legendary trader

Chapter 805 Chapter 806 Naked Short Selling

It should be said that Enron began to develop rapidly in the 80s, and in just over ten years, it has grown into an important electricity and natural gas supplier in the United States, and its tentacles have also extended to Europe and other countries and regions in the world.

It is unimaginable to develop so rapidly without a large consortium behind it.

The reason why Enron has been able to maintain until now is not only the hard work of Kenneth Lai, but also the fact that Kenneth valued Jeffrey's talent, although in the end he also pushed Enron into the abyss of eternal doom.

Jeffrey Skilling was born in Pittsburgh and later moved to New Jersey to study.

He studied at Southern Methodist University and went to Harvard for an MBA.

In 1986, immediately after graduation, he went to work at McKinsey Consulting Company, and was selected by Enron President Kenneth to join Enron, where he was initially in charge of transaction projects.

Skilling became Enron's chief operating officer in 1996 and took over as Enron's chief executive from Kenneth earlier this year.

In fact, the rapid development of Enron at the beginning was indeed related to Jeffrey's outstanding ability. Especially under Jeffrey's management, Enron founded "Enron Online", which quickly became a very famous electronic trading platform in the United States. Electronic trading of energy products such as natural gas and electricity.

In fact, it can be seen from this project that what they seek is to control the future energy prices. They offer countless preferential measures to attract customers to trade here, and quickly become a dark horse in the trading platform in the United States.

Although the platform was successful, under the leadership of Jeffrey, Enron also began to expand more rapidly. They not only acquired assets in the United States, but also established business departments in Europe and the Asia-Pacific region. When the development funds fell into a bottleneck, they had no choice. Slow down, the projects are still moving fast, and the methods of obtaining funding start to become less formal.

In order to increase the company's financing ability, they began to fabricate the company's revenue and profits, and raised the stock price, so as to win more support from the bank funds. After they tasted the sweetness of this operation, the emergency measures finally turned into long-term business , They began to make serious arrangements, establishing a large number of short companies in the United States and overseas tax havens.

It is a pity that in the end, many investments ended in failure, and finally came to this point.

Of course, all of this is kept from the investors. Only a very small number of senior executives in the company know the whole picture.

In the eyes of outsiders, such high-quality assets have naturally become the sweet pastry in the eyes of many consortiums. Kenneth and Jeffrey introduced high-level people from the U.S. government as their umbrellas, and finally successfully defeated various peeping funds.

Enron began to actively provide campaign funds to candidates for elections at all levels in the United States, and also introduced many politicians who have been active in American politics for a long time, who more or less also hold shares in Enron, especially this session of the United States. Many big figures in the core of the government let them hold Enron stock to become shareholders of the company, including senior military generals.

Of course, Enron will not be stingy with those departing officials. This is also a kind of unspoken rule in the United States. Inviting them to hold various titles of consultants and leading high salaries is not only to gain their influence , It can also indirectly affect the attitude of the incumbent officials towards Enron, after all, everyone has time to leave.

Now the senior executives of Enron Company are starting to respond to the doubts from all sides in the United States with all their firepower, and at the same time actively looking for solutions. In the imperial capital of China, Chen Fan came to Oak Capital again.

Lin Hong did not successfully complete the plan to sell 2 million shares of Enron stock by the end of February as Chen Fan wanted, but it was not too bad. The time was not too long, but it took more than a week longer than planned, and finally I still got enough stocks and sold them successfully, although Enron's stock price has also fallen to around 4 yuan.

The average price of these 4 million shares sold was 69.97 yuan, which is not bad, but the interest on securities lending is a little higher. In the end, the annualized interest of millions of shares is close to 18%, and the average annual interest has also reached 9.76%.

That is to say, they now have to pay interest of 2.73 million yuan per year to borrow these stocks, which is 75 yuan per day.

After "Fortune" magazine published the report "Is Enron's Stock Price Overvalued", Enron's stock price began to decline continuously. Spread the word.

