A Wall Street Genius's Final Investment Playbook-Chapter 159

Meanwhile, while Ha Si-heon was away on an external schedule.

The office of Pareto Innovation Capital was filled with intense heat.

The cause was the news streaming from a large screen on the wall.

[The U.S. government has designated 35 hospitals nationwide for Ebola treatment, and they will be operated under the direction of the CDC's REP team……………]

“No way!"

“Haha, what did I tell you!”

Cheers and groans mingled throughout the office, and soon, hundred-dollar bills fluttered around like dancing leaves.

The results of the office betting pool on CEO Ha Si-heon’s Ebola investment had just been announced.

“This can't be happening……………!"

Most of those raising their voices in frustration were talents recruited from outside.

In contrast, those counting money with bright smiles were all former employees of Goldman.

“It might not make sense, but it's reality, right?"

They had already witnessed several instances where Ha Si-heon’s absurd predictions came true.

‘If Ha Si-heon is involved,’ even things that defy common sense could very well become reality.

They knew this from experience, which is why they were able to rake in a decent profit from this bet.

“How the hell did he get this right?”

“Try clearing your mind and just accepting what’s right in front of you."

“But! Just because there’s an Ebola outbreak in Africa, the demand for hazmat suits rises in the U.S.? That’s not logical at all!”

It was a prediction that seemed completely preposterous.

Yet Ha Si-heon made that very prediction at a summit where top financial figures were gathered.

His statement quickly spread across Wall Street through summit attendees, and for a while, employees of Pareto were mocked because of it.

Every time someone asked, ‘What nonsense is your boss spouting now?’, some began to regret joining the company, wondering, ‘Did I come here too hastily?’

On Wall Street, reputation is everything.

Being part of a fund that became a laughingstock was, in itself, a blow to one's pride.

Worse yet, it also led to real, tangible problems.

Ha Si-heon had actually carried out massive investments in hazmat manufacturers, protective equipment companies, and research facility suppliers.

‘If this fails………’

Forget being laughed at—financial loss was the real problem.

And when a fund’s performance drops, bonuses naturally shrink.

Since bonuses at hedge funds often surpass base salaries, this was a serious matter.

So they had been watching the situation nervously……

“And this actually happened?"

Amazingly, Ha Si-heon’s outrageous scenario had become reality.

Thanks to that, Pareto Innovation not only maintained its reputation but also secured its bonuses.

Some lost $300 in the bet and felt regretful.

Others were simply baffled by this bizarre turn of events…………

At the same time, the employees in the office felt a strange kind of thrill.

The feeling was like………

“A rollercoaster?”

“Exactly! Once you get hooked on this, it's addictive!"

The employees from Goldman knew this unique pleasure well, and each began to share old stories involving Ha Si-heon.

Especially Dobby—also known as Renton—was particularly eager to talk.

“This is nothing. Back during the Epicura incident………”

Normally, new funds tend to have some awkwardness among the newly gathered talent, but Pareto Innovation was different.

Thanks to their boss's extraordinary actions, team unity naturally grew stronger.

This was an extremely encouraging sign.

Because in the finance world, the most important asset is people.

Especially in hedge funds, where the employees’ abilities directly translate to profits, competition for top talent is fierce.

So in this industry notorious for high turnover, there needs to be a strong motivation to keep great employees around.

Whether it's excellent pay, a strong reputation, or a unique sense of enjoyment only that place can offer. freewёbnoνel.com

Among those, at the very least, Pareto Innovation Capital had definitely secured the fun factor.

There was never a dull moment here.

Because the CEO was a madman whose next move no one could predict.

Meanwhile, amidst the festive atmosphere, one person was quietly observing everyone.

It was Gonzalez.

Among the excited and eager faces, Gonzalez was searching for something different.

Having already lost interest in the Ebola case, he was now searching for signs of the next incident to come.

As he scanned the office, his eyes landed on a face that, unlike the others, showed concern.

‘There it is.’

Ha Si-heon’s execution trader, Gray.

Unlike the others in the office, Gray wore a look of confusion and distrust.

A sign of something.

Gonzalez waited for his chance, and when he saw Gray leave for lunch, he followed him.

And at a quiet deli, he asked a question.

“Did Sean give you some kind of weird order?"

An order that had left Gray this confused.

Surely, it held important clues about the next move.

“So where is it this time?”

“Do I really have to tell you?”

Gray answered with a troubled look.

Sharing work-related information among colleagues was common, but he was being extremely cautious.

Which meant he was holding onto information too valuable to just let slip.

Bingo.

Gonzalez smiled and pulled a checkbook from his pocket.

He tore out a $10,000 check and handed it to Gray, saying,

“Is this enough? To give you a reason to tell me."

***

When I returned to the office, an unexpected person was waiting for me.

It was Gonzalez.

“What brings you here?”

“Allergan.”

A name suddenly brought up with no context—Allergan.

It was my next target and the battlefield where I would face off against Ackman.

“If you haven’t assigned personnel yet, I’d like to volunteer……”

“That’s not going to happen.”

I cut him off firmly.

Gonzalez came from the natural resources department and had zero expertise in healthcare.

He had strengths in networking, but he wasn’t suited for hands-on work.

There was no way I would choose him as a key player in this critical battle.

But then, Gonzalez said something unexpected.

“Banorte, Fonadin.”

“?”

