jdhmnovel Chapter 357 Short Squeeze
Chapter 357 Short Squeeze
April 5, 2000, 2 PM.
Star Technology's stock price hovered around $26.3 for half an hour, with sell orders piling up one after another, but the stock price just wouldn't move, which meant it was going down.
Anderson stared at the screen, his fingers tapping on the table. The trader next to him was on the phone, his voice low.
"How much?"
The trader covered the microphone and turned around. "Still 26.3. A sell order of 300,000 shares was instantly absorbed."
Anderson didn't say anything, and the phone behind him rang again.
Nasdaq closed at 3:00 PM.
Star Technology's stock price is $26.3, up $0.3 from yesterday.
Anderson stood there, motionless.
The office door opened, and Winston walked in, looking rather grim. "You've seen today's trades?"
"I've seen it."
Winston walked over and stood next to him. "What's going on? Is someone scrambling for chips?"
Anderson didn't answer. He went back to his desk, turned on his computer, and pulled up today's trading records.
Turn the pages one by one.
Behind every large sell order is a buy order. The buy order is just slightly larger than the sell order. No more, no less, exactly absorbed.
He turned to the last page and stopped. "What was the total trading volume today?"
The trader next to him glanced at the data. "120 million shares, four times the usual amount."
Anderson's hand hovered over the mouse as he did some calculations: 120 million shares, at $26 a dollar, would amount to $3.1 billion.
Who has that much money?
Winston walked over and stood behind him, also looking at the screen. "Is Ling Yun taking over?"
Anderson didn't speak, but just shook his head, muttering to himself, "Where did he get so much money?"
He recalled something: before the IPO last year, Lingyun had reduced its stake in Xingchen. Not much, only about 10%. Based on the share price at the time, that was roughly $4.5 billion.
Where did that money go?
He picked up the phone, dialed a number, and said, "Check all the funds that have flowed out of Lingyun's personal account in the past month. Find as much as you can."
After hanging up the phone, he leaned back in his chair, and Winston sat down next to him.
"What are you thinking about?"
Anderson didn't answer; he stared at the ceiling for a long time.
The phone rang quickly, and Anderson answered, "You found it?"
The voice on the other end of the phone paused for a moment, then said, "Ling Yun's account saw approximately two billion US dollars transferred out in batches between December of last year and January of this year."
"Where to?"
"There are more than a dozen offshore accounts, but we can't trace them any further for now. To determine where the money went, we need to investigate carefully, which will probably take a long time."
Anderson put down the phone, stood up, and walked to the window.
Two billion US dollars, at the current stock price, how many Starry Sky shares could you buy?
More than 70 million shares, accounting for about 3.5% of the total share capital.
Including what Lingyun himself had left, plus the employee stock ownership platform's...
He turned to Winston. "Have you calculated how many shares Lingyun actually controls right now?"
Winston paused for a moment, "He still has 21.6%. The employee stock ownership platform has 10.88%, totaling 32.48%."
"What if he bought stocks with all two billion?"
Winston's expression changed.
He picked up the calculator and started pressing the keys.
"Two billion dollars, at $26 per share, can buy 77 million shares. That's 3.85% of the total share capital."
He raised his head.
"Adding the original 32.48%, it becomes 36.33%."
Anderson nodded.
"And what about those buy orders today? 120 million shares were traded today. Whose orders were those? If they were his too…?"
Winston pressed his fingers a few more times.
"120 million shares, at an average price of 26, that's 3.1 billion. If he really bought that many, then he would have..."
He stopped pressing the buttons before he finished.
Anderson finished speaking for him.
"If he really bought half of today's shares, then he would have more than 40% in his hands."
Winston's face turned pale. "Half of the stocks we hold are lent out for short selling."
Winston was stunned. He knew, of course, that Goldman Sachs and Morgan Stanley had held onto their shares to ensure sufficient voting power on the board, without selling a single one. But to facilitate short selling, they had borrowed shares from other shareholders and sold them.
Those lent-out stocks are to be bought back.
If the stock price keeps falling, they buy it back at a low price and make a profit from the difference.
If the stock price doesn't fall...
Winston didn't dare think any further. He stood up, walked over to Anderson, and asked, "What's the stock price now?"
"26.3".
"How much lower is it than when we sold it?"
Anderson paused for a few seconds. "When we sold them, the average price was $35."
Winston took a deep breath. "Buying it back now would still be profitable."
Anderson looked at him. "The question is, can we even buy it back?"
At 5 p.m., one hour after the Nasdaq closed.
After-hours trading for Xingchen Technology's stock has begun.
Anderson stared at the screen: 26.3, 26.3, 26.3.
A sell order appears and is immediately absorbed. Another sell order appears and is absorbed as well.
He picked up the phone, "Sell another 100,000 shares and see the reaction."
Thirty seconds later.
The sell order was placed, and the screen briefly jumped to 26.29 before immediately returning to 26.3.
It's been eaten up, "Let's throw another 200,000."
26.28, then 26.3, and it was eaten up again.
Anderson put down the phone, leaned back in his chair, and closed his eyes.
Winston sat beside him without saying a word.
After a long silence, Anderson finally spoke.
"Notify London that they must stop vandalizing starting tomorrow."
Winston looked at him. "The stock price..."
"The issue now isn't the stock price, but whether we can cover the shortfall from lending out shares. There's been a short squeeze, and we don't know how much money we'll lose. Moreover, we've lost the voting rights of these shares, so our struggle with Lingyun is bound to fail, and Microsoft probably won't let us off the hook either."
"But what should we do with our short positions?"
"I don't know either."
Anderson opened his eyes and stared at the ceiling. "We made the wrong bet."
7 PM.
Anderson's phone rang. He glanced at the caller ID; it was Jim Olson.
"Anderson, what's going on your end?"
Anderson didn't say anything.
"Feed?"
"I'm listening."
"I'm asking you what's going on with the stock price."
Anderson was silent for two seconds.
"Someone is buying up all the goods."
"Who?"
"Lingyun".
There was a few seconds of silence on the other end of the phone.
"Where did he get so much money?"
"have no idea."
"I told you not to short sell or lend out shares, and now what are you doing? Greed is the biggest risk. Just do what I tell you, and you'll make a good profit. Why insist on walking on the edge? Why do something with such high risk and low reward?"
Anderson did not answer.
"Anderson, listen to this. Microsoft has made a huge bet on this. If they can't acquire StarCraft, things will get complicated."
"I know."
"You know that's good. Figure it out yourself. If you don't get enough shares, you can expect the board to hold you accountable."
Before Anderson could speak, the call was disconnected.
Anderson put his phone on the table, feeling that he had messed up this time and was in big trouble. Losses were inevitable, but the important thing was to grab enough chips and close his position as soon as possible.
A short squeeze is inevitable. What should I do? Should I apologize to Ling Yun? Should I kneel down to this yellow-skinned monkey I look down on?