PS: If you want to hear more of your voices and receive more of your opinions, search for the WeChat public account "qdread" now and pay attention to it to give more support to "The Financial Son of the Great Era"!

Bear Stearns, the fifth-largest investment bank on Wall Street.

Founded in 1923 and headquartered in New York, Bear Stearns has been in existence in the world for 85 years. The world's leading financial services company has served governments, businesses, institutions and individuals around the world. Like several other Wall Street giants, Bear Stearns' business spans equities, bonds, fixed income, investment banking, clearing, private wealth management and more.

But unlike other major investment banks on Wall Street, Bear Stearns has its own unique corporate culture. There are two kinds of people on Wall Street, one represented by Stanley, who took to the extreme the noble and egalitarian character characteristic of the white Anglo-Saxon Protestants, as evidenced by Stanley's refusal to become a consultant on the privatization of Britain; The other kind of people are represented by Bear Stearns, a company built by Jews, who are thrifty, stingy, flamboyant, they do not hide their ambitions, they are full of radical individualism, and they pursue a kind of wolf nature, so Bear Stearns is called "the lone wolf of Wall Street".

This unique style has been recognized in the past few years by the current CEO James Brown. Kane played to the fullest. He had declared that Bear Stearns would only hire PHDs to come in. Of course, PHDs here do not refer to PhDs, but to people who come from poor, hungry, and are bent on making a lot of money (desireformoney). These people are often smart, willing to endure hardships, and able to put down their bodies, so among the five major investment banks on Wall Street, Bear Stearns' brokerage business is the largest and most successful, and many large financial institutions, including hedge funds, are their customers, and there are countless small and medium-sized investors.

Although in July, two of Bear Stearns' hedge funds that bet on subprime mortgage-backed bonds collapsed due to huge losses. This was the beginning of the panic in the subprime mortgage bond market. But even in December, Bear Stearns managed at least $200 billion in assets, and its market capitalization is still close to $10 billion today.

How easy is it to defeat such a giant in the short term?

"We lost $854 million in the fourth quarter, writing down $1.9 billion in mortgage losses." Paulson's aides quickly found the latest information about Bear Stearns, "where the stock rose to $170 a share at its peak, and now hovers around $70." Surprisingly, this qiē happens in the middle of a year. ”

After a deliberate pause, the stock analyst named Bissos lifted his glasses on the bridge of his nose and continued with a blank face: "In addition, their management is very infighting. There is now only one person in charge of the syndicate, and that is James. Kane. Also, they are now entangled in a lawsuit, appealed by Barclays Capital, who argues that Bear Stearns concealed the truth and led to the loss of their funds in the collapse of Bear Stearns' hedge fund. ”

"Leave those lawsuits alone. I wonder what their management is planning! "John. Paulson was equally expressionless, and from the moment he made up his mind to short Bear Stearns, he began to closely monitor the details of the Wall Street giant. While there are several other large hedge funds or individuals who are also looking to short Wall Street, Paulson prefers the feeling of having everything in his hands rather than simply following someone else's foot.

A portion of Paulson's funds are also borrowed from Bear Stearns, because Bear Stearns' style dictates their strategy, and high leverage is the norm. Specifically, as an exchange member with clearing qualifications. Bear Stearns lends money to their clients, and some of that money comes from their asset management. Part of it comes from the lending market and the company's own funds. As for their income, it is naturally the spread between different borrowing and lending and brokerage commissions.

Offering high leverage to clients, Bear Stearns is even more so in its proprietary business. In fact, their internal leverage has reached an unbelievable level, and some large transactions can use more than 10 times leverage, let's say that the two collapsed hedge funds have a staggering 20 times leverage. The total scale reached 20 billion US dollars. This is true for large transactions, not to mention for small transactions, which can easily reach multipliers of hundredfold or even higher.

It is precisely because of this aggressive operation style that Bear Stearns can surpass Stanley Company in terms of assets and market capitalization, and become the largest asset securitizer on Wall Street. According to its disclosures. In the fourth quarter, they held a total of $48.7 billion worth of bond positions, which naturally included subprime mortgage-backed bonds. And it was the losses on these bonds that caused Bear Stearns to write down a staggering $1.9 billion in losses in the fourth quarter.

Now is the time for their management to reassure investors, and Paulson is eager to know what their management will say to investors and what they will do to restore their confidence.

