Fang Zhuo did not expect that Kong Yu would give him a cruel suggestion.
This Chinese New Year, don’t you have some peaceful festive atmosphere?
In order to deal with the threat of Nokia's patent competition, Fang Zhuo thought outside the box and decided to settle the final decision if the patent lawsuit could not be resolved. He came up with the idea of tying customer funds to Yike's stock price.
The ultimate goal is to protect Yike's U.S. mobile phone market, and of course, take advantage of the short sellers.
But after all, he is not a professional. What he is good at is finding referees, inside information, bundling interests, making friends, and seeking win-win results. The specific operational details and pre- and post-processing all need to be handled by professionals.
Kong Yu is very professional.
After receiving the boss's idea, he had only one direction of thinking: how to maximize benefits.
Not long ago, in Europe, while Kong Yu inspected the financial situation there, he also had close contact with the parties involved in the Volkswagen short-squeeze case involving Porsche. He learned from this experience and made further corrections to Yike's trading.
Fang always has to deal with options to lock in tradable shares and the commander's office to overturn the ban.
But Porsche's initial short squeeze did not have the benefits of a desperate comeback like "overturning the ban."
How does Porsche do it?
It has absorbed Volkswagen shares since 2005 and wants to seek control of the German Volkswagen Group. There is a hurdle in the process. Germany has specially established a "Volkswagen Law" to protect the Volkswagen Group, which clearly stipulates that only 80% of the shares can be obtained to gain control.
However, the German government holds 20.1% of Volkswagen shares, almost cutting off the possibility of changing hands from the source.
Porsche does not believe in evil and spent more than two years suing in the European Court of Justice, accusing the Volkswagen Act of violating the EU's Fair Trading Act. It finally overturned the German law at the end of 2007 and achieved a 75% holding bottom line, which means it no longer needs
Consider government shares.
However, as Porsche pushed up Volkswagen's stock price in the process of acquiring shares and fighting lawsuits, a large number of funds smelled an overvalued market value and came to the news.
Is the stock price of Volkswagen reasonable? Not reasonable.
Is Volkswagen’s valuation multiple high? High.
Can you win by short selling? Hmm...
Porsche has anticipated the fierce short-selling wave and has been well prepared to secretly lock in 31.5% of the Volkswagen share call options, plus the 42.6% of the publicly held shares, for a total of 74.1% of the disposable equity.
The key to this step is that options are financial derivatives, not spot stock sales. They are sales contracts with a price agreed upon within a certain time limit, so they are not subject to public disclosure regulations.
In the financial market at this time, the total amount of public short orders has accounted for 10.4% of the total share capital, but only 100-74.1-20.1=5.8% of the circulating shares on the market are left.
In other words, the short side has a gap of 10.4-5.8=4.6%.
When Porsche chose to announce the news on Sunday, a stunning short squeeze occurred the next day.
Volkswagen's share price rose from 200 euros to 1,005 euros in two days, with a market value of more than 300 billion euros, making it the world's most valuable company.
In the end, under the leadership of the Frankfurt Exchange, Porsche delivered 5% of its shares, which alone brought 3 billion euros in cash.
According to statistics, the losses of short sellers in this wave exceeded 20 billion.
Now, based on Kong Yu's observation, speculation and thinking, Yike has reached a situation similar to that of public stocks.
European and American markets lead 3G smartphones, and China has opened up the 3G market and initially realized its potential. This is a great benefit for Yike's stock price.
At the same time, Yike is caught in a patent competition with Nokia, the mobile phone overlord. The latter has sued the ITC to ban sales, which is a big negative.
The game of good and bad gives Yike's stock price room for profit.
The time when this profit margin can really be maximized is before ITC announces the ban on sales.
Once the ban is promulgated, Yike's stock price is bound to plummet. That is the moment for short sellers to gain, but they also face risks.
What if Nokia and Yiko reconcile?
What if Nokia loses the patent lawsuit?
The latter is not considered for the moment. The former is the final result of many patent lawsuits, which often ends with a high compensation for one family.
How to prevent Nokia from settling with Yike and how to obtain ITC's internal opinions as early as possible is crucial from the short side's perspective.
But in Kong Yu's view, it's very simple. No matter what Nokia decides, everyone on Yike's side will be happy if they show confidence and a tough attitude from top to bottom.
As for whether ITC will reveal enough information in advance to create a larger scale of shorts...
Kong Yu feels that the profits here are enough for many people to use resources, and Mr. Fang is very familiar with that unfair practice.
