From legendary short seller to god of American capital

Chapter 421 Larry's Asymmetric Warfare: The Big Players All Have Hidden Motives

Baruch's face was filled with anxiety. Larry, on the other hand, was not in a hurry. He stood by the window, the double eagle gold coin in his hand still tumbling.

Has it rebounded?

Larry asked softly.

"Yes! A huge wave of buying has entered the market—"

Larry nodded. "Go check those single buy orders exceeding 5000 shares and see which trading seat they correspond to!"

"Okay!" Baruch didn't waste any more words and turned to leave.

The door to the private room slammed shut, and just then, the quotation machine clicked out a new strip of paper. Larry took two steps to the table, picked up the paper strip that still smelled of ink, and immediately saw the three letters NCC representing "National Rope Company".

The letter is followed by 86+1/4.

This means that the latest price from the National Rope Company is $86 and a quarter.

Then came $87 and a quarter, exactly $88.

Prices are rebounding, and have jumped several levels in succession, which is consistent with the usual behavior of large funds buying up stocks.

Outside the private room, the noise in the trading hall suddenly changed tone. The earlier panic and screams transformed into a mixture of doubt and excitement.

Amidst the excited commotion, a man with a thick German accent shouted, "It's rebounding! Buy the dip! I know this stock will eventually go back up!"

The measuring tape remained still, but the paper tape he was measuring was still being continuously ejected, using its length to gauge the duration of time.

One minute, two minutes —

The latest price jumped to $89, and then immediately climbed to $90.

A louder commotion erupted in the trading hall outside. Although people didn't know the resistance and support levels on the charts, it was clear that the recapture of this psychologically important round number would stimulate more technical buying and short covering.

"Not only did they refuse to surrender, they also intended to put up a stubborn resistance—"

Larry smiled.

Baruch pushed the door open again. "We found it. It's not an anonymous institutional seat; it's Hanover Bank!"

Larry frowned slightly, then nodded. "As expected—Hanova Bank not only lent money to National Rope Company, but also had joint liability for a large amount of the company's bills. They didn't want to see the stock price collapse now."

Thinking of this, Larry turned to Baruch. "Do you know how many shares they traded?"

Larry hadn't expected an answer, as it was beyond his scope, but Baruch immediately and firmly stated, "I also asked about that. It's confirmed that there are over 8000 shares involved since the recent rebound to the $88 mark!"

"If the average cost is $86, and there are 8000 shares, they've already invested nearly $70 in a short period! Very good, a real big spender." Larry sneered.

This is another type of asymmetry between the bulls and bears.

Because Larry's 25,000 shares were a "naked short" order, the order was just a number until it was filled; the money was only actually deducted from the account during the settlement process after the transaction was completed.

Therefore, at this moment, only the 1200 shares that had just been traded were using up margin in Larry's account. The other orders were hanging there looking intimidating, but Larry didn't spend a single cent more on these stacked orders.

But buyers are different; they enter the market to prop up the stock price by spending real money!

They spent $70 on a large purchase during the recent counterattack—it's unimaginable what they will do next.

This was actually part of Larry's plan. The other side would most likely launch a counterattack, so he couldn't rush to place short orders. Instead, he should hold the $95 level and wait for the market-stabilizing funds to actively push the price up to that level.

This is like a flood hitting a dam; the tide of market rescue will naturally reveal its true strength in front of the more than 2 shares piled up at $95.

Of course, the bulls might also have retail investors buying on the dip to help them, but that's okay—25,000 shares correspond to $237.5 million.

On a normal day, the National Rope Company's total daily sales volume is only $180 million.

Let them come and eat whatever they want from my menu!

If it's not enough after eating, I'll double my order!

Meanwhile, in the conference room at the headquarters of Hanover National Bank.

Stephen van Cullen White sat at the end of the mahogany table. He was one of Hanova Bank's largest individual clients, and more importantly—he also held a tranche of soon-to-mature commercial paper from the National Rope Company, for which Hanova Bank was one of the guarantors.

The conference room door opened, and the president of Hanova Bank, two directors, and a legal advisor walked into the conference room.

