Rebirth Tokyo 1986

Chapter 231 Money Game
As soon as Paulson finished speaking, a hoarse voice sounded.

"Now that you have sold all your Japanese stocks, can you tell me about the profitability of Xinghai Investment?"

Immediately afterwards, another rougher voice appeared.

"Mr. Harrison said it well. I also want to know the company's earnings."

"Paulson, is that okay?"

Paulson responded confidently: "Of course, that's how it should be."

"However, my ability is limited. I can only make a rough estimate of the returns of Xinghai Investment in the most conservative manner."

Afterwards, Paulson began to tell the story of Xinghai Investment.

"In February 1987, Xinghai Investment established its first private equity hedge fund - Rat."

"This private equity hedge fund raised 500 billion yen, or more than 3 million U.S. dollars."

"Then this company made more than 2 billion yen, or almost $1000 million, in just two months by buying and selling NTT stocks."

"This is the newspaper report at the time, please take a look."

After that, Paulson distributed the Asahi Shimbun international edition newspapers that he had copied earlier to the senior partners who could decide the fate of Goldman Sachs.

“This news is very impressive.”

"Well, this incident has greatly stimulated the development of domestic hedge funds."

"Yes, I remember the front-page headline of the New York Times was also reporting on the fund's profits."

Goldman Sachs is very familiar with this propaganda method of using public opinion to achieve its own goals.

Because when Goldman Sachs wants to suppress a company's stock price, it will use think tanks related to the company to downgrade the company's evaluation.

When a company that was originally rated A is downgraded to B or C, Goldman Sachs can make a lot of money by short selling.

This trick is very useful and concealed, and it has been proven to be effective time and time again.

Paulson flattered: "You are right, this is the fund reported by the New York Times."

“Domestic hedge funds have received a lot of investment thanks to this publicity.”

Xinghai Investment is far away in Japan, which is very inconvenient for many small and medium-sized investors who are rich but not that rich.

At this time, domestic hedge funds have become a good alternative.

Especially those hedge funds with relatively good performance have expanded rapidly in size.

However, these investors did not lose money. They did make a lot of money by taking advantage of the madness of the Japanese stock market.

Even the only exception, Quantum Fund, got back on the right track after the stock market crash in 87.

I can’t say I made a lot of money, but I definitely made a lot of small money.

"It's a very normal way of leveraging power."

A senior partner responded casually and then brought the topic back on track.

"And then? Keep going."

Paulson nodded at him and continued.

"Taking this opportunity, Xinghai Investment established two new private equity hedge funds in May of the same year - Chou Niu and Yin Hu."

“The scale is 1000 billion yen each.”

Paulson's throat was a little dry, and his tone became a little low after he drank the black coffee in front of him.

“The next point in time was the stock market crash in October 87.”

“I don’t know how Chairman Masato Takeshita of Xinghai Investment discovered that something was wrong with the stock market.”

“But he did lead Xinghai Investment to safely evacuate again before the stock market crash.”

Before Paulson could reveal the specific profit figures of Xinghai Investment, a senior partner couldn't wait to ask.

"Xinghai Investment was not affected by the stock market crash at all and escaped easily?"

Paulson responded affirmatively: "Although I don't want to admit it, it's true."

“Maybe, this is investment genius.”

Paulson was a little disappointed because his company, Goldman Sachs, suffered heavy losses in the stock market crash.

But he was also somewhat relieved.

Because of the stock market crash in 87, several senior partners of Goldman Sachs left in disgrace.

Only then did he have the opportunity to go one step further and upgrade directly from a general partner to an important management position among the partners.

Although they are still general partners, their status is very different.

The structure of Goldman Sachs is actually very interesting.

Strictly speaking, companies are actually divided into only four levels.

The lowest level, with a variety of names.

There are a lot of titles like president, senior president, etc., but in essence they are just ordinary salesmen.

They have the largest number of people, with a size of over 10 at its peak.

These people cannot participate in any decision-making of Goldman Sachs and are just a cog in the company.

The reason for using high-sounding titles such as president is mainly to scare people.

Of course, it also means equal transactions.

Although Goldman Sachs is an investment banking giant, it will not give up the business of small and medium-sized enterprises.