In this case, regardless of whether the governor's office will overturn the ban, let's learn from Porsche's option lock to complete a short squeeze.
When this wave of short squeeze ends, Yike still faces the ITC ban and still cannot solve this big disadvantage.
The maximum time for this ban and the overturning power of the General Office to be implemented is 60 days. During this period, better sales performance, true or false huge royalty settlements and other news can be used to push up the stock price again, thus creating profits again.
space.
The short sellers in the previous round can take revenge, and the new short sellers can pursue profits.
As for whether a bad thing turns into a good thing in the end, it depends on whether Xiao Ao and the others are willing to lose money.
Anyway, what Kong Yu already knows is that Xiao Ao has gathered around him a group of former classmates, friends, and the like, including senior executives working in a certain company, and everyone is waiting to contribute to the new boss.
And what is an overthrow from the commander's office?
It’s just billions of legitimate profits, and it’s just assets that have doubled customer funds. Can it compare to hundreds of billions or trillions of toxic asset disposals?
Geithner and others are ready to get involved in even these, and the ban seems to be even more frivolous.
Of course, these ideas still need to be refined in many details.
For example, Xiangjiang Huanyu, which still holds 5.16% of Yike's shares, is a shareholder who participated in Yike's Series A financing and bought back the shares after the listing. Its existence cannot completely guarantee the formation of the first wave of runs.
There is a run on the market here, and Xiangjiang Huanyu over there is approached by someone to deliver its stocks, or it sees that the profits are too big and cashes out directly, and then it falls apart and... it can only cut the next wave.
Kong Yu even believes that even the shares held by Shenxin Kechuang cannot be retained to avoid causing additional risks.
When he discussed this point with Mr. Fang one by one, he found that the boss who had been thinking about it was hesitant.
"Mr. Fang, don't be soft-hearted." Kong Yu immediately warned.
He knew the relationship between his boss and the head of Shenxin Science and Technology, but from the perspective of a trader, this kind of risk was unnecessary.
"I trust Brother Wang very much." Fang Zhuo said.
Kong Yu frowned and warned again: "Mr. Fang, you have to think about the new production line."
Fang Zhuo remained silent for a long time.
Forget it, who wouldn’t feel a little wronged in this life?
There will always be opportunities to make amends in the future. Shenxin Technology still holds shares in Penguin. At the end of this year or next year, Yike will rely on the development of the Android system to compete head-on with Penguin.
Fang Zhuo said nothing and signaled the gasoline man to continue.
Kong Yu understood the boss's decision and admired in his heart that this was the Mr. Fang he knew. Afterwards, he talked about the legal risks of these two waves of short squeezes.
The procedure will be legal.
Just like the Porsche short squeeze, even if the German Financial Supervisory Authority intervenes in the investigation, all actions are legal.
However, even so, trouble arose afterwards.
Kong Yu is very aware of the developments in the financial circle. A number of hedge funds are now preparing to join forces to file lawsuits in U.S. courts on suspicion of fraud, market manipulation, secret holdings, and manipulation of public stocks.
Can the lawsuit be successful?
I'm not too optimistic. Even if it succeeds, it may only cause Porsche to lose a small amount of money, which will somewhat relieve its anger.
Boom, boom, boom, boom, boom.
The door in the office rang three times, and guests who had made appointments were repeatedly postponed.
It wasn't until nine o'clock in the evening that Kong Yu completed a comprehensive report and review.
Even if it was Fang Zhuo, he couldn't help but sigh: "This time it seems a bit fierce."
Kong Yu didn't refute, just a little bit.
"Let's go have something to eat." Fang Zhuo had been listening to Mr. Kong's report, and the two of them didn't even eat dinner.
"Mr. Fang, you still have guests, and Mr. Ni is also an old friend. There is no need to greet me." Kong Yu stood up and politely declined, "I must have left food at home."
He had a rare moment of rest.
It's extremely peaceful in Shanghai, and the hustle and bustle in the financial circle seems to be completely away.
Kong Yu liked this feeling very much.
Of course, he also likes the feeling of profit-seeking in trading, and sometimes the bloody smell of fighting and killing emerges from his heart. My name cannot be shown in the financial turmoil. Is it the head office this time?
Fang Zhuo escorted Mr. Kong to the door of the office.
At this time, Kong Yu suddenly turned around and said arrogantly: "Mr. Fang, if I can bring the first production line, I can naturally bring the second and third."
arrogant!
This is the first time he behaves so arrogantly in front of his boss!
