KNC International (1)
Sunwoo was taken aback.
“No, why?”
“What do you mean, why?”
“Why am I the one getting caught in the crossfire?”
“Are you investing, or not?”
My connection with Sunwoo went back to middle school.
He probably didn’t realize it, but we had known each other for another ten years after that. In truth, apart from family, he was probably the person I was closest to.
When my company went under and I ended up unemployed, he let me stay with him without even charging rent. And when I was wasting my days away playing games, he was the one who reached out and said we should open a fried chicken place together.
When someone has received kindness, they should repay it.
“I’m giving you a chance to invest—just you, especially.”
...That said, there were a few other practical reasons too.
First, I really was short on cash.
Maybe things would be different later, but right now every last dollar mattered. When it came to seed money, the more the better.
And Sunwoo was a fairly capable developer. A few years from now, he would even rise to a director position overseeing game development.
If I thought about the growth of the gaming industry going forward, there was work that needed to be done by someone like him.
Of course, if he didn’t want to do it, there was nothing I could do about that.
After a brief silence, Sunwoo asked in a shaky voice, “Uh, how much am I supposed to invest?”
“How much do you have in your account?”
At my question, Sunwoo gave me a look of disbelief.
“What is this, ‘How much money did you come here with?’ at a phone store?”
“Just tell me.”
“Hmm... about 120 million won.”
“Not bad.”
Unlike me, who had gone through military service, Sunwoo had worked at a game company under a military exemption program, and that counted toward his pay scale.
He also got a decent amount of overtime pay, since he was worn down by endless late nights. He probably hadn’t had much to spend money on, so he’d quietly saved it all up.
I nodded.
“Perfect. Invest all of it.”
Sunwoo jolted.
“What!? All of it?”
I put a hand on his shoulder and said, “Trust me and give it a shot.”
“...You?”
He looked utterly unconvinced.
Fair enough. My track record hadn’t exactly been great.
“You saw me make twenty times my money with Red Hole Studio. That’s the level of my investment skills.”
“That looked more like a lucky break.”
I said confidently, “This time, I have solid information.”
“You said that when we did crypto too!”
“Mm...”
A few years ago, the cryptocurrency craze had swept across the world.
Crypto was treated like digital gold, and coins that rose hundreds or even thousands of times became common. Once old coins bought for a few cents shot up to tens of thousands of dollars, everyone rushed in and bought whatever coin they could get their hands on.
Sunwoo was an engineering type, so he was interested in digital currency, and I was interested in investing. So we’d ridden the wave together and shouted our way through the fever with everyone else.
The result?
We nearly went to hell for it. We were lucky I bailed out after cutting losses at half.
“You know Aaron Baker, right?”
“The chairman of White Road?”
Aaron Baker was the greatest living investor in the world, someone everyone knew, and White Road was the largest investment firm on the planet.
He had started investing in his twenties and was still active even now, in his eighties.
“When he first started investing, one villager put in ten thousand dollars. Sixty years later, how much do you think that money turned into?”
“Let me guess... ten million dollars?”
“No. It became six hundred million dollars.”
A staggering sixty-thousand-fold return.
Even while stunned, Sunwoo asked, “So?”
“I’m going to make you more than that, so invest now. Don’t be the guy who regrets it sixty years from now.”
“Mm. Will I even still be alive in sixty years?”
That was a brutally realistic point.
“Then I’ll multiply it more than that within ten years.”
“...”
He looked even less willing to trust me now.
He didn’t have any results to go on yet, so I couldn’t really blame him.
“Just trust me a little!”
In the end, Sunwoo agreed to lend me 120 million won.
When I added that to the 150 million I’d borrowed from my parents and the 150 million I’d scraped together myself, it came to a total of 420 million won.
But even that still wasn’t enough.
“Don’t you have any more money?”
“No! Even if I wanted to eat it and die, I don’t have any more!”
Did he really?
Even dried squid yields water if you squeeze it hard enough.
“How much would you get from a credit loan?”
Sunwoo looked at me like I’d lost my mind.
“Huh?”
“You’ve got a job, so you should be able to get decent credit, right?”
“You want me to hand over my entire net worth and then go into debt too?”
“It’s fine, so empty everything out.”
“...You bastard.”
I said seriously, “I have one piece of information I obtained before I left the securities firm.”
“What information?”
“I’ll tell you later.”
Sunwoo shook his head.
“My mom always said anyone who comes at you with some great investment tip is a scammer.”
“Think about it. I’m planning to put in not just my entire net worth, but my parents’ money too, plus debt on top of that. Do you really think I’d go this far if I didn’t have solid information?”
“That’s true, but...”
After about an hour of coaxing and persuading, I managed to get him to draw eight more million won from his line of credit. Still, experience did make the loans come in fairly well.
“Five hundred million is at least workable.”
“What are you trying to do? You’re not going to disappear tomorrow, are you?”
“Don’t worry too much. I’m going to trade through your account anyway.”
“Why?”
