Chapter 16
CHAPTER 16
The target was decided. What remained was what problem this target had.
"Please gather all data on NextMove Logistics from now on."
"NextMove?"
"What kind of company is that?"
Kim Seong-won and Choi So-yeon asked. Natural reaction. But Kim Ha-yul was different.
"It's a company developing AI-based autonomous truck driving."
"If it's AI-based autonomous truck driving, is it a car company?"
"No. They only produce software on that side. Market cap is 7.3 billion dollars, over 10 trillion in Korean Won."
"10 trillion company? But why haven't I heard of it..."
"It's a unicorn company and hasn't become a topic domestically. Also, there are many companies of this scale on Nasdaq."
To an individual, 7.3 billion dollars is a large sum, but in the market called Nasdaq, it was never large. Plus, to Koreans, Tesla was number 1 when it came to autonomous driving. No, not number 1, but practically everything.
"Do you view that NextMove will become the Nikola of the AI industry, CEO?"
Nikola. A global company that grew by bringing out the hydrogen truck card before the Corona crisis. This company, which grew to a market cap of over 30 billion dollars at one point, eventually collapsed as fraud was discovered. In short, the word Nikola that Kim Ha-yul picked out was accurate.
"I cannot give a definite answer yet. However, Nikola also didn't have substance, and NextMove also doesn't have substance."
The common point of the two companies.
"Eventually, they are scraping money just by selling promises that it will work without technology."
That was the reverse scale (weak point) of the current AI market.
The quiet KH Capital started to run busily. All employees entered data collection on NextMove Logistics. Representative Gang-hyeon was the same.
The more I search, the more it's in a state similar to Nikola. There is no technology, but the stock price keeps rising.
NextMove is also shouting full autonomous driving, but its substance couldn't be found. The evidence the company side is putting out every year was too meager, and a way to drive their sales was not visible.
The reason they could grow into a company of this scale despite this is because they had reliable partners.
Checking the time slightly, it was soon meeting time. He organized the contents, got up from his seat, and headed to the meeting room. When he arrived, employees were already gathered.
"Let's start."
The one leading this meeting was Kim Ha-yul. Although she was the one who showed good information power in previous transactions too, this time she ran around like a fish meeting water.
"According to what I investigated, NextMove is a company maintaining a huge market cap, but it has no substance."
He liked it from the beginning. Parts she investigated and had confidence in came out of her mouth first.
"Above all, the full autonomy they talk about is very insufficient currently. Nevertheless, the biggest reason the company could grow to this scale is that CDH, China's largest private equity fund, is behind them."
CDH Investments. A huge fund with a capital scale approaching 27 billion dollars as China's private equity fund. It was a scale to be within the top 50 in the world, and in China too, it was located in the top tier excluding sovereign wealth funds. Providing money from here meant only one thing.
"It must have been accepted as a signal to external investors that there is no problem with funds."
At Kim Seong-won's words, Kim Ha-yul nodded.
"Correct. After that, as UPS, Nvidia, and Navistar attached one after another, the scale grew like a snowball."
UPS, the world's largest delivery company. Nvidia, the strongest in AI semiconductors. And even Navistar, a traditional American truck company. Plus, since funds are being provided by the largest private equity fund in China, everything fit perfectly. Gwang-ho, who was listening to the explanation until now, spoke.
"At this level, isn't there no reason to fall?"
Looking from the outside, there was no reason to fall. To the extent one might want to buy even now. However, in Gang-hyeon's eyes, NextMove Logistics was still glowing blue.
I can just trust the ability and take a short mindlessly. Then profit will definitely occur. But if such data accumulates, eventually the outside will snipe us.
The outside Gang-hyeon worried about were prime brokers and supervisory agencies of each country. They were frantic to catch financial crimes. Brokers to reduce risk, and supervisory agencies to catch financial crimes. So if even a little strange sign is seen, they push in first.
If I can't present proper evidence then, it will become tiring.
It's fortunate if it ends at just being tiring. Once a huge supervisory agency like the SEC bites and hangs on, things to explain increase tremendously. Even without going to the SEC, just the Financial Supervisory Service of Korea had great notoriety. Among traders or incumbents, the saying 'Don't catch the eye of the Financial Supervisory Service' didn't exist for nothing.
The reason I didn't go all-in on one stock.
Matching all repeated trading and ups and downs particularly in one stock? Leaving aside whether the amount is small or large, it had no choice but to be detected as abnormal trading immediately. But this time, he had to go all-in on one stock. NextMove Logistics. Although looking like a fine company on the outside, his eyes were saying no. He had to find that reason. Preparing for a possible contingency.
"The fundamental part is excellent. Then, has there been no gossip recently?"
"Although it went up and down in various gossips, there was one incident recently."
Kim Ha-yul's investigation didn't end. As gazes focused on her words, she continued speaking.
"NextMove side put out no accidents as a principle while putting out autonomous driving. But recently an accident occurred in a test and the stock price fell slightly."
"If it's an accident, it's quite a big accident?"
"Why did the stock price close with just a slight fall?"
"At that time, there is a feeling that the news was buried as the Nvidia side put out new technology. Plus, it seems they also defended the stock price."
"Mmm."
It seemed like a tail was visible.
"Let's dig into that part in detail. And check if there is any owner risk too. According to what I found, NextMove's owners are of Chinese descent and all funds came from China, there might be some connection."
"Understood."
"Now, it will be busy for the time being. Let's move quickly."
"Yes!"
Even though he said busy, there was no fatigue on the employees' faces. Knowing that this is all the power of the bonus, Gang-hyeon smiled.
