructed and adapted to fit the story and may differ from actual information.