Fang Zhuo was a little shocked, vaguely remembering the way Kong Yu walked into the office carrying a gasoline can.
At that time, I thought he could do it, and now he does!
Like a fish in water, like a fish in water!
Fang Zhuo patted the gasoline man's arm and said with emotion: "Mr. Kong, there are two kinds of ideals in this world. One is that I realize my ideal, and the other is that the ideal is realized through me."
"If I hadn't met you, how would I have realized my ideal? My ideal can only be realized through you."
This is the highest praise Kong Yu has heard since he met Mr. Fang.
Over there, Ni Runfeng was already walking quickly in the corridor.
Kong Yu shook Mr. Fang’s hand, nodded silently, left the CEO office of Hang Lung 23, and went downstairs to realize Mr. Fang’s ideals.
…
"Sit, sit, sit."
"Old Ni, you drink tea first."
"Have you eaten? Oh, I'll order you some dinner, you eat first."
Fang Zhuo bids farewell to the Gasoline Man and welcomes old friends.
But he still needed to take a moment and sort out the report from Kong Yu in his mind.
It happened that Ni Runfeng really didn't have dinner, so he had a simple dinner at Yike's president's office in a warm but attentive manner.
When Fang Zhuo gathered his thoughts and locked the safe with Mr. Kong's handwritten draft, he saw that Lao Ni hadn't eaten much.
"Old Ni, you can't do this anymore."
Ni Runfeng waved his hand: "I drank wine yesterday and got angry today. My throat hurts and feels like it's being cut by a knife."
Fang Zhuo thought for a while: "If I had known I would have ordered you a bowl of noodles, just in time to eat the noodles."
Ni Runfeng: "...You know how to enjoy hardships."
His visit this time was because he had an appointment with Mr. Fang yesterday to talk about creating his own mobile phone brand. Now it has officially started and it is expected to be launched in the domestic market in the second half of the year.
Now I am taking advantage of the annual meeting of the Yi Ke Department to seek some more opinions.
Fang Zhuo and Lao Ni exchanged a few pleasantries and then got down to business: "The mobile phone supply chain is gradually maturing, and this gradual pace is actually very fast. Last time I heard that you meant to make entry-level Android smartphones."
"There is no problem with this idea, and the positioning is very accurate."
“Entry-level phones focus on cost-effectiveness while ensuring basic quality.”
Fang Zhuo said a few words like this, and then took the initiative to say: "Old Ni, Yike can invest in your mobile phone brand."
Ni Runfeng suddenly heard this sentence, and his heart moved slightly: "Mr. Fang is willing to invest, and I am 100% willing. I know that Hanwang and Meizu are also making Android phones, but I don't seem to have heard that Yike has such cooperation with them."
Fang Zhuo was very open and honest when talking about these things, revealing the news: "Yike originally had a plan similar to an entry-level phone, but Qualcomm's chips did not go as smoothly as expected. This plan is being re-discussed and may be postponed."
Under this situation, Yike needs a product that occupies the entry-level phone position. Hanwang, Meizu, and Lao Ni are all within Fang Zhuo's consideration, but the first two already have systems, and Lao Ni is easy to shape.
Fang Zhuo and Ni Runfeng are old friends. They know each other well and there will be no problems in cooperation. Even his son is still working in Yike, so it is easy to communicate various opinions.
Even if the entry-level product does not achieve the desired results, it will not damage Yike's brand recognition.
The realization of the domestic market is a little faster than expected. Now Yike does not have to rush to launch new positioning products. It can use the method that Fang Zhuo is talking about to sink the market. After all, the first generation of Mars and the initial launch of 3G were misaligned.
It sinks only once.
"Then if Yike launches a product with this positioning in the future, what should I do?" Ni Runfeng asked a question.
Fang Zhuo nodded: "Fair competition."
Ni Runfeng thought about this fairness, a fair competition between his godson and his biological son... They are different in stature, and the price alone is two different things...
But then he thought about it, what if Yike invested money and resources in other companies with similar positioning?
The future is in the future, let’s survive now.
Ni Runfeng didn't spend too much time thinking. He stretched out his hand: "Mr. Fang, I trust you. To be honest, I am a little surprised that you are willing to vote today."
Fang Zhuo threatened: "If you are so shocked, then I will vote for someone else."
Ni Runfeng smiled and said: "I'm flattered."
He suddenly remembered what Mr. Fang once talked about about how to deal with the giant joining the same track. Yi Ke now also has the appearance of a giant. This, the feeling of facing this kind of thing is completely different.
