The American Kill Line: I Can Predict the Future

Mark Hurd led HP to double its stock price and triple its profits in five years in office, and this successful CEO was suddenly dismissed.

HP's general counsel cited the following reasons: Hurd had engaged in systematic fraudulent expense claims in an attempt to conceal his close relationship with contractors, and the board believed that he had lost credibility as a leader.

This time comes right after the US stock market closes, and tomorrow is the weekend.

HP chose this time to announce such important news simply to avoid causing too much impact on its stock price that day.

The idea is great, but will those bloodthirsty institutions on Wall Street agree to it?

Sure enough, as soon as the news broke, before it even spread in the market, short-selling institutions rushed to the scene.

After-hours trading became unusually active, and HP's stock price plummeted by 9%.

Ron also instructed JPMorgan Chase to close half of its short positions immediately upon receiving the news.

"What about options? Also half-position?"

Ron pondered for a moment and said, "Let's just close all our positions in the opposite direction."

He knew that unless there was more positive news from HP, the short sellers wouldn't give up easily.

This is why he chose to keep 50% of his short selling position.

Unlike options, the time value of options gradually decreases over time.

Moreover, the funds from the shareholders of Fund No. 2 are almost all in their accounts.

That's the key point: he needs to recover a portion of his principal in advance.

Around 7 p.m., $150 million of the short selling principal, plus an additional $46 million in profit, was released from the account.

In addition, the $1100 million put option profit was $1.275 million, and the $3000 million inverse ETF profit was $460 million.

The initial investment was $3.410 million, and the current total profit is $1.78 million.

Ron had JPMorgan Chase keep an eye on the remaining half of the short position, and would start buying back shares once the stock price broke through $40.

The next day, Ron began to plan for the international market.

After resting for so long, it's time to get some exercise.

After first checking with Sophia to confirm that all the funds would be in place by Monday, Ron sat in the control room and began assigning tasks.

"Victor, we're going long on the Japanese yen and gold next."

"I have two requirements. First, the principal of $1 billion should be leveraged within a safe range as much as possible."

"Second: You must complete the position building within 3 days. I will contact Merrill Lynch and ask them to use dark pools and algorithmic order splitting to assist you."

Victor chimed in, "You mean buying options, futures, and spot?"

"Nonsense," Ron continued, "We'll also use another $5 million to short the three major US dollar indices, again maximizing leverage within a safe range."

"You and your team should discuss the specific allocation of funds, and come up with a detailed plan before 4 p.m.

"OK."

Tonight is different from yesterday.

He used to be a person, and even though Fund No. 1 had some shareholders, apart from a few old money, the others were not important small shareholders.

He can invest heavily according to his own wishes.

That won't work now; the shareholders are too powerful, so he has to be more cautious.

This is not cowardice, but a sense of responsibility.

The higher you go, the more careful you need to be of the strong winds.

Moreover, using $15 billion is actually quite a lot.

Normal hedge funds generally maintain a return of 5% to 8%.

Only those with a heavy and aggressive approach would allocate 20%-30% of their portfolio to this position.

There's nothing major happening in August, so there's no need to gamble heavily.

Moreover, the leverage this time is not low, which can be considered a small heavy position.

Ron spent the rest of the day in his office browsing related information.

One piece of information alerted Ron.

[A mysterious buy order for 3000 million HP shares appeared after hours, suggesting a large institution may be buying on the dip?]

Some people on Bloomberg have expressed doubts about this news:

"Are you sure this volume is real? How could there be such liquidity after hours?"

"If that's true, it means someone has used at least $12 billion to take over."

"I think it's impossible. With such a large order volume, the stock price can't possibly fall to $39."

The trading volume after hours is not visible, but Ron is well aware of the amount of his buybacks.

"Could it be that someone else, besides me, had planned this in advance?"

He was a little worried, so he made a call to JPMorgan Chase.

The other party's response was: "Based on the predictions of our JPMorgan Chase analysts, this should be a false report released by HP. I am quite certain that the large buy order last night was made by no one else but us."

At this point, the JPMorgan broker suddenly laughed, "We've received information that SIP (Securities Information Processor) will provide the corrected data Monday morning. If it's true, that's good. If it's false, then HP's stock price could very well open below $40."

"Could this be a discussion deliberately created by short-selling firms?"

"That's not important, Mr. Hunter. We've already locked in our profits. Besides, the fundamental reason for HP's recent plunge is Hurd's departure. A single order of 3000 million shares can't reverse the overall trend."

The situation is clear: Hurd was like a savior to HP.

He not only brought HP back from the brink of losses to profitability, but also led HP to surpass Dell and reclaim the top spot in the global PC market.

Its market value has nearly tripled.

Now, an unverified sexual harassment report and a similarly unverified false expense claim have easily ousted this key figure from HP.

For investment institutions, Hurd's departure was the fundamental reason for this massive sell-off of stocks.

Unless the board of directors changes its mind now and rescinds the dismissal.

Or HP might release some very positive news in the short term.

Otherwise, HP's stock price will face a prolonged period of decline.

Around 3 PM, Victor handed over a plan to go long on the Japanese yen and gold, and short on the US dollar index.

Ron made some minor adjustments to the low-leverage strategy and then had him implement it.

As predicted by analysts at major investment banks, SIP released revised data at 7:45 a.m. on Monday, confirming that the 3000 million share buy order was false.

After the market opened, HP's stock price plummeted by 8%.

Ron glanced at it and then paid no more attention.

He then turned his attention to hedge funds.

On August 10, the FOMC resumed its purchase of Treasury bonds. The US dollar rose initially and then fell, the Japanese yen rebounded to 86.4, appreciating by about 2.6%, and gold rose by 1.2%.

On the 11th, the stock purchase was officially completed.

Over the following week, market panic spread, and US stocks experienced a sharp decline.

On the 19th, initial jobless claims exceeded 500,000, hitting a nine-month high.

US stocks continued to fall, gold rose to $1225.00, and the yen rose to 84.8.

The following day, the 20th, was originally the day when Hunter Capital No. 1 hedge fund was to announce its net asset value.

The shareholders, however, have yet to receive their response.

Shareholders called in droves to inquire.

Ron had only one answer:

"The net asset value will be published uniformly on the 1st of each month from now on."

Compared to the minority shareholders of Hedge Fund No. 1, Hedge Fund No. 2 is not very concerned.

Because those who know him are aware that Ron has been spending most of his time at the company lately.

He declined all parties and invitations.

On August 24th, Ron finally received the news he wanted.

At 10:7 AM, the National Association of Realtors announced that existing home sales in the U.S. plummeted 27.2% month-over-month compared to July.

Panic selling of the US dollar occurred in global markets, causing the Japanese yen and gold to strengthen instantly.

All three major indexes fell sharply at the open, with the S&P 500 dropping as low as 1051, the Nasdaq falling 1.61% to 2124, and the Dow Jones Industrial Average even breaking below the 10,000 mark.

The downward trend has been established, and after nearly half a month of preparation, it's finally time to reap the rewards.

Ron immediately issued the order:

"With the US dollar index unchanged, and the Japanese yen and gold, starting today, options, futures, and spot positions will be gradually closed out."