A Younger Brother Better Than the Elder
Private equity funds ran a number of closed-end vehicles.
Shark Management had a reputation for never posting a loss in a single one of them.
That was why even a blind fund, one that gave investors no information at all about where their money would be placed or what sort of return to expect, would close the instant it was launched.
But this time, that record had been broken.
I had already sensed that something was off about Thomas Motors, and I had been weighing when to get out.
The problem was that the stock kept rising.
With an important announcement scheduled for this event, my plan had been to sell only after it was over. Instead, something blew up before that could happen.
The negative return itself wasn’t the real issue.
A loss of that size could be recovered if I set my mind to it.
The real problem was that I had been forced to sit on my hands until the moment everything collapsed, and then take the hit as it came.
Michael had long rated hydrogen vehicles highly.
So apart from pushing ahead with the sale of Thomas Motors shares, he had been planning to invest in a new hydrogen car company.
Nextrogen was a company building core hydrogen technology and vehicle platforms, and he had poured serious effort into acquiring it.
But because of this incident, the major LPs were now demanding a review of the investment.
With the industry leader effectively falling apart, there was no choice but to be cautious about related bets.
Michael read David Lockhart’s report slowly. According to it, Continue Capital had dumped short positions through CFD trading right before the event.
Most likely, that too had been orchestrated by David Lockhart.
If he had come to Shark Management, what would have happened?
In that case, Shark Management would have been the one to bring this about. He would have liquidated every share he held, then bought put options alongside the short.
Instead of losses, they would have booked a huge profit, and by now they’d be raising a glass in celebration.
But that never happened.
Michael Preston’s face hardened.
I should have brought David Lockhart over by any means necessary!
The fact that he had let such a talent slip through his fingers struck him like a wound all over again.
He had intended to drive the man into a corner and then rescue him at the last moment, but some other bastard had gotten there first and snatched him up.
“Who the hell partnered up with him?”
* * *
The plunge in Thomas Motors’ stock was the kind of event that could ripple through every related company.
Under ordinary circumstances, Hwaan Energy, which had been a partner, should have been hit the hardest. But just before everything broke, it tore up the agreement and sold off its entire stake.
The sale brought in $1.8 billion.
That was roughly 2 trillion won.
Given that 90 percent of the stock had been wiped out after Continue Capital’s exposure, that meant Hwaan Energy had secured 180 billion won in gains compared to simply holding the shares.
The stock forum exploded.
-Whoa! 2 trillion won!
-I heard Heo Minwoong personally investigated the report and ordered the sale?
-He figured out what all those so-called experts missed by himself?
-Even Wall Street’s famous hedge fund Shark Management got caught in it. Their first loss since founding, they say.
-According to the WST article, the Thomas Motors stake was originally bought by Vice President Heo Minhong at Hwaan Solution. Then Heo Minwoong took it over and exposed the fraud this time.
-LOL, the older brother got fooled like an idiot, and the younger brother caught on smartly~
-Among the major shareholders, Hwaan Energy was the only one who saw it coming and sold early.
-Sold everything at the top and got out alone lol
-Damn, that’s insane. I thought he was just a chairman’s son given a seat somewhere, but he’s actually got real ability, whoa.
-The money they made from selling those shares is equal to years of operating profit.
-God of stocks! Heo Minwoong saved Hwaan Energy!
-At this point, shouldn’t they give him an award or something?
-We can’t just sit here and do nothing! Let’s send flowers or something!
-Right! Let’s chip in among the retail shareholders!
Hwaan Energy shareholders could only pat their chests in relief, but Hwaan Solution shareholders were not so fortunate.
The Hwaan Solution forum was a funeral parlor in everything but name.
-No, Hwaan Energy sent over an official notice, so what the hell were they doing?
-They say Hwaan Energy even attached a report telling them to sell immediately?
-Did they use the company’s toilet paper to wipe their asses or something?
-What the hell were these bastards doing? Did they take money from Thomas Motors behind the scenes?
-We should file a breach-of-trust complaint against Heo Minhong!
-Shouldn’t they sell every share they still hold right now?
-If they sell now, they won’t even get 10 dollars back, will they?
-If the company delists anyway, isn’t it zero dollars either way?
-Heo Minhong is seriously terrible at management. I’d do better than him.
-Hey! Heo Seonghun, you better make the right call. If you hand the group to the eldest son, he’ll flush the whole thing down the drain in a few years. Hwaan Group will turn into bean-sprout soup before you know it!
-Heo Minhong, get on the floor!!!
-I’m a Hwaan Energy shareholder. I came to pay my respects.
-Heh! I was trying to buy Hwaan Solution but ended up getting Hwaan Energy, and thank goodness for that.
-They say there’s no younger brother better than the elder, but… there it was!
-The minute the market opens, it’s going straight to the floor.
-The crash is looking razor-sharp!
-Express train to the River Styx! All aboard!
-Down-limit, down-limit, happy little song~
-The worst ones are the people making fun of them, T_T
* * *
Right up until the Thomas incident, the Korean press had been busy praising Heo Minhong for being the one to make the initial call to invest in Thomas Motors.