After all, it is an indisputable fact that Enron's stock price plummeted at the end of last year, and no one would suspect that some Wall Street fund companies were madly selling Enron's stock at that time.

Chen Fan came to the headquarters of Oak Capital today because of Xu Jing's invitation. She was not very satisfied with Chen Fan's operation in recent days.

"I asked Lin Hong, and he said you meant to be cautious about shorting?"

Xu Jing looked at Chen Fan and said, "Although I know that Enron is a blue-chip stock in the rice stock market, it is very difficult to short it, but this company obviously has financial fraud and conceals huge debts. Its stock price is not worth so much."

"Sister Xu, you are in a hurry."

Chen Fan said with a faint smile on his face.

"Are you worried that the stock price will not drop?"

Miss Xu asked hesitantly.

"Not at this stage."

Chen Fan's answer was also very decisive. Just kidding, if you are desperately shorting now, it will be a question of what price the sold shares will be recovered in the future. At least until the market admits that this company is fraudulent, you must not be fooled.

"What I asked Lin Hong to carry out was naked short selling. Indeed, as long as we have enough funds in our hands, we can sell countless Enron stocks, but the stocks we sold must be replenished within three trading days. Failure to do so will result in a breach of contract.

At this stage when the market is just beginning to doubt, we can't make big moves to buy money. Once they encounter bargain hunting and absorb funds, they only need to attack us for three days, which will make us extremely passive and force us to cover positions at high prices.

In this case, I don't think we need to take risks at all, don't we? "

Chen Fan still said slowly, "We just need to slowly suppress the stock price, let the stock price drop become a trend, and those who hold Enron stock will panic, and they will choose to sell and leave the market. The moment when the firecrackers are really ignited is when we go all out to harvest."

Xu Jing knew what Chen Fan was referring to when the firecrackers were ignited, which was the complete exposure of Enron's fraud. Although "Fortune" magazine published an article questioning it, the senior management of Enron denied it. Of course, in such an environment, it cannot be regarded as the daylight.

From Chen Fan's words, Xu Jing also understood that he was worried about being attacked.

The war in the financial market does not mean that if you are justified, you will definitely win. In many cases, you have to rely on your strength to speak, and shorting is naturally at a disadvantage. You must take advantage of the right time, place and people to be successful.

But Xu Jing was not so easy to be persuaded, she also thought a lot before calling Chen Fan.

"According to the current news, the Knicks Joint Fund is shorting Enron, see if we can join forces with them."

Before Xu Jing finished speaking, Chen Fan waved his hand and interrupted: "Don't expose us, have you studied the shareholders of Enron Company, and you should have read the latest analysis report from Zhang Quan, right? A company that dares to make an idea, do you think we can do well in short selling?

According to current calculations, the Knicks Fund's short-selling of Enron stocks is very limited.

Once we contacted them and it was exposed, Enron's stock price soared instantly, so they would not cooperate with us to reap Enron.

Moreover, even if they join hands with us to short-sell, I can guarantee that we will be the last ones to take the blame. If the U.S. government takes action to investigate our short-sell methods, you should know the consequences.

Xu Jing, don't try this, it's very dangerous, even if you contact it through a third party, it will increase our risk of exposure. "

When saying these words, Chen Fan spoke very fast, and also revealed his clear objection to Xu Jing's meaning.

In fact, during this period of time, Chen Fan seemed to be very relaxed and did not pay close attention to the changes in Enron's stock price. In fact, it was just for others to see.

In Chen Fan's mind, shorting An Ran this time is very important, because he has no supernatural powers to assist him.

Of course, the reason for saying this is that he can’t be put down, he can only be put up, so now he pays attention to the daily trading of Enron stock, because he is worried that Enron’s stock price will rebound in retaliation. After buying shares of stock, he chose to let him operate cautiously, and the reason why naked short selling of Enron stock continued to suppress the stock price.

Chen Fan didn't care much about the profit from the price difference during the entire suppression process. What he cared about was that Enron's stock price could not rebound in such an operation, and it had to form a downward trend.