While telling employees to gather information, Gang-hyeon prepared for short selling immediately. For large capital to short sell, it had to go through a broker unconditionally. Like general individual investors, one couldn't short sell just by clicking on HTS. Negotiation with PB was essential, and to do so, one had to go through RM. Originally, it's a matter that could be finished by call, but since that side also said they had something to say, they decided to meet.
"CEO, have you been well?"
"Yes, manager also has been well right?"
Lee Jong-hyeok, met in nearly a month, had become friendlier than when first seen. To the extent of wondering if he was this friendly at first. He could know the reason soon.
"The head office classified the CEO's company as a special management customer."
"Special management customer?"
"Simply speaking, you can see it as becoming a VIP. Wow~ I saw a case of being classified as a special management customer in a month for the first time in our country."
If becoming a special management customer, various benefits arise. Allocation for dark pools or short selling is pulled to the front priority. Plus, he knew commission rates also lower.
Timing is good.
To hear such news when preparing for short selling. Luck seemed to follow too.
"By the way, the reason you asked to see today?"
"Nothing else, I want to short sell a specific stock."
"Of course possible. May I know what stock it is?"
"It is NextMove Logistics."
"It's NextMove. Although securing volume is difficult because there are quite a few institutions taking short selling, it is possible. Perhaps what scale are you thinking of?"
The most important thing in short selling was scale. If taking too little, profit is small, and if taking too much, margin call could come even if the stock price rises a little. Plus NextMove was a stock whose price was rising actively currently, the entering position was important.
"100 billion won, thinking of 5 times leverage."
Volume that made Lee Jong-hyeok's eyes widen came out of Gang-hyeon's mouth.
Doing short selling overnight was something only general individual investors could do. Or possible if scale is very small or stocks with abundant liquidity. But most stocks didn't fall into such cases. Naturally, time to prepare lending volume was needed at PB too. The reason Gang-hyeon moved in advance. Thanks to that, a commotion arose at JP Morgan's headquarters. To be precise, the place where commotion arose was the Risk Team.
"John, that place in Korea we saw last time requested short selling volume this time."
At Carter's report, John crumpled his expression and read the report.
"What is this? Short selling amount is 350 million dollars? That too NextMove? Hanging short selling of this scale on a stock actively raising stock price?"
NextMove is a super-special growth stock. Expectation that it will become the second Tesla is widespread. Short selling of 350 million dollars on such a stock? Yielding a hundred times, short selling is possible. If done only with own money, there was no problem.
"Plus, they revealed intention to purchase CDS too."
"Even CDS?"
CDS meant insurance given when a store goes bankrupt. However, this insurance is not taken by the store owner but by people who think the store will go bankrupt. Short selling plus CDS. What this meant was one thing.
"Means they have certainty that NextMove will go bankrupt right?"
"Seems so. Plus, it's an order from a Family Office in Korea close to China too."
"NextMove is a place where Chinese capital entered right?"
"Yes. That side is the money line."
"Means it could be insider trading. Does Richard also know this transaction?"
"Report must have gone up. Since special approval would be needed for a transaction of this scale."
This scale is not something the lending team can decide and solve internally. Report had to go up to the executive and approval had to come out. Reason Richard Blake had no choice but to know this matter.
"Have to visit."
John visited Richard Blake's office immediately. He also welcomed John as if waiting.
"Welcome. You visited my office again because of short selling from Korea."
"Correct. This short selling and CDS order risk is too big."
"Currently NextMove's stock price is 53 dollars, so if taking this much volume, it's margin call if it rises just 13 percent."
"Additional collateral that side can provide?"
"Even so, 20 percent is limit. Plus KH side is not even hedging."
Generally, when taking short selling, one hedges. Hedge is done by buying call options or taking index long. Besides that there were various methods, but KH's orders were short selling and CDS. Only two.
"At this level, means there is certain evidence that the company will go bankrupt. was there such movement on NextMove side?"
"A truck doing autonomous driving test had an accident a while ago, but it was buried by Nvidia's issue. But company bankruptcy with such thing is..."
"Mmm."
Interest arose in Richard Blake's eyes. Since he is also a trader, he knew. How reckless such betting is.
Means knowing what others don't know or seeing what others don't see.
This transaction is same as tightrope walking. If successful, could head to next step, and if failed, crash down the cliff as is. Would face bankruptcy unable to come up again.
"Fun. Approve it."
"Yes?"
"This is too dangerous!"
"I take responsibility. Approve and place short selling volume with top priority."
Richard who gave approval was curious.
If succeeding in this gamble, want to see once for sure. This friend called Mr. Choi.
Choi Gang-hyeon. That name was imprinted in his head.
Gang-hyeon, returning to office, discovered Ha-yul still remaining in office working.
"Didn't leave work?"
"Ah, there are some more data to investigate. CEO?"
"Have to wait because there is contact coming from US side. Want coffee?"
"Good. I'll buy!"
"No. Investigate data. I will buy."
Saying that, went down to 1st floor, bought coffee and came up. Ha-yul approached such Gang-hyeon urgently.
"CEO! Look at this."
"Hm? What is it?"
One article was printed on the document she handed over.
Gang-hyeon's eyes seeing the article shone.
"When did this article come out?"
"A week ago. At that time stock price fell about 1.3 percent, but turned to rise again."
Certainty that this is it arose. The reason was because blue light was emitting more intensely than ever from the article.
Currently written as review target, but the moment this changes to investigation...
Stock price was clear to fluctuate.
At that time office phone rang. Gang-hyeon reached out hand immediately and received phone.
"Hello."
Would there be more perfect timing than this? It was moment everything fit perfectly.
"Yes. Please process at earliest date possible."
It was time to bet in earnest. On that company called NextMove will go bankrupt.
(End of Chapter)
— Translated by Prime Works —