1988 - First Profit
1988 - First Profit
January 22, 1988.
"One more!"
"Hoo-eup-."
"Okay. Good."
Kwoong-!
After throwing the barbell to the floor, I plopped down, panting heavily.
I'm dying.
It's damn hard.
Did I increase the weight too much?
"Did you used to work out?"
"No."
"Then you must be naturally gifted."
A phrase I often heard.
My exercise efficiency was better than others'.
Even with the same workout, muscles built up much faster, and my body took shape.
Probably an effect of that gene.
"You worked hard. See you the day after tomorrow."
"Good work."
The muscular trainer bid farewell and went to manage another member.
'Should I hire a personal trainer too.......'
Among the women in the magazine, there were also trainers.
Getting PT here, then going upstairs to wash together and handle the aftermath wouldn't be bad either.
'They're probably investigating my background around now.'
Of course, not immediately.
The vetting doesn't end in a day or two.
Swaaa-.
I showered and began preparing for work.
After properly settling in, my routine ran almost like clockwork.
Early morning workout, morning work, afternoon flight, evening study.
In between, I stopped by Delaware and Florida to establish companies and register a few patents.
Hank, Jessie, and Jessie's fiancé Brandon (surviving) ultimately decided to leave New York.
Though it's just next door in New Jersey.
Right now is the period where we're looking at sites in New Jersey together and preparing to establish a factory.
Once they settle in later, we'll probably be lucky to see each other once a year.
Both I and they will be busy.
The debt in my heart will be fully settled then.
"Hoo-."
After finishing my shower, I sat at the table and lit a cigarette.
Gazing at the open outside scenery and having this brief moment of leisure was also part of the routine.
Ttiririring-!
But today, a tacky, yet most modern ringtone broke my routine.
'At this hour?'
It's an era without caller ID, but I could guess who it was.
Among the people who know my number, only one person would call this early.
"Hello?"
- It's Diana! Mister Kim!
"What's the matter?"
- It happened! The White Knight!
January 22nd.
So today was the day.
The day Sodak announced it would acquire Sterling Drug.
"I see. Which company?"
- Don't be surprised. It's Sodak! Sodak!
As expected.
I believed in it!
"The acquisition price?"
- $89.5 per share! And it's an all-cash buyout! Sincerely, congratulations! You'll become a legend on Wall Street!
89.5?!
Are they in their right mind?
They offered that high?
I thought Roche's price was already an overpay, but Sodak went way beyond that.
No wonder it's strange they didn't go bankrupt.
"Then what's the estimated profit?"
- It's $2,728,217! Based on pre-market!
Then what's the multiple.
$4,500 to $2.72 million.......
This is enough to become a city legend among retail investors for generations.
"Liquidate immediately when the market opens......."
- Understood!
"Wait a moment!"
- ?
"Don't hang up, hold on. Let me think a bit."
- Yes.
We need to close out today.
That's correct, but.
'It's also the day Sodak drops 15%.'
Sodak will hit number one in trading volume today.
Meaning the possibility of it remaining as open interest is low.
"What's Sodak's stock price right now?"
- Sodak? It's $49.
A 15% drop would be, $41.6?
No, with some margin, $42.
Target price $42.
"Does the retail department also do arbitrage?"
- We can if we want to....... Why do you ask?
"Are you interested in taking the call options at $89.25."
- $89.25?!
"In exchange for Merrill Lynch taking $0.25 as arbitrage profit, can we liquidate right now?"
- J-just a moment! I think I need to do some calculations.
The method where Merrill Lynch buys at a converted stock price of $89.25 and resells at $89.5 to gain a $0.25 profit.
No reason to refuse.
$25 profit per contract, 1,120 contracts.
Diana's team can pocket $28,000 right here.
In return, I can sell before the market even opens and secure $2.7 million in cash.
- How about $2.68 million?
"You want the premium too?"
- We need a justification since it's department idle funds. We also need to show that level of P&L; to have something to say to upper management.
"$2.698 million. A $50,000 arbitrage profit is too much."
- $2.685 million.
"Merrill Lynch will handle it directly with Sodak, right? A premium cost that would take at most an hour including physical conversion is that much? Hard to accept."
- ......$2.693 million.
"$2.697 million."
- $2.694 million. Please give us this much.
"$2.695 million."
- $2.695 million! Done.
"In return, settlement is right now."
- We'll finish it in-house within 3 minutes!
Good.
Liquidation is done for now.
"Net usable amount?"
Then after repaying commissions, loan, interest, etc. from that, the remaining cash is?
- $2,583,011 and 22 cents.
"Throw the full amount into short selling Sodak."
- I figured as much. We're also flooded with orders to short Sodak right now.
Everyone's doing that, but some stupid private equity fund manager went long.......
A sad dark history.
"But will there be enough volume to short?"
- If the pool runs short or fees get high, we'll pull some from the inventory the prop team has borrowed and set aside.
"Is that possible?"
- We have to try. We need to earn our lunch money, don't we?
Internal firm asset inventory to a client?
That's a pretty generous tip for a $33,000 lunch.
- What should we set as the liquidation target price?
"$42. If the borrowing gets tangled, throw it at market price."
- Understood. Should we also enter put options?
"No. On a day like today, if you get the timing wrong, you might get eaten by volatility. Can the retail department keep up with beta and gamma too?"
- Probably difficult. Understood.
"Then I leave it to you."
- Leave it to me!
