Reborn: Billionaire in College

Chapter 351: Still Naked Short Selling
"There is another condition. We must show weakness to the enemy and force the short sellers to fall into the trap. Let them feel that they have made enough money and then cash out and leave. At the same time, we will cooperate with our private fundraising to further reduce the number of circulating shares in the market." Bu Housheng slapped his thigh and said excitedly: "Combined with Renren's repurchase plan, the number of circulating shares in the market will be pitiful."

When short-selling institutions want to sell stocks, Chen Pingjiang buys them.

It just so happened that they brought the stock price down, allowing Chen Pingjiang to buy more circulating shares at the same price.

The stock price will be smashed down, and the money that Chen Pingjiang has raised will be trapped. It seems like a big loss, but this is no longer the key point!

The action of accumulating funds is just a chess piece on the chessboard, and the ultimate goal is to reduce the number of outstanding shares.

Wait until the number of outstanding shares drops to a certain level.

Short sellers need to buy stocks to repay them, and market makers also need to buy stocks to hedge risks.

The stock price will be pushed up continuously. Although it is not as exaggerated as a short squeeze, the same effect can be achieved.

The fewer stocks circulating in the market, the higher the share price of Renren will be. Everyone wants to buy it, which will continue to push up the price!
With this excitement, Chen Pingjiang was willing to go back to sleep.

The strategy has been decided, and all that’s left to do now is to implement it step by step.

The first step is to show weakness to the enemy.

11 month 15 day.

Renren's stock price opened at $150.32.

As of the close of the day, Renren's stock price was US$141.27, down 8.18% from the previous trading day, and a total drop of 21.34% in two trading days.

It can no longer be described with just one word: miserable.

Bu Housheng's actions of accumulating funds also appeared to be more secretive and gentle. He wanted to get as many circulating shares as possible while not alerting the enemy.

The market is not completely in mourning, but there are still many bearish sentiments.

"Renren's share price can't be pulled up any further, what a shame, as they have just started buying back shares."

"The positive momentum of buybacks has almost been released. The SEC's move is really ruthless. If the investigation had been delayed for a while, it wouldn't have been so bad."

"I advise everyone who still has chips to throw them off the table immediately, otherwise you will be stuck."

"Has Chen Pingjiang admitted defeat? This is not in line with his style. He was shouting very loudly yesterday, but today he even tweeted less."

"Haha, the SEC's investigation hit the snake's weak spot. Yesterday he was just a ferocious lion, seemingly ferocious, but actually bluffing. Today, the SEC came with a shotgun, and he couldn't stand it."

"I was planning to hold on, but there was no response from Renren today. I have chosen to sell all my Renren shares to avoid being stuck."

"..."

There is an endless stream of pessimistic voices.

The day was so long that Chen Pingjiang found it a little hard to endure.

Numerous private messages on Twitter and interviews from various media came flooding in like a tide, seeming to surround Chen Pingjiang.

Especially that idiot Carson Block, he was so proud that he kept tweeting like crazy, almost shouting at Chen Pingjiang's face.

[Chen, is there a power outage or internet disconnection today? Why aren't you talking? ]

[Haha, the poor tiger had its fangs pulled out.]

[Facts have proven that my point of view is absolutely correct. Renren stock is not worth holding. This SEC investigation may lead to big news.]

[I'm already building a position to make some extra money.]

……

Chen Pingjiang: [Carson, has anyone ever said that you are like a mad dog, only able to bark? It’s so annoying.]

After the first tweet of the day was sent out, the world's attention was focused.

Everyone asked Chen Pingjiang what he thought about the SEC investigation and whether there were any subsequent measures to stop the short sellers?

Chen Pingjiang thought, how can I see it? I can only use my head to look.

[These short sellers are like grasshoppers in autumn, they can’t jump for a few more days.]

However, not many people seemed to believe what Chen Pingjiang said.

Because Renren’s stock price has fallen so badly.

According to Chen Pingjiang's previous style, if he had any tricks, he should have used them.

After the market closed, Chen Pingjiang smiled and asked everyone, "How was my performance today?"

Bu Housheng smiled and said, "It's OK, but it's still a little bit off. The short sellers haven't gone crazy yet."