These businesses are too small for partners to go and handle, so they can only be handled by low-level employees.

If the job title of a low-level employee is just an ordinary employee, both parties will feel awkward when communicating with the boss of a small or medium-sized enterprise.

It would be better to give it a title like president.

In this way, both parties can communicate through the president, and there will be no trouble with job titles.

It’s a bit like the sales industry, where the starting position is manager.

Although their status is low, they can shout slogans loudly.

The second level is the company's ordinary management personnel.

They have certain rights, but they still have to follow orders.

The third level is general partners, and the number has always remained at around 300.

Have certain rights to make suggestions on the development of the company.

Paulson is in that position now.

At the same time, in order to keep the company vibrant.

Goldman Sachs will rotate one-third to one-quarter of its general partners in a high-profile manner every two years.

The number of people ranges from sixty to seventy, to hundreds.

Those managers who are successfully selected for the general partner list will receive a phone call from the CEO.

His dialogue is usually concise.
“Good news grows wings.”

As for the highest level of senior partners, which are equivalent to the top management of other companies, there are only 9 of them.

Because of the stock market crash in 87, Paulson has now entered the ranks of senior partner reserve.

If nothing goes wrong, I will definitely become a senior partner of Goldman Sachs within five years.

"That makes sense. A genius doesn't need to give reasons."

John Weinberg, the current CEO of Goldman Sachs and the biggest contributor to the development of Goldman Sachs after Morgan Stanley, spoke with emotion.

He thought of his friend, the genius who seemed to be able to see into the future.

The CEO had spoken, so naturally no one had any more questions. They all shut up and waited for his further instructions.

About a minute later, John came back to his senses and said apologetically, "I'm sorry, I'm old and I always like to reminisce about the past."

"Paulson, please continue."

"clear."

Paulson nodded and began to talk about the profitability of the three funds.

"After successfully escaping the 87 stock market crash, Xinghai Investment's reputation has grown even stronger. It has already shown signs of becoming the number one private equity hedge fund."

"As for the specific profit figures, they were not published in the newspaper."

"However, according to the company's intelligence analysis, the higher the figure, the higher the value. The lower the figure, the higher the value.

Duncan, the third senior partner of Goldman Sachs, could no longer sit still. He asked in surprise, "So many?"

“Yes, this is still a conservative calculation.”

Paulson's calculations are indeed conservative.

Xinghai Investment successfully escaped in 87, and the three funds made profits of over 3000 billion, over 2400 billion, and over 2400 billion respectively.

But Goldman Sachs is already powerful enough.

Because Xinghai Investment is a private hedge fund, the level of information confidentiality is far greater than that of ordinary companies.

If Goldman Sachs is given more time, the numbers will probably be more accurate.

"The momentum of the rise is really strong. Have we made any investments?"

Duncan is now very interested in Xinghai Investment and decides to give part of his wealth to it.

With such an exaggerated growth rate, we must get involved.

“No. Neither we nor Morgan Stanley have made any investment.”

"As far as I know, Xinghai Investment's foreign investors."

“Mainly the company’s early business partners, as well as several major retirement funds and school funds in California.”

Speaking of the domestic capital that has successfully participated in Xinghai Investment, Paulson couldn't help but reveal envy in his eyes.

It's really profitable. Even the leaf seller in Colombia can't make that much.

"pity!"

"Yeah, what a pity."

Another senior partner couldn't help but speak up.

John's expression did not change. He said softly, "It's okay. There's still a lot of time."

"I went to Japan this time and made some connections."

"Next time Xinghai Investment expands the size of its hedge fund, or ends the closed period of an existing hedge fund, we can choose to enter at the first opportunity."

John took the initiative to go to Japan. His biggest purpose was not to earn tens of millions of dollars, but to establish a relationship with Masato Takeshita.

If two people can become good friends regardless of age difference, countless benefits will arise in the future.

However, this opportunity may not arise.

Because his chosen successor, Paulson, seemed to be more pleasant to talk to.

John certainly wouldn't be angry.

On the contrary, he was extremely happy.

He is old, and Goldman Sachs will soon be dominated by Paulson's generation.

It will be more beneficial for the development of Goldman Sachs if Paulson can become friends with Masato Takeshita.