I hung up the phone, took out a new cigarette, and lit it.
$4,500 to $2.58 million.......
A 57,200% return in just 20 days.
Feels like I might have misplaced a zero or two.
Moreover, that's the return after deducting all housing costs, loans, etc. used during that period.
In reality, it's probably even larger.
"Ssu-. Hoo-."
The cigarette tastes incredibly sweet.
Of course, it's clear this is a return rate I'll never achieve again in my life.
It's a number possible only because I used the option premium itself as leverage.
Moreover, the larger the investment amount, the lower the return rate tends to be.
"Hehehe......."
But let's save those thoughts for later.
For now, just enjoying it is enough.
'So small.'
The people commuting down below looked even smaller today.
Like ants.
I decided to take the morning off from work.
Going to work just meant going to the brokerage and staring at the ticker board.
It's just analyzing daily, wondering if I missed anything among this era's information.
'No matter how I look at it, the hourly seems certain.'
Instead, as I did every day, I was pondering with the Status Window open.
───────────
<Memory Palace>
[Nikkei 225]
[Federated LBO]
[Firestone M&A;]
[Drought]
[Corpus M&A;]
[1988 Event 7] : 30K
.
.
.
Coins Held : 11.4K
───────────
The Sterling Drug M&A; that was liquidated and disappeared was today, January 22nd.
Federated is starting to be talked about, and from my memory, I think it was acquired around March.
Soybeans and corn roughly start around April and peak in June-July.
My memory of Nikkei, Firestone, Corpus is hazy.
Looking at it like this, I think that order might be chronological.
The fewer coins used, the shorter the remaining period.
'Then next is Nikkei.'
The current Nikkei index is 22,877.
It has jumped a whopping 1,660 in just a month.
If my assumption is correct, that means there's still plenty of room for further rise.
'Should I enter divided or go all-in.......'
Whether to enter in order as the Status Window indicates, or divide and enter simultaneously.
"Hmm-."
After pondering for a long time, I again couldn't reach a conclusion today.
The clues weren't limited to that.
Two days ago, the Dart Group declared a hostile takeover to acquire the historic supermarket chain Stohl & Shop.
It was a completely unknown event.
Until now, I thought Stohl & Shop went public in the 90s.
And as a supermarket owned by KJR.
It's not like I remember every M&A; of course.
But shouldn't it have at least appeared in the Status Window?
If it didn't, then by what criteria are events that appear in the Status Window and those that don't divided?
It was a problem I had been pondering for days.
'Subconscious.'
That was my guess.
I judged that the content of the left Status Window wasn't labeled <Memory Palace> for nothing.
If I had seen it before regression, it appears in the Status Window; if not, it doesn't.
That was the conclusion.
'Then I must constantly update information.'
It means I can obtain information I didn't know in previous cycles and make investments in this cycle.
'Going to be busy.'
In the end, nothing changed.
Just like in my past life, I had to roll like a dog to make money roll.
- The profit is $202,124.
"You worked hard."
- I'm sorry. Because the gap down was too large.......
"I understand. It couldn't be helped."
Sodak hit order delays as soon as the market opened.
A situation with no buyers, too many sellers, not even an opening price.
30 minutes later, the stock price, which was $49 the previous day, started at $45.3.
To capture the full 15% drop, I would have had to enter at $49, which was impossible from the start.
'So I entered after it fell due to the gap down. Doesn't matter now, though.'
Still, it's $200,000 in a day.
It's just less than the expected profit, not a bad feeling.
How can I be disappointed earning several years' worth of others' salaries in a single day?
"So the total is $2.78 million?"
- Yes. Precisely $2,780,198.
"I see."
- Where should this go?
"I'm planning to change accounts. I'm thinking of leaving only $280,000 in the CMA."
- ......That's a shame.
Investing through a personal account ends here.
Since I established a single LLC connecting Delaware-Miami, I plan to contribute using the family office's account.
Transactions through the retail department will inevitably decrease.
"But I'm not completely abandoning the CMA."
- That's something to be thankful for.
"Who knows. It might blow up like this again."
- Even then, we won't be your main, will we.
"Can't be helped. There are limits as an individual investor."
A small sigh was heard over the receiver.
$2.78 million and $280,000 have a huge difference even in trading commissions, so it's understandable to feel regretful.
Must feel like letting a caught fish go.
But what can you do.
"It would be nice if you could handle the office account too."
- Is that up to me? When the AUM grows later, please nominate me.
"Are you considering it?"
- We're just hyenas chasing profit reports, aren't we?
"You'll probably move to a hedge fund before that."
- Maybe. But still, well, a $280,000 client is much better than a $20,000 client. Can I contact you like this still?
"Of course. Please contact me anytime."
- Then......, no, it's nothing.
From my perspective, there might be human regret, but no lingering attachment.
But from Diana's perspective, probably not.
Perhaps she could manage me face-to-face offline.
Such client management sometimes happens discreetly.
Seems like she knew very well what her weapon was.
"Then see you tomorrow."
- Yes. I'll prepare for the transfer.
After hanging up, I picked up the receiver again and began pressing buttons.
- Hallo? Wer ist da?
"Hello?"
- Who is this?
"I wish to make a request."
It's not over just by establishing a company and transferring accounts.
Now it's time to recruit someone to help me.
Matthias Keller-Roth.
A direct descendant and junior partner of Keller-Roth, a Swiss lawyer family.
The person to entrust with money laundering and fund management.