Chen Pingjiang spread his hands helplessly: "Then I have no choice but to join the game and seduce them myself."

"Mr. Chen, what are you going to do?"

"You'll see in two days."

…………

at the same time.

In an old neighborhood in Los Angeles where the security is not so peaceful, Tom listlessly watched the financial news on TV, taking a sip of beer from time to time.

His wife, with a big belly, complained: "Last month's bill has been sent, dear, we don't have money to pay the bill. And we are running out of food. Prices are rising too fast. We only have enough money to buy some discounted chicken thighs.

Tom glanced at his wife guiltily and rubbed his face helplessly: "Honey, I'll find a way."

Since 2011, Tom has been ruined by the ups and downs of the stock market and has lost almost all his fortune. Now all he has are a few stuck stocks.

Tom didn't expect that he would survive 08, but eventually collapsed in 11.

He doesn't have a formal job, but is a professional stock trader and a small retail investor. Stock trading is his job.

So when the stock got stuck, Tom's life fell apart.

Tom was almost unable to breathe due to the mortgage, car loan, insurance, water, electricity and internet bills.

"Hey, Tom, come out for a drink." The phone rang, Tom looked at the caller ID and saw that it was his good friend Jim calling.

"Sorry, I'm not in the mood for a drink." Tom sighed.

On the other end of the phone, Jim said, "Don't worry, brother. I'll treat you to a drink and introduce you to an opportunity to make a fortune."

Tom was excited when he heard it. "It only takes me twenty minutes to get there."

The two were childhood friends and had been friends for decades. Tom felt that his childhood friend would definitely not lie to him.

After arriving at the bar, Tom found his childhood friend Jim. As soon as he sat down, he asked anxiously: "Brother, is there any opportunity to make a fortune? You know, I really need some money to improve my life now."

Jim smiled and called the waiter to order a drink for Tom, then said, "Hey, man, there is definitely an opportunity to make money, but before that you have to keep your mouth shut, otherwise not only will we not make any money, but we will also get into big trouble." Tom was stunned when he heard it, "Damn it, it's not drug trafficking or something like that? I won't do it."

"Of course not. Would I harm you? Of course it's our old business, stock trading."

Hearing what his childhood friend said, Tom finally breathed a sigh of relief. "That's not bad. You've known me for a long time. You know how tight-lipped I am. I haven't told anyone about your high school affair with your math teacher."

"Ahem!" Jim choked on his wine. "Okay, man, I believe you."

After saying that, Jim waved his hand, motioning his friend to sit over.

"It's pretty simple. You've been trading stocks for many years and have a lot of influence in the forum. Now a big boss is willing to pay half a million dollars for the two of us to do something."

"Dude, just say what you want to say. Don't tell me half the story. It's making me anxious."

"Okay, we need to encourage a group of people in the forum to buy Renren's call options together. The more people, the better. The only thing we need to do is not back down in the face of any pressure."

Tom's eyes lit up. "It's that simple? I can get $250,000? I know Renren's stock well. Wasn't it shorted recently? Why do I need to buy call options?"

Jim smiled and said, "That's not something we should consider. Our mission is to complete the call and call on everyone to find market makers to buy Renren's call options. The other party gave us 100,000 as start-up capital, and the rest of the money will be transferred to us after completion. If we do well, there will be an additional reward of 500,000 US dollars."

When Tom heard this, his breathing became heavier.

This round trip will cost half a million dollars.

And the task was simple, just posting, which was as easy for Tom as drinking water.

After all, he is well-known in the circle, but he has just been unlucky recently.

"Remember, no matter who asks, we must deny the third party and pretend that this person does not exist. The boss also said that the short sellers may cause trouble for us, so we must hold on." As he said that, Jim patted his friend on the shoulder and handed a bulging brown paper bag to Tom.

After returning home, Tom seemed very excited. On the way back, he carefully thought about various possibilities.

"What we can confirm at present is that this matter is not illegal and it is not difficult to operate."

After thinking about it, Tom logged into the forum and posted his first post.

"Guys, I think I found a good way to make money. Renren's stock is currently facing a lot of short-selling institutions. I have observed this company and it is very good. If we firmly go long, we will definitely beat the shorts."