He had a strong premonition that Xinghai Investment would be the key for Goldman Sachs to surpass Morgan Stanley.

As soon as John finished speaking, Paulson took over and said, "Not only that, I'm taking this opportunity to reach a preliminary agreement with Xinghai Investment."

"If the company is willing, it can even cooperate with Xinghai Investment to jointly establish a joint venture private equity hedge fund."

He had wanted to talk about this for a long time, and the previous series of preparations were also for this moment.

Although the entire development process of Xinghai Investment has not been fully described, there is a slight flaw.

But now everything has come to fruition, so there is no need to keep nagging about it.

“What are the conditions for establishing a joint venture hedge fund?”

Madison, the fifth senior partner, doesn't believe that there will be free lunches in the world and wants to know the terms of the exchange of benefits.

"The other party wants to invest in U.S. stocks and needs Goldman Sachs to help cover the transaction."

Paulson smirked.

He believed that such simple conditions would definitely arouse the interest of some people in the company.

"So simple?"

Paulson nodded. "Yes, it's that simple."

"We are the local bosses. If they want to make money in our territory, isn't it reasonable for them to pay us protection fees?"

Paulson didn't think the conditions he had proposed were excessive at all.

If foreigners want to make big money in U.S. stocks, they will only become pie in the sky if they don't cooperate with local investment banks.

Of course, the same goal can be achieved if the major shareholders become Americans.

"Well, that makes sense."

Just when he wanted to say something else.

Thomas, the vice president and second senior partner of Goldman Sachs, said, "We haven't finished talking about Xinghai Investment yet. Please continue."

"Ok, no problem."

As a higher-ranking official can crush a lower-ranking official, Paulson immediately stopped his sales pitch and continued to tell everyone the information he had about Xinghai Investment.

"The success in the 87 stock market crash once again proved the strength of Xinghai Investment."

"Xinghai Investment established three new private equity hedge funds at once - Rabbit, Dragon and Snake."

"These three private equity hedge funds are very large, with each having a fund size of 6000 billion yen."

“It can be said that it is a veritable giant in the fund field.”

With a scale of 6000 billion yen, it is first-class not only among hedge funds but also among all funds.

Only during Japan's bubble era could a hedge fund of this size be born.

As for the entire Xinghai Investment, its scale is among the best in the world.

In other words, it is more difficult for information to flow these days.

If it were the era of mobile Internet, Masato Takeshita would have been as famous as Buffett.

But it’s not bad now actually.

Xinghai Investment is extremely well-known in Japan and is also somewhat famous in the United States.

Of course, the most important thing about this kind of thing is publicity.

For example, BlackRock Capital in later generations controls over 10 trillion US dollars in wealth.

But in terms of popularity, it is far less than Buffett's Berkshire.

Other similar examples include Quantum Fund and Tiger Fund.

Before the 21st century, Tiger Fund made more money than Quantum Fund.

But Quantum Fund always acts in a high-profile manner.

Ultimately, in terms of popularity, Soros's Quantum Fund crushed its contemporaries.

If Xinghai Investment deliberately keeps a low profile and often gives money to the media.

Then news about Xinghai Investment would not appear frequently.

In this way, the popularity of Xinghai Investment can be concealed to a certain extent.

This is Japan's homeland, there is no way to hide it.

It’s different in the United States. Xinghai Investment is an outsider.

So Masato Takeshita wanted to try to hide it and not let ordinary people know.

Because Xinghai Investment’s ability to make money is too hateful.

If too many Americans knew about this, someone with ulterior motives would only need to stir up trouble a little, making it difficult for Xinghai Investment to cope with it.

Losing money is a small matter, but affecting investment is a big problem.

"After the establishment of the three new hedge funds, Xinghai Investment also established some public and private funds that are only for company employees."

“But the scale is relatively small, and not much data is collected.”

Except for the one owned by Masato Takeshita personally, the several internal funds are relatively small in scale.

Moreover, this smaller amount of funds is also dispersed among part of the Taiwan stock market, which naturally makes it more difficult to track its whereabouts.

If Goldman Sachs can grasp the situation of the Taiwan stock market, then Xinghai Investment must be filled with sand.

What’s even more terrible is that there may also be external spies among the management.

(End of this chapter)