"Good morning, Priest!" The president looked relaxed and was still joking with White. "Priest" was the nickname of the mastermind White.

"I heard you were in a hurry to come and verify this, but there's no need!" The president sat down, crossed his legs, and said with a smile, "The $85 in commercial paper you hold is due next Friday. According to the contract, if National Rope Company cannot pay, we will fulfill our guarantee obligation. Hanova Bank should be able to pay this debt!"

"I know—" White said calmly, looking directly at the president, "but I want to know, is Hanova Bank planning to pay me cash directly and then go to a company on the verge of bankruptcy?"

Collecting debts. Or is there a better solution?

"I don't know what you're talking about," the president said with a smile, glancing at the legal advisor.

The latter took a few steps forward and handed White a list. "This is the current asset list of National Rope Company. They have a large inventory in their warehouse in New Jersey and have undertaken a series of port projects on the East and West coasts. Their order book is very full."

White glanced at the documents but didn't take them. "What's the current market value of these warehouses?"

The legal advisor glanced instinctively at the bank president and admitted, "—It should be over $200 million."

"Fixed assets have exceeded $200 million! And there's goodwill and cash on hand—" the president said with a smile, "Mr. White, you can rest assured now, right?"

White frowned slightly and asked, "Mr. President, do you think it's normal for National Rope Company to have $200 million worth of inventory in its warehouses during the April shipping recovery period?"

The conference room fell into a deathly silence.

The smile on the president's face slowly stiffened and then disappeared.

One of the directors spoke up, "Mr. White, there's really no need to rush. We'll be holding a board meeting this weekend to discuss providing the company with an emergency bridge loan."

White remained silent, still staring at the president.

The CEO thought for a few seconds, then spread one hand on the table. "Alright—I know I can't hide it from you. But you also need to know that we're now on the same side as the National Rope Company, well, in the same boat!"

"As long as we can handle this sudden attack from the short sellers, or even crush them, we can calmly deal with the National Rope Company's affairs."

"And then?" White pressed on relentlessly, "Let the stock price go to zero, the company go bankrupt, its assets be seized by the court, and all creditors wait in line for three years to get back 20% of their principal?"

"Judging from your tone, do you have a better suggestion?" The president squinted at White.

White leaned forward, placing his hands on the table. "Don't be foolish, Mr. President! I don't know what National Rope Company told you, but the president of New York Bank, and the other banks or trust companies that lent money to the company—they won't be as honest as you. If they run away first—you'll be the one left holding the bag."

The president's face visibly stiffened. He gestured to another director, "Could you please check the current stock price of the National Rope Company for me—"

After the board member left, White said with regret, "Mr. President, I wish you hadn't stepped in to prop up the stock price. Otherwise, it would have wasted a lot of time."

"No, we have only a business relationship with the rope company." The president said with a smile.

"That's good," White nodded. "I came here to tell you that the National Rope Company is actually dead. The question is, who will dispose of the body? And how will they be divided?"

"You are welcome to speak freely!"

"The biggest problem for the National Rope Company is not its debt, but its liquidity. Nobody dares to give it a single penny now, because it could go bankrupt at any moment."

White calmly looked at the group and continued, "How about we try a different approach? I know you have 2 preferred shares, or more. Our company happens to have 1.8 shares as well. If Rope Company goes bankrupt, we can have priority access to its assets—the Great Lakes shipping network they hold is a valuable asset."

The CEO paused slightly, then asked, "But what benefit does this bring us?"

"I can manipulate the stock price—after you let go, we can announce that we won't renew the loan to the National Rope Company. If all goes well, we can not only make money from shorting the stock to make up for your bank's losses, but also acquire the company's best assets in the subsequent asset auction!" White offered his proposal.

The president fell into deep thought. Just then, the director rushed in and whispered something in his ear.

After hearing only a few words, the CEO's expression changed drastically. He turned to stare at the director, "—How is this possible? Even 400 million can't bring the stock price back up?"

The director looked very uncomfortable. "There were over 2 orders at $95 initially, but we couldn't absorb them all at once. Now the orders there are increasing, reaching 4 shares!"