In fact, if this post was made by an ordinary person, probably no one would believe it at all.

But the good thing is that Tom's identity is so wonderful, he is not an ordinary person.

He is the group leader of wallstre step, abbreviated as WSB, which means Wall Street Casino in Chinese. The friends in the group are a group of speculators who are addicted to stocks and options. They never believe in rational and value investment. They all have the mentality of either getting rich overnight or losing everything overnight. WSB is almost the most extreme group of retail investors.

To put it bluntly, everyone here is a gambler.

Not long after Tommy posted his post, someone responded.

"Haha, Tom, if you had posted this in some other group instead of in wallstre step, you would have been considered a lunatic."

"That's right, Tom. With so many short sellers entering the market, it's almost certain that the stock price will fall. If we go long now, wouldn't that be courting death?"

"Yes, Tom, if you can convince us, we'll go long with you."

Tom thought about it and continued to post the second message.

"The logic is very simple, guys. There aren't many shares of this Chinese company circulating in the market. Now the company is buying back its shares. So many short-selling institutions have sold their shares. If we take over at this time, what will happen? Just think about it!"

At this time, some people have already reacted, and some replied excitedly: "If we take over and hold on to it tightly, when the short sellers want to return the stocks, they will find that there are not enough stocks."

Tom: "BINGO! We can also buy call options, which gives us more leverage."

A member of the group said: "In order to hedge the risk, market makers will also buy Renren's shares and go long together, which will reduce the number of circulating shares in the market."

The group discussed excitedly for a long time.

This can be considered that Chen Pingjiang found the right person. If he had changed the group of people, he would not have achieved such an effect.

Many of these people work and exchange their wages for stocks.

He can be called a stock trading maniac!

Now that there is someone leading the way, enthusiasm is immediately aroused.

These crazy people spread the news everywhere just to get more people to join in and enjoy the carnival.

11 month 16 day.

After the U.S. stock market opened, Renren's stock price not only stopped falling, but even began to rise dramatically.

This bizarre scene immediately attracted the attention of many short-selling institutions.

Because normally, Renren's stock price would continue to fall for a few more days. It doesn't make sense for it to rise so quickly.

After investigating everywhere, the short sellers finally found out helplessly that there was a group of ignorant investors who were hindering their good deeds.

Can this be tolerated?

It is said that the A-share market is harvesting leeks, and the institutions in the US stock market will be even more ruthless in harvesting.

More sell orders were placed that day.

As of the closing, Renren's stock price fell below the $140 mark to only $137.43.

A strange scene appeared.

The intensified actions of the short sellers not only failed to stop the power of the retail investors, but instead further stimulated them.

Let’s all work together to create Renren.com.

The word spread like an infectious disease.

Even Chen Pingjiang himself did not expect to achieve what he had achieved.

"Mr. Chen, Ortex has just released the latest data. The short selling index of our Renren stock has reached 10.2%. If the over-the-counter dark pool is included, I estimate that this number may exceed 14%."

Chen Pingjiang was also stunned when he heard what Bu Housheng said: "Isn't it impossible to sell naked short? Our total available equity is more than 90%, where does this 4% come from?"

Bu Housheng was also somewhat speechless: "The SEC did ban naked short selling, but they came up with a shady idea and made similar financial derivatives. In short, the short sellers borrowed the stocks that originally belonged to the long sellers from the securities firms, and then one borrowed another, and naked short selling was formed."

Chen Pingjiang was stunned after hearing this.

Or you might say that the big American institutions are ruthless and dare to lend out the stocks they are in custody. If you want to lend your own stocks, people will be speechless. How dare you lend stocks that do not exist in the market?
Then they are packaged into financial derivatives and borrowed one by one!
For example, a short seller went to UBS to borrow Renren shares, but UBS said, "I don't have it, but I can get it for you." Then UBS turned around and went to JPMorgan Chase to borrow.

JPMorgan Chase doesn’t have any of its own, so it is using the stocks held by retail investors to support it.

"This is a really cool operation. No wonder these Wall Street institutions are so brave."

Bu Housheng smiled and said: "The behavior of retail investors today made the short sellers a little anxious, so they borrowed more stocks to suppress the stock price."

(End of this chapter)