“Mexico’s pension fund and sovereign wealth fund. They each hold 0.7% and 0.3% of Allergan shares.”

A total of 1%.

If it came down to a shareholder vote, that was a number that couldn’t be ignored.

Gonzalez’s proposal was clear.

‘If you bring me in, I’ll secure 1% of friendly shares for you……?’

He had grasped that I was already anticipating the battle to come at the shareholder meeting, and he played his negotiation card accordingly.

I couldn’t help but smile.

“If you had that kind of influence, why didn’t you say so during the capital raise?”

Back when we were desperate for institutional funds, he had kept his mouth shut, and now he was making offers?

It seemed pretty shameless.

However, Gonzalez responded with a confident expression.

“At the time, I didn’t particularly want anything.”

“And now you do?”

Gonzalez only smiled without giving an answer.

Still, I had a rough idea of what he wanted.

‘He probably wants to get a firsthand look at the situation from the inside.’

Normally, it would have been an offer I had no reason to accept……

But if he was willing to pay 1% of friendly shares as the price of admission, that changed things.

We didn’t know what would happen next, and I couldn’t afford to pass on 1% of shares.

I made a quick decision.

“There’s already a lead analyst assigned. But if you’re okay joining as additional personnel, I’ll allow it.”

It would mostly be a peripheral role rather than hands-on work, but Gonzalez smiled as if he was perfectly satisfied.

***

LBO (leveraged buyout) refers to mergers and acquisitions where a significant portion of the funding comes from debt or loans.

In other words, you buy a company—but with a huge amount of borrowed money.

However—

“Allergan…… isn’t it too large in scale for an LBO?”

Even a child knows that excessive debt is dangerous.

And it’s the same when acquiring a company.

Too much debt means higher risk, so LBOs usually target companies valued around $5 billion.

Even a $10 billion deal is considered a ‘mega deal’……

But Allergan had a market capitalization of $37 billion.

Normally, that would make it an unlikely candidate for an LBO.

However, I spoke firmly.

“It’s not impossible. Allergan is too healthy.”

Allergan had ample cash, almost no debt, and held the golden egg—Botox.

So, if we went all-in on debt and acquired the company first, then used Allergan’s name to take out loans, we could recover a good portion of the initial capital.

“It might be possible… but isn’t that too extreme? How many companies would actually adopt such a plan……?”

Laurent trailed off.

As a PM recruited from a healthcare fund, he quickly grasped the situation.

Yes, there was one company that would carry out such a plan.

“…You’re not thinking of Valeant, are you?”

Valeant.

It was a Canadian-based pharmaceutical company that had seen explosive growth over the past few years.

How explosive?

Its stock price went from $10 in 2008 to $140 by 2014.

That dramatic rise was all thanks to CEO Stinson’s unique strategy.

Most pharmaceutical companies grow by developing new drugs through R&D and expanding their product lines.

But Stinson completely bypassed that process and chose to grow the company solely through M&As.

As a result, in just six years after taking office, Stinson executed more than 50 acquisitions.

That alone was bold enough……

But what he did after the acquisitions caused even more controversy.

He drastically slashed R&D spending to around 3% in the name of “cost-cutting,” and massively increased the prices of newly acquired drugs.

The price hikes were extreme.

Take the drug for the rare Wilson’s disease, for example—monthly costs jumped from $1,800 to over $20,000, a 1,000% increase.

Patients and medical professionals, suddenly burdened overnight, voiced strong complaints……

But company revenue certainly went up.

Stock prices soared, and Valeant, having maximized its profits, devoured more companies like a predator.

And that insane predator’s next target was none other than Allergan.

The battlefield where Ackman and I would face off.

‘They’ve probably already made a move.’

If my memory served me right, Valeant had already proposed a merger to Allergan earlier this year.

But Allergan had firmly rejected it.

Allergan placed great importance on R&D, while Valeant was a predator that grew only through M&As.

The two companies couldn’t be more opposite.

Allergan probably thought it was over and had let its guard down……

But Valeant hadn’t given up yet.

They were secretly preparing a hostile takeover, and even planned to collaborate with Ackman to send in a Trojan horse.

“That’s right. My focus for now is on Valeant’s LBO attempt.”

A look of confusion briefly crossed Laurent’s face at my declaration.

Valeant had never publicly shown clear intentions of an LBO, so preparing for such a move with certainty probably felt strange.

But he soon nodded in agreement.

“Understood.”

In any case, this was my fund, and the final decision rested with me.

It seemed he judged that going along was wiser than opposing it.

I looked at Laurent and asked a question.

“Assuming we’re going up against Valeant, what would you say is the most urgent priority?”

This was a kind of test.

As the PM, Laurent was the second most important figure in this operation after me, and since this was our first time working together, I needed to understand his mindset.

From how he reacted to the briefing so far, his understanding of the industry seemed solid.

The real question was his strategic thinking……

“The opponent will launch a surprise attack. To stop it, we need to figure out when they’ll move.”

‘Predict the timing of the ambush and block it, huh……’

It was a textbook answer, but I shook my head.

That wasn’t my way.

If he was going to work at this fund, he needed to understand my method.

“That’s just a defensive tactic to neutralize their strike. That’s not how real battles are fought.”

“Then what kind of approach…?”

I gave the puzzled Laurent a wise smile.

Then I firmly delivered an important message.

“There’s an old saying in the East. Every battle is won with the first strike.”

Yes, in every fight, the first blow wins.