My 1999

After chatting with Xia Changsheng, Xu Liang found the operating report and financial statements of Hongyan Fund in his mailbox.

Hongyan Fund has non-business departments, such as the Finance Department, Human Resources Department, and Logistics Department.

Another example is the Security Department, Hongyan Security and its hacker division 'Black Impermanence' and mercenary team 'White Impermanence', all the proceeds are used for themselves.

Xu Liang would even often pay for the subsidies out of his own pocket.

There are four main business units:

Financial Investment Department: Responsible for managing Hongyan’s equity assets.

Investment Management Department: Responsible for supervising Hongyan’s subsidiaries.

Own Asset Investment Management Department: Mainly responsible for managing Hongyan’s real estate, artworks, cash, short-term debts, etc.

Strategic Investment Department: Responsible for the "Gonggong Plan", "Zhurong Plan", and the "Dijiang Plan" which has begun preliminary research and aims to bottom out after the subprime crisis.

The asset portfolio of the Financial Investment Division includes:

Apple 14.9%

Amazon 15.2%

Standard Chartered Bank 36.7%

Alibaba 24.8%

Google 10.3%

Hermès 15% [half of the voting rights]

Unocal China 51%

9 in total.

The equity interests of Standard Chartered Bank, Alibaba, Moutai, Hermes and Unocal China were not transferred.

The rest all sold half of their shares.

The company raised $21.7 billion in funds, with Apple receiving the highest return.

With the hot sales of the iPhone, Apple’s market value once broke through the 100 billion US dollar mark.

Because it was so popular in the market, Hongyan's sale of Apple shares did not affect its stock price.

At the same time, it also brought Hongyan huge returns.

The 6.9% stake resulted in a return of $6.37 billion.

The profit was 22 times in five years.

The second is Google. Before the mobile Internet matured, it was the most popular search company.

In this life, Google missed the throne of the world's number one Internet search company due to competition from Hongmeng and Bing.

However, its position of almost dominating the global English market has still brought it huge profits.

It also brought an astonishing market value.

Today, Google's market value is approaching $120 billion.

A 5% stake brought a return of $6 billion.

The three-year return on investment is 2.5 times.

Then there is the investment management department.

It owns seven companies.

Kunlun Industrial Group

Harvest Agriculture Group

Torch Automotive Group

Marvel

NBA Warriors

Penguin Group

NBA Warriors transferred 50% of its equity to Phoenix Fund and earned $2.1 billion.

Other companies basically do not pay dividends.

However, the valuations of the seven companies have increased to varying degrees.

The highest is Penguin, whose latest valuation has swelled to 40 billion US dollars.

Asset Management Department.

This is the largest business unit under Hongyan.

It includes real estate investment department, precious metals investment department, art investment department and bond investment department.

The Real Estate Investment Department manages the office buildings of Hongyan’s global branches, such as 33 Barker Road, Hong Kong.

Precious Metals Investment Department.

This is the department established after Hongyan took over the precious metal assets of Hanhua.

Mainly rare earths and lithium.

Hanhua started investing in 2001. At the beginning, the company had little capital, only tens of millions. Later, Hanhua reaped great rewards in the capital market.

The investment amount increased rapidly.

So far, Xu Liang has invested nearly 7 billion US dollars in this.

China's rare earths are really too cheap these days.

One kilogram of light rare earth costs only 900 yuan, and at its lowest point in 2001/2002, the price fell to just a few dozen yuan.

Even medium and heavy rare earths are only 5,000 yuan per kilogram now, and at their cheapest they were only 1,000 yuan per kilogram.

Compared with the high prices in the future, of course you have to stock up.

Now, Hongyan's precious metal investment department has stockpiled 60,000 tons of light rare earths, with an average purchase price of 330 yuan per kilogram, and a total investment of 18.3 billion Chinese yuan.

Compared with light rare earths, medium and heavy rare earths are the focus of investment in the precious metals sector.

However, the output of medium and heavy rare earths is too small. Of the more than 100,000 tons of rare earths produced each year, only about 30% are medium and heavy rare earths.

So the price is also higher.

Over the past six years, Hanhua has stockpiled 13,000 tons, with an average purchase price of 2,310 yuan per kilogram, and a total investment of 30 billion Chinese yuan.

The total is 99.6 billion Chinese yuan, which is equivalent to 6.8 billion US dollars based on the current exchange rate.

After six years of investment, this part of the assets has increased by about 1.3 times, with an average annual return rate of about 20%, which is quite good.

In addition to rare earths, there is lithium ore, mainly lithium carbonate.

When Hanhua first entered the lithium carbonate market in 2001, the price was only 16,000 Chinese yuan per ton.

From 2001 to 2005, the price of lithium carbonate remained stable.

Hanhua also invested US$2.75 billion in it and acquired 1.375 million tons.