“Because I was working at a securities firm until just a few days ago.”
Using insider information to trade is illegal. That’s why securities employees are required to report their stock holdings and trading activity on a regular basis.
Now that I’d quit, I no longer had a reporting obligation, but it was still possible someone could suspect I had traded on information learned through my company work.
“Ah, right. You said you can’t trade on information you got from the securities firm, didn’t you?”
“Exactly.”
Technically, it wasn’t information obtained from the securities firm. But once someone decided to make an issue of it, anything could become an issue.
So it was better to do it under his name.
He was just my roommate, after all. Even if anything happened, there’d be no reason to suspect me. Still, I added one more layer of protection just in case.
“You still have your U.S. account, right?”
“I haven’t used it in ages, but I should. Why?”
It was an account we’d opened together in college for investing in U.S. IPOs.
“We’re going to use that.”
“Why bother with the U.S. account?”
“If we’re doing this, we should do it safely.”
Korean brokerages were famous for handing over customer information the instant law enforcement asked. Foreign brokerages, on the other hand, wouldn’t budge unless you came at them with a proper warrant.
There was another reason too: I planned to use the money I made this time to set up an investment firm in the United States.
He didn’t need to know that yet.
* * *
How is a stock’s price decided?
In principle, it moves according to performance. If revenue and profits rise, the stock goes up; if they fall, it goes down.
But the world doesn’t always run on principle.
Sometimes a stock’s price is determined by supply and demand alone, with no connection to performance at all.
There are only so many shares in existence, after all. If more people want to buy, the price rises; if more people want to sell, it falls. That much is obvious.
And sometimes, there are bastards who exploit that by accumulating shares and artificially driving the price up to make a profit.
That was a stock manipulation crew.
In the stock market, manipulation happened every day. And every so often, there were incidents so huge they shook the whole country.
“Manipulation” sounded dramatic, but the method was simple.
The group pooled their power, artificially pushed the price up, then sold out at a high price. In the process, all kinds of bizarre tactics were employed.
I didn’t remember every manipulation scheme that had happened over the past ten years, but I remembered this one clearly.
It was an absurd case that even dragged the government into it.
Daejeong Sangsa.
A KOSDAQ-listed company that had originally been a small trading firm.
But revenue and performance fell, debt and losses ballooned like a snowball, and the company found itself in crisis.
That was when a man named Cheon Deok-yu appeared.
He used a backdoor listing to merge his own company into it, becoming Daejeong Sangsa’s largest shareholder, and later changed the company name to KNC International.
Chairman Cheon suddenly declared that he wanted to go into mineral mining in Africa, and changed the company’s main business into resource exploration and mineral extraction.
Then he announced that he had acquired mining rights to an abandoned mine in Congo, and set up subsidiaries to process and distribute minerals.
Even after the announcement, the stock didn’t move much.
But the shares that had been stuck in the mid-1,000 won range just a month earlier had recently started attracting buying pressure, and before long they were nearing 3,000 won.
The stock had nearly doubled without any meaningful performance or favorable news.
The foreign brokerage names at the top of the trading volume included Merrill Lynch, JP Morgan, and HSBC.
While Sunwoo was at work, I sat down in front of the computer and loosened my fingers.
“Might as well start now.”
Even after doubling, KNC International’s market cap was only 70 billion won.
The trading volume wasn’t all that high either.
Most of it was probably just the manipulator group passing shares back and forth.
With such a small market cap and thin volume, even a little extra buying could push the price up. So, to avoid drawing attention, I split my orders up and kept buying whenever there was existing buying pressure.
Over the course of several days, I accumulated a total of 302,000 shares.
Once the buying was done, I told Sunwoo about it.
After hearing everything, Sunwoo asked slowly, “So you bought an entire trash-tier KOSDAQ stock?”
“Yeah.”
He searched the stock on his phone.
“Market cap is 70 billion, no real performance to speak of, and it’s just a loss-making company drowning in debt.”
“Yep.”
“How much did you buy it for?”
“Average price was 3,430 won.”
Sunwoo looked stunned.
“You bought a stock that was 1,500 won just last week for 3,430?”
“I couldn’t buy much at that price anyway.”
The price was being driven up as the manipulation crew passed shares back and forth.
By quietly slipping in between them, I’d managed to secure more than one percent of the outstanding shares.
“How many shares did you buy?”
“382,000.”
Sunwoo frowned as if something didn’t add up.
“Wait. Doesn’t that calculation seem off?”
“What’s off?”
“3,430 times 382,000 is over 1.3 billion won.”
“Right.”
As expected of someone from the math and science track, his calculations were fast.
“Your principal was 500 million. How did you buy more than 1.3 billion won worth of stock?”
“I made good use of a wonderful system called margin trading.”
“...Huh?”
Margin trading meant borrowing money from the brokerage to buy stock using the shares in your account as collateral. With it, you could leverage yourself to more than double the money you actually had.
After a moment of stunned silence, Sunwoo suddenly exploded.
“You crazy bastard!”