The Son of Finance of the Great Age

  Chapter 564 The Giant Falls (1)

one week later.

  In this office with a panoramic view of Manhattan, Alan Schwartz looked at the tall buildings outside, but he didn't feel any excitement in his heart. He was surprised to take the position of CEO of Bear Stearns, because James Kane himself is a major shareholder holding more than 5% of the shares. If he is unwilling to move his position, the directors of the board of directors will not be able to say anything. But for some unknown reason, Kane actually gave up the position of CEO and let him pick up a big bargain. Maybe the other party wanted to focus more on his hobby of bridge.

  Schwartz, who joined Bear Stearns not long after graduating from Duke University, has served the company for 30 years. It can be said that the culture of this company flows in his bones. He started as a stockbroker and is very good at dealing with people, and has the reputation of "super salesman". He is not tall, with an ordinary Caucasian face, his hair is already half-white due to years of hard work, but his figure is well maintained, his often tight lips and the occasional falcon-like eyes reveal his determination and shrewdness, This is the profile of Wall Street's most famous investor.

   Before waiting for his **** to sit hot, Alan Schwartz discovered that the current situation of Bear Stearns is quite bad and very difficult. The positions hoarded by the fixed income department could not be sold, and they could only watch the losses day by day; because of the bad market conditions, the brokerage business that Bear Stearns was proud of also stagnated; the investment banking business was not bad, So far, relying on the financing wave in emerging markets, there has been a small increase, which has exceeded the amount of the same period last year. This is the only bright spot among the several core businesses.

It took Schwartz a full week to sort out the messy situation, first slowly deal with that part of the bond position, shrink the FICC business, and then vigorously develop the brokerage business, provide leveraged business and Settlement business, while strengthening wealth management and investment banking. And if it develops according to the strategy he formulated, at least it will have to undergo a major cleaning first.

In terms of personnel changes, the biggest pressure on Schwartz is the sluggish stock price of Bear Stearns. After the internal hedge fund collapse and losses in the fourth quarter, investors have serious doubts about Bear Stearns' profit prospects, dragging down the stock price. The rapid decline has been like a roller coaster, so far only the level of 62 US dollars per share, compared with the peak of 170 US dollars, almost only a third of the remaining.

  At the beginning of taking office, the board of directors gave Schwartz a death order. In any case, the stock price will be raised to more than 100 US dollars this year. These figures can be related to the net worth of each director, as a professional manager, he naturally dare not be sloppy.

But just when Schwartz ordered the people in the capital market department to secretly observe the performance of his own stock and prepare to buy it at a low price, he was surprised to hear a piece of news that shocked him. Someone was shorting the stock of Bear Stearns, and It has been going on for three or four days.

Logically speaking, the U.S. stock market can be both long and short, and it is a T+0 transaction, that is, it can be bought or sold on the same day, so it does not count as someone shorting Bear Stearns stocks A strange thing. However, according to the feedback from the people in the capital market department, this short-selling force is not simply selling and covering up positions at a low price, but selling with all its strength, without any intention of covering up positions.

  Although there are only three or four trading days at present, the momentum of the other party's short selling is extremely fierce. In the first few trading days, the short selling reached tens of millions of dollars every day. By yesterday, this number suddenly surged to 50 million US dollars, surpassing the sum of short selling in the previous few trading days, and the momentum was surging.

   Under the short selling of this force, the stock of Bear Stearns has fallen rapidly in recent trading days. So far, it has fallen by a full 10%. But judging from the situation on the market today, the other party is not satisfied with the drop, and is still desperate to sell Bear Stearns' stock.

   "Damn, where did they get so many chips, how could they sell so many shares?"

   Distraught and irritable, Alan Schwartz couldn't help but swear. According to the calculation of the Fundamental Capital Market Department, the short-seller has sold at least 1.5 million shares of Bear Stearns in the past few days, accounting for about 1.2% of Bear Stearns' total share capital. Although these share shares cannot shake the foundation of Bear Stearns, it will inevitably lead to a decline in Bear Stearns' stock price in the short term, leaving the market with the possibility of spreading rumors.

"Should we consider entering the market, or formulate a redemption plan? After all, the current price is not high, and a proper recovery of part will help the stock price to rise." Jones McKenmier, director of the capital market department, frowned suggested.

  Jones McKenmill is a typical image of the backbone of Wall Street: suits and leather shoes, shiny hair, tall, ambitious. After entering Bear Stearns, he aspired to become a member of the management team. Relying on his excellent mind and hard work, Jones McKenmier quickly stood out and became one of Bear Stearns' many department heads, and he was also the youngest one, only 35 years old.

The main responsibility of the capital market department is to provide market analysis for the investment banking department, and provide professional advice on various derivatives in the decision-making of providing leverage to customers, such as the allocation of equity capital, the structural design of bond issuance, valuation, and pricing etc. Its function is similar to the combination of the research department and the sales department. However, because Bear Stearns' sales department is particularly powerful, the sales function of their capital market department has been severely marginalized, and they can only develop towards the research department.

   Now that Jones McKenmire said that his stock price is undervalued, it is naturally the result of their internal research. However, even the researchers of Bear Stearns couldn't fully grasp their overall financial situation, so Alan Schwartz was noncommittal and silent about Jones McKenmill's suggestion.

"Observe and observe. If the other party continues to sell short in the next three trading days and does not stop, then we will fight back without hesitation and show them a little bit!" After a long silence, Schwartz finally made up his mind. Said categorically.

Although I am not very satisfied with Schwartz's decision in my heart, I don't even know who the other party is, where the short-selling limit is, and whether there are any other tricks that have not been used. Jones McKenmier also knows that this is the most important thing. Safe countermeasures.