But lithium carbonate is different from rare earths. The price of rare earths has been growing steadily but has never skyrocketed. Therefore, Hongyan Precious Metals Investment Department has been buying it steadily and has never sold it.

But lithium carbonate is different. In 2006, due to the surge in demand for consumer electronics, the price directly jumped from 16,000 yuan/ton to 80,000 yuan/ton.

Although Xu Liang knew that lithium carbonate truly ushered in an unprecedented surge after the rise of electric vehicles.

But there is still more than a decade before the price of electric vehicles skyrocket, and it is impossible for him to hoard them without selling them for such a long time.

And even if you sell it, there will be many opportunities to buy it back later.

He went all in and sold all of them to domestic lithium companies such as Tianqi Lithium, Ganfeng Lithium, and Sinomine Resources at a price of RMB 76,000 per ton, making a direct profit of US$11.56 billion.

Although the price of lithium carbonate showed a certain correction in 2007, it still hovered around 50,000 yuan/ton, considering the approaching subprime mortgage crisis.

Xu Liang did not give any more orders to attack.

So now Hongyan does not have any lithium carbonate.

The art investment department is not large and basically only makes money but never makes any money out.

Over the years, Hongyan has invested about US$3 billion in it, most of which were invested in Chinese art, mainly calligraphy and painting, oil painting, supplemented by overseas bronzes and porcelain.

The famous Yuan blue and white porcelain "Guiguzi Going Down the Mountain" was in his possession.

Finally, there is the bond investment department.

This department mainly collects corporate bonds with higher returns and relative safety around the world.

Since 2005, Hongyan has invested US$16 billion in this department, with an average annual return rate of about 8%, and a total profit of US$2.66 billion in two years.

Finally, there is the Strategic Investment Department.

The Gonggong Plan, Zhurong Plan, and Dijiang Plan are just major investment actions under the Strategic Investment Department, but the Strategic Investment Department does not only have these super-large investment plans.

There are also some smaller investments.

For example, the investment in oil, iron ore, gold futures, etc. starting from 2005.

Hongyan and Hanhua have different investment strategies. Hanhua aims to obtain the highest possible return, but Hongyan’s investment strategy is stable.

The scale of investment in futures has always been controlled at around 10 billion US dollars, and the leverage has always been only one times.

But in 2006 and 2007, the energy industry exploded and Hongyan also made a profit.

The average floating rate is 1.3 times.

Taking leverage into account, the floating increase is 2.6 times.

Ten billion, earned 26 billion US dollars, made a huge profit.

If he had not been afraid of being dragged down by the subprime mortgage crisis, he would have closed his positions in mid-2007 and could have made more money.

Next is the profit from the Gonggong Project. Although Xu Liang distributed most of it to companies such as Hongmeng and Taihua, he still left $20 billion for Hongyan.

Finally, cash.

In 2005, he competed with Soros in the global gold market and won with astonishing returns.

At that time, Hongyan's cash flow once expanded to US$77.175 billion.

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Later, it provided support to its subsidiaries, such as Kunlun.

Its acquisition of Gree Air Conditioners and Meiling Refrigerator, as well as subsequent R\u0026D funds were basically provided by Hongyan. In total, Xu Liang received US$2 billion.

Add to that some small-scale investments, such as real estate, and money given to his women, and he spent about $500 million.

After deducting the principal required for investment.

For example, the $10 billion principal invested in energy futures, the principal invested in artworks and precious metals, etc.

Hongyan's cash on hand has remained at $40 billion.

Of course, this money will not just lie in the account, but will mainly be invested in overnight borrowing and government bonds, which is stable and profitable.

Benefited from the positive effects brought by the Federal Reserve's rapid interest rate hikes.

The interest rates on overnight loans also continued to rise.

Over a two-year period, the interest rate can basically be maintained at 5%.

All in all, it brought Hongyan about $2.3 billion in revenue.

Overall, Hanhua made a pre-tax net profit of US$79 billion and a post-tax income of US$63.2 billion in the past two years.

After deducting expenses on precious metals, artworks, salary expenses, corporate investments, etc., Hongyan now has $120 billion in cash and $20 billion [including $60 billion in leverage] in short positions in U.S. subprime debt in its account.

$5 billion worth of art.

$13 billion worth of rare earth investments.

Equity assets worth US$44 billion [as of February 2008]

Corporate assets worth hundreds of billions of dollars.

Plus some real estate.

As of the end of February 2008, Hongyan had total assets of US$303.2 billion, US$120 billion in cash, and zero debt.

This is just Hongyan. Hanhua’s assets are equally impressive, but Hanhua’s assets are more complex and have not yet been sorted out.

In addition, after continuously selling off assets, Hongmeng has a cash flow of hundreds of billions of US dollars, and the "Xu Family Member Charity Foundation" has received huge donations from Hanhua.