In the past few days, Lin Hong's short-selling stock was only more than one million shares, although it was not a lot, but using the short-selling T+3 trading rule, they can have 3 days to cover these short-selling stocks.

Chen Fan felt that this kind of operation was the safest, even if someone attacked him, the loss would be limited.

As for the stocks obtained through securities lending, the margin and the money for selling the stocks are pledged by the brokerage, so at most they will lose some interest, because Chen Fan is sure that Enron is not worth the price.

In a company with financial fraud, Chen Fan believed that no one would spend a lot of money to protect the market, especially for a long time.

"Well, I thought there would be more hedge funds entering the market to short, but now there is just a lack of a catalyst, and we can play this role."

Xu Jing thought for a while, and knew that Chen Fan's idea was safer, so she stopped arguing.

"What did you say?" Kenneth sat in his spacious office, answering the phone with an expression of disbelief.

At this moment, he felt that his head was about to explode, because Jeffrey told him on the phone in Peanutton just now that their trip to Peanutton did not meet the ideal expectations.

The appropriation procedures of government departments are too complicated. Even if they have many supporters in the US Senate and House of Representatives, it is also very complicated to complete the relevant procedures. As for the unrestricted government, that amount of money is not enough for the current Enron Corporation. , but a drop in the bucket, meaningless.

Not only can this money not be taken, but they dare not even let the outside world know about it, because this will confirm the rumors that Enron's funds are tight. Under the current situation, any information that is biased towards the short side will be infinitely magnified.

"They let us stabilize and figure out a solution by ourselves. What do we use to solve it? Don't those people care about their own investment?"

Kenneth was a little out of breath at this moment, and he pulled off the tight tie fiercely to let himself breathe more comfortably.

"I think we have made things simple, so they don't care about us. Before we could scare those consortium forces with bullshit, it has no effect on them. After all, it involves a hostile takeover, and they stand up.

But they won't get involved in the company's current predicament at all. I even suspect that they let us stabilize the situation just to sell the stocks in their hands in the near future. "

Jeffrey complained on the phone that today's experience in Peanutton was too bad, and all expectations were not fulfilled. Not to mention, from the eyes of those people, he felt that he was abandoned.

On the way back to the hotel, he realized what these politicians were trying to do.

When there are benefits, they are willing to join in because they need them.

But now that the matter was exposed, they left wisely, even worried that they would be involved if they left late.

I used to think that my relationship network was very tight, but now it seems like a tattered fishing net.

"What's the use of saying this now, don't tell others for the time being, including Kesai. Since Peanutton can't get funds, and there is no other way, then we can only use Kesai's previous plan. The quarterly report almost caused the stock price to fall and prevented those guys from leaving the market smoothly.

Well, that's it, come back and talk about it. "

Kenneth hung up the phone mercilessly, staring at the computer screen on the large desk, on which was the real-time stock price of Enron stock that was being traded, 62.73 yuan, and the stock price continued to fall.

Before the stock price seemed to stabilize, huge sell orders would appear one after another, breaking the market again. Kenneth knew that this was the gang of Wall Street vampires shorting their stocks.

"Damn Jim, can't you be short a few years later? Fuck."

Kenneth sat on the boss chair and cursed. He was the only one in the office at the moment, so naturally he didn't have too many scruples.

For him who has stepped into the upper class, he usually pays attention to his own image, not to lose his composure, and the key is not to be seen by others.

But now there are too many bad things to worry about, and I don't care about them anymore, hell upbringing.

After venting his anger and disappointment for a while, Kenneth sat down again and began to think about what to do next.

Picking up the phone on the table, he told Kesai that the quarterly report was released according to his previous intentions. Jeffrey Peanutton's trip did not get funds. Of course, the reason was that the procedures were too complicated and he was worried that getting government funds would affect The stock price constituted a further negative, and he didn't say a word about the rest.

(End of this chapter)