Just when he was about to say something, the mobile phone in his arms suddenly vibrated. Jones McKenmier took out the mobile phone, just glanced at it, and immediately changed his face, while holding the mobile phone screen to Alan Schwarz Ci, asked hurriedly: "Alan, are these true? Is it true?"

   "What?" Schwartz glanced at the other party in doubt, took the phone and just scanned it slightly, and his face changed in the same way. Staring blankly at the phone for a while, he slowly handed the phone back, his face once again pale, "Yes, everything said in the Financial Times is true."

  Jones McKenmill's BlackBerry just received an email about Bear Stearns. Among the e-mails was a report from the Financial Times of London on the termination of DBS Bank in Singapore and the closing of the Bear Stearns deal. The report quoted a trader who did not want to be named. Based on risk considerations, DBS Bank has issued an internal order prohibiting all transactions with Bear Stearns, including settlement.

  Behind the article, the author specifically mentioned that because of the effect of DBS Bank in Singapore, other Asian banks have followed up and started to close the transaction with Bear Stearns. Now the UK's local banks are also considering not to do business with Bear Stearns as a counterparty, although no bank has publicly announced so far.

   "You already know all this?"

   Seeing Schwartz's reaction, Jones still doesn't understand. He held his head and wailed, "My God, how can you restore investors' confidence when something like this happens?"

  As the boss of the capital market, he naturally understands the importance of investor confidence. In fact, a few minutes ago, he didn't take the stock price drop seriously at all, because as long as the management came out to make an appearance, a few hints could restore the market's confidence. But now that this incident broke out, at least in the short term, it is very difficult to save the decline of Bear Stearns' stock price.

"Relax, buddy!" Seeing Jones' helpless face, Schwartz couldn't bear it, and couldn't help but comfort him, "Even if some banks in Asia and the UK don't do business with us, we won't Don’t worry, as long as we give us enough time, we can still revive the stock price.”

   Until now, he is still worrying about the stock price, completely unaware of the real purpose of the short side.

   "Stock, share price..."

Like a flash of lightning piercing the sky, a certain idea suddenly appeared in Jones's mind. Although it was fleeting, it was still captured by Jones's fast-moving brain, "Alan, Alan, tell me honestly, What is the current cash flow situation of the company?"

   "What?" Schwartz scolded angrily, and his expression became visibly displeased with the loud questioning. Logically speaking, this is a secret that only executives at a certain level know, and this level obviously does not include Jones McKenmier. However, seeing the anxious look in Jones' eyes, he realized that what he just said might have been too harsh, so he slowed down and said, "Don't worry, Jones, the company's current funds on the books are very sufficient, and it can definitely guarantee the normal operation of the company." operate."

After hearing this answer, Jones McKenmire breathed a sigh of relief as if he had been pardoned, and said with some fear while clutching his chest: "Sorry, Alan, please forgive my rudeness. Just now, I realized that It is a terrible possibility that all of the current situation is created by short sellers, and their purpose is to suppress our stock price as much as possible, and these are common tactics in the market.”

   "Are you saying that it is DBS Bank of Singapore who shorted us?" Alan Schwartz's face changed. This opponent is really a bit powerful. Although it is not enough to scare him, it is always troublesome. But after thinking about it carefully, he couldn't find the possibility of DBS Bank shorting his company, so he waved his hand decisively and said, "It's unlikely, I can't find a reason for them to short us."

"No! No! No!" Jones shook his head again and again, "I don't think it will be them either. They really have no reason to short us. But I think they were bewitched by others and chose not to do business with us out of caution. .This is a bad news for us. There is no doubt that the black hand behind it has not yet appeared, but if all this is true, we must not sit still."

   "Is it really that serious?" Schwartz frowned, and he felt that Jones' words were too true. Although he came from a brokerage sales background, he has also seen a lot of turmoil in the stock market, so he believes that this time the action of shorting Bear Stearns stock is at best to leave the market after reaching a certain low point, and it will not shake Bear Stearns. Stern's foundation.

  As long as the financial statements for the first quarter come out, today's sluggish stock price will immediately skyrocket, as long as the report can turn losses into profits.

"It's hard to say how serious it is now!" Jones McKenmier didn't take it seriously when he saw Schwartz, and he didn't dare to exaggerate the consequences. After all, if his opinion is adopted by Schwartz, the future It may become an important reference for the direction of Bear Stearns' policy, and if his guess is wrong, then he is likely to fall into a doomed situation. After all, these things involve tens of thousands of funds. "Currently short The biggest suspects in our stocks are those hedge funds, only they have such financial power to stir up the market. We need to pay close attention to their capital flow, and if necessary, we must mobilize funds to protect the market.”

  Because Bear Stearns is the top brokerage firm on Wall Street, many hedge funds use its channels. Although brokers cannot inquire about the other party's investment targets and positions, as long as they monitor the flow of funds and the use of leverage, experts can still guess part of the investment situation.

   "It won't be them!" Schwartz's denial was very firm this time.

   What Jones didn't know was that after DBS Bank and Bear Stearns cut off the deal, several other banks cut off the deal with Bear Stearns one after another. Before the Financial Times reported, these news had already started to spread in a small area, and the direct result was that some customers began to request to withdraw the funds held in Bear Stearns, many of them were Asian customers, which was unavoidable . Bear Stearns is also in the process of returning this part of the funds to investors in an orderly manner, amounting to about $11 billion. And there is not a single hedge fund in this wave of refunds.

  This is the reason why Schwartz firmly denied that the institutions shorting Bear Stearns were not hedge funds. At least from the current point of view, they are not them.

   Thanks to the book friends Kalm, God, and Butt Bear for voting for the monthly ticket!

  (end of this chapter)