Xu Liang's estimate of his net worth of $500 billion seems a bit conservative.

——

When Xu Liang was counting his assets, he unexpectedly received a call from Peter Thiel. Considering that the Thiel Fund was a large shadow fund under his name and had made billions of dollars for him, he did not refuse.

But the location is in a bar.

When Xu Liang arrived here, Peter Thiel was already sitting on the railing on the second floor, drinking alone while enjoying the singing and dancing performance on the big stage downstairs.

"Xu!"

Peter Thiel stood up with a smile on his face, bumped fists with Xu Liang, and asked the latter to sit down.

"Everyone says you made a lot of money," Peter Thiel said with a smile.

Xu Liang smiled and said, "Didn't you also make a lot of money?"

After the Thiel Fund's hedge fund department made money from subprime mortgages as a shadow fund of Hongyan and Hanhua, Peter Thiel was not satisfied with the 5% share and began to learn from him to short subprime mortgages.

Although he entered the market late, he still made a lot of money.

"My fund has been completely liquidated and will be transferred to your designated overseas account within this week."

Peter Thiel poured himself a glass of wine, raised his head and took a big sip, then said: "The outside world thinks that the Thiel Fund has made $14 billion, but in fact most of it is yours."

Fearing that he might misunderstand, Peter Thiel quickly added: "I am not complaining about anything. On the contrary, I want to thank you.

Following you, I have made more than three billion dollars myself.

At the same time, benefiting from this industry-leading performance, tens of billions of dollars of funds poured into the Thiel Fund last year.

Even if you deduct your shadow fund of $10.6 billion, the assets under management of the Thiel Fund have reached nearly $20 billion.

The outside world has already regarded the Thiel Fund as a strong contender for the top ten hedge funds in the world this year!"

At this point, Peter Thiel spread his hands and said, "To be honest, the scale of asset management has skyrocketed, making my team and I have no idea how to invest. This is really a happy trouble."

Xu Liang smiled. Peter Thiel’s Thiel Fund was just a venture capital fund managing US$1 billion two years ago.

It was under his own efforts that the hedge fund department was established.

It has only been a year since he entered the hedge fund industry, and the scale of his assets has skyrocketed nearly seven times in a very short period of time, which is much easier than when he first raised funds on his own.

However, although this seems to be a good thing on the surface, the skyrocketing fund size will place higher demands on the management team's capabilities and investment level.

He is not like himself who has the memory of his past life and can make a lot of money by investing with his eyes closed.

Moreover, because of the large amount of capital, the company has become a big fish in the market. Many of its past investment strategies have become invalid, and the company needs to transform from top to bottom.

Failure to adapt to this transformation will have disastrous consequences.

New funds emerge in the market every year, but most of them will become lost in the crowd after they grow big. The ones that dominate the market are always the old-established funds, such as Bridgewater and D.E. Shaw.

This is the reason, even if I give you money, you can’t control it!

"Some changes need to be made to allow the company to maintain its current size. Otherwise, it will be like a meteor across the sky, dazzling but only short-lived," said Xu Liang.

Peter Thiel nodded slightly. “You are absolutely right.”

After looking at Xu Liang for a few times, Peter Thiel seemed to be hesitant to speak. He really wanted to ask him about Hanhua's next investment strategy, but it was not convenient to ask about such highly confidential information even if he was a friend.

He simply threw out some ideas and talked about the future investment direction of the Thiel Fund: "I want to invest in the US dollar and oil next."

Xu Liang did not ask for details. "This is a good direction. Hanhua's next direction should still be its old business, the stock market and foreign exchange market."

Peter Thiel really wanted to ask more details, but from the attitude Xu Liang expressed, he seemed not to want to discuss it in depth.

He expressed his understanding, but he still felt a little uncomfortable.

I have already made some attempts to attract jade, but the other party is still so wary.

Moreover, it is not a unilateral request. Instead, the company will share some market information collected by the Thiel Fund, which is mutually beneficial for both parties.

He felt that Xu Liang had changed and no longer had the generosity and magnanimity of the past.

In other words, the other party has not changed. Take the short selling of subprime mortgages as an example. It is clear that the other party wants to use the name of the Thiel Fund to carry out this kind of action that is likely to attract notoriety.

They, the Thiel Fund, did get some benefits from it, but they deserved it.

If the other party had not held back and shared more investigative reports on the subprime mortgage derivatives market earlier, they would have made more than just over 3 billion US dollars.

There was pleasant singing downstairs, but neither of them was in the mood to listen. They were both calculating in their minds, and the atmosphere was a little awkward for a moment.

Xu Liang could actually guess that Peter Thiel would have some opinions about him.

But he doesn't care!

I helped the Thiel Fund win without any effort, which is quite nice.

But the other party's desire was insatiable, and he even wanted to find out about their second wave of actions.

No sense at all.