The CEO's face was icy. "It must be other banks running away—damn it! These cursed demons, they were supposed to work together to prop up the market!"

As he spoke, the president turned to look at White, his face resolute. "Alright, Priest White! Name your price. Tell me how much you're willing to pay, and tell me what you intend to do next?"

"I own 50%, according to the weighting of preferred shares!" White's face was calm. "But during liquidation, you must give me the shipping network of the National Rope Company—to offset my profits."

"On the premise that you can actually do it!" the president emphasized.

"As long as you stop supporting Rope Company, I'm determined to drive down the stock price." White smiled for the first time. "After all, the Wall Street Journal just published this scandal, and I don't believe anyone can be faster than me! And I was the first to come to you."

The CEO thought for a few seconds, "You've ordered quite a lot—"

"But I'm offering quite a lot too!" White emphasized. "Mr. President, please make a decision quickly. There's not much time left before the market closes. Otherwise, next Monday you'll face a complete collapse and get no gains whatsoever."

The president spoke briefly with the two directors and finally nodded in agreement.

White snapped his pocket watch open. "It's 11 o'clock now. Don't dump your chips until I've collected enough."

As White walked out of the conference room, there was no smile on his face. He could feel the fine layer of sweat soaking his shirt.

In the Hanover Bank conference room, when White heard the president say, "There are 40,000 shares in the order book at $95," his mind went blank!

Before he arrived, he had already set his goal: to quickly establish an alliance with Hanova Bank by taking advantage of the time difference and take a share of the National Rope Company—but all of this depended on him being the fastest.

The problem was, he was too eager to form the alliance. White didn't even have time to glance at the opening of the stock market, let alone know that someone had placed a short order for 2.5 shares at $95 before the market opened! So when he learned from the bank president that someone had already shorted the stock, his mind went completely blank!

What does this mean? It means someone is much faster than you! It's even possible that this person is orchestrating all of this!

He had thought he was the first to see through the truth and the first to arrive at the poker table. But now it seemed that someone was already seated at the table, with their chips already stacked, just waiting for others to join.

Therefore, the agreement we just discussed with Hanova Bank is simply impossible to implement!

White then continued to feign confidence as he presented his solution—all to appease Hanova Bank and prevent them from dumping their shares.

White's mind raced, but his feet never stopped. As soon as he stepped out of the Hanover Bank, he immediately told the clerk who approached him, "Tell our traders! Short National Ropes at all costs! We need to at least recoup our losses!"

The clerk hurried off to place the order. White glanced back at the bank building, thinking, "Sorry, Mr. President! I have to take care of myself first!"

Meanwhile, the president of Hanova Bank paced back and forth in his office, his face ashen.

At that moment, his secretary pushed open the door and handed him a document.

The CEO glanced at the document, his eyes nearly popping out of their sockets. "What? Someone has already borrowed 3.8 shares of our National Rope Company common stock and 2 shares of our preferred stock—who the hell gave you permission to lend them out?"

The secretary, her face filled with fear, swallowed hard before speaking, "—On Thursday, four securities firms borrowed stocks from us; this is routine business. Unsecured stocks are lent out to earn interest, and we had no idea—you would need shares from the National Rope Company!"

The president's face turned ashen, almost like lead. He easily concluded that someone had meticulously set up a trap to short the National Rope Company, and had even borrowed real stock first! It seemed he was also the one who placed the short order at $95!

So—who the hell cares about the short-seller alliance with White! They can't even come up with their own preferred shares. And because they just intervened to prop up the market, they're holding a ton of long positions.

The best course of action now is to sell all long positions regardless of cost and then go short!

There's absolutely no need to consider White's promise not to "dump the market!"

"Quickly! No matter what, dump all our shares in the National Rope Company! We need to recoup our losses first. Then—" the president paused, then said resolutely, "—have our legal counsel immediately prepare legal documents to completely sever ties with the Rope Company. We need to cut ties with it before other banks do—we need to deny our joint guarantee liability before this monstrous company goes bankrupt!"

The assistant hurried away. The president of Hanova Bank frowned and looked out the window, thinking to himself, "I'm sorry, Mr. White! One must first take care of oneself!"

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