But once everything blew up, they abandoned that stance as if they had never held it and started flooding the public with criticism of him.
How much ad money have they taken from us over the years, and this is the kind of article they write?
Heo Minhong shouted at the screen as he read the reports.
“What is the PR team doing? Why aren’t they responding to the media?”
President Im Taekju of Hwaan Solution shook his head.
“We’ve tried contacting them everywhere, but the reaction has been the same. They say there’s nothing they can do.”
The first person to break the story had been Trish O’Connor of the Wall Street Times.
She had uncovered the truth firsthand at the Purecell Day event and had secured an exclusive on Continue Capital and Hwaan Energy.
Because of that, every outlet, foreign and domestic alike, was reduced to repeating her reporting.
“They say they’ve been writing such different kinds of articles that it’s hard for them to publish anything that goes against the WST line. If we want, they’ll include our side as well, but...”
Unfortunately, there wasn’t much that was actually wrong, so there was no real position to present. Any attempt to explain things with documents would only backfire.
“It looks like Team Leader Heo Minwoong worked with Continue Capital and pulled this off.”
Heo Minhong nodded.
So those bastards were all in on it.
That was the only thing that explained the situation now.
“The problem is that they warned us about the risk in advance.”
In truth, the official notice Hwaan Energy had sent was nothing special.
It had simply said that since there was a report like this, they thought it would be wise to consider selling the stake. The attached report itself was hardly different from the one already circulating in the market.
When he first saw it, he had wondered why they were sending something like that right before the agreement. Now he understood.
“So they send a single email and think they’ve done their duty?”
The hydrogen infrastructure agreement involved the entire Hwaan Group.
To reverse the group’s policy by 180 degrees, they needed enough time and a proper basis.
For something this important and this certain, they should have called directly and explained the situation. But Heo Minwoong had not contacted them separately.
“What matters is that they notified us. Just that alone is enough for Team Leader Heo Minwoong to dodge responsibility.”
“Damn it!”
A new business took a long time to establish itself, and there was no certainty it would ever produce actual profit.
That was why he had handed hydrogen energy, the new business, to his younger brother and taken over solar energy, which was already established.
And now this had happened.
It would have been better, in a way, if they had all gone down together. But while the other side had sold at the top, this side had been left holding the bag.
A staggering 170 billion won in company assets had vanished.
Who, then, should bear responsibility for that?
President Im Taekju kept his complicated feelings hidden as he looked at Heo Minhong.
Let it not be me.
* * *
The Korean stock market opened. As expected, the related companies all plunged in unison.
Hwaan Energy’s stock wobbled around -3 percent right after the opening bell, but it quickly recovered and settled at -0.6 percent.
At that point, it was fair to call it flat.
Heo Minwoong read the flood of real-time articles one by one.
He had been in the social pages a few times before for stirring up trouble, but this was the first time he had ever been featured so prominently in the business section.
As I was reading the articles and feeling something strange and unfamiliar about all of it, my phone rang.
I answered.
“Hello?”
The other person barked back at me.
“Explain to me exactly what the hell happened!”
I answered calmly.
“If you read the article, you should already know. Those Thomas Motors bastards were outright frauds.”
“What?”
“I even kindly sent an official notice saying I thought it would be better to sell. You didn’t check it?”
Heo Minhong gritted his teeth.
“Two days before the event, you mean?”
“There wasn’t much time.”
“You didn’t have time to make one phone call?”
“I was busy running around like crazy. I nearly died cleaning up after it, too. If I’d been even a little later, Hwaan Energy would have been caught holding the bag as well.”
“No matter how busy you were, you should have called and explained!”
“Why are you angry at the guy who was busy enough to send you an official notice?”
“You little...”
I cut him off with a cold voice.
“I flew to the U.S. to sign that agreement, pushed forward by everyone else while knowing nothing. Luckily, I caught on to the fraud right before the signing ceremony and even made sure to tell you about it. What more was I supposed to do? Do you think you have the right to say anything to me right now? Why? Did you think I should have gone down with you?”
“......”
At that, Heo Minhong had no easy answer.
In any case, his younger brother had done what he was supposed to do. Failing to respond in time was his own mistake.
“And it’s not as if you lost money. If you sell now, you can still recover your principal, can’t you?”
Heo Minhong shouted back.
“Is that really how you say it?”
The inflated share price had already been booked on the ledger as an asset, which was why Hwaan Solution’s stock had tripled. But now that asset had vanished by 90 percent.
Of course Hwaan Solution’s shares were going to collapse.
“But seriously, you really didn’t know those guys were frauds?”
“Damn it! How the hell was I supposed to know?”
“You were the first one to meet Brad Button, weren’t you? You were the one who decided to acquire the stake and invest. But you left the rest of it to me.”
“Why are you bringing that up now?”
Heo Minwoong asked bluntly.
“I just wondered whether it was because you wanted to avoid responsibility if something went wrong like this.”
“...What?”