"Layoffs!" The corners of Bizos's mouth twitched slightly, because this is a tried-and-true trick to reduce the number of employees to cut operating costs, "We have already cut 900 employees globally, but last month, they announced a layoff plan to lay off another 650 employees, and the fixed income sector has become the hardest hit." ”

"The other thing is to sell shares!" After flipping through the information on his hand, the expression on Pissos's face finally changed slightly, although he was already familiar with these materials, but when he thought of the striking similarity between the two investment banks that are currently in crisis, he still couldn't hide the surprise in his heart, "Like Stanley, they plan to sell part of their shares to a new investor, this investor is also from Huaxia, which is said to be a state-owned enterprise called CEFC." ”

After China Investment took a stake in Blayrock and Stanley, Wall Street's efforts to make similar deals reached its peak. Although I don't know whether it's true or not, the news of "having an affair" with Huaxia enterprises at this time is undoubtedly a great reassurance to investors.

At the mention ......of Huaxia, Zhong Shi's face came to Paulson's mind. No way, the impression left on him by the owner of this face is too deep. Suddenly, his heart moved. Thinking about how he would deal with a giant like Bear Stearns if he were him?

Although Paulson has been on Wall Street for many years and is now a big name on the big side, he is not essentially a "barbarian at the door," nor is he one of those powerful funds that enter the board of directors and work with minority shareholders to change the management structure, so there really isn't much to do other than short his stock.

Do what you think! Paulson was always a man of action. He waved his hand and told Bissos to step back, and then dialed Zhongshi's phone.

"Mr. Zhong, if you were given the option to short a company, the kind that was completely defeated, what would you do?"

Without the slightest pleasantries, Paulson went straight to the point. He understood it this way, he seemed to be a coalition of interests with Zhong Shi, at least in his opinion. So there's not much nonsense at all. He asked bluntly.

Zhong Shi on the other end of the ...... phone was silent for a moment, as if digesting the meaning of Paulson's words, and as if he was thinking carefully. After a full two minutes, he let out a long sigh and asked in a low tone, "John, which company are you going to target?" Or rather, what industry are you targeting a company? ”

Naturally, there are different strategies for businesses in different industries. Paulson immediately came to his senses, "It's a financial institution. I'm going to completely crush it, not as simple as shorting its stock in the short term, but to let it go out of business, close its doors, and completely disappear from this world. ”

"Wow, that's not an easy task!" Zhong Shi smiled. Without thinking about it, he replied, "John, I didn't expect you to be so aggressive, but I like it." I don't know if you've heard of Northern Rock Bank, a bank headquartered in the UK. The British bank was run on because of a lack of liquidity, which caused depositors to lose patience with it. Although it did not go out of business in the end, it was bought at a very low price, you can refer to this model! ”

"Northern Rock Bank?" Paulson naturally had the impression that after quickly recalling the events of the previous period in his mind, he had some enlightenment, but another question immediately came to his mind, "Mr. Zhong, let me ask you more, did you do that?" ”

"Of course not me!" Zhong Shi snorted, and then flatly denied. For such an act of putting the black pot on his head, he will not admit it to death. After saying no, he added, "For financial institutions, liquidity is their fatal flaw, and I believe you know this very well. As long as this spread of news is addressed, there is a good chance that it will cause a heavy blow to the financial institution, of course, provided that there is an internal problem in the financial institution, so as to achieve the greatest effect. In fact, you don't need to publish a message at all, just stand up and say a word, believing that it is a threat to everyone. ”

Paulson is a novice to the idea that liquidity is the fatal flaw of financial institutions, but he is a novice when it comes to spreading information. He had no idea how influential he was in the market today. In fact, countless people are studying him and imitating him, so as long as he makes a public speech, the impact or lethality is absolutely enormous.

That's one of the reasons why Soros came to Paulson.

Paulson hung up thoughtfully, looked down and pondered for a moment, before his strategy for how to short Bear Stearns began to take shape in his mind.

"Mr. Paulson, an important personnel change regarding Bear Stearns has just taken place within them!"

Just as Paulson picked up the phone and was about to call the asset management department, Bissos suddenly burst in through the door and said to Paulson out of breath. Schwartz succeeds James. Kane is the chief executive officer, Kane is still the chairman, and the appointment has just been announced on the board of directors and will be announced shortly. ”

"Schwartz? Who? Paulson's outstretched hand to the phone stopped, frowning and thinking for a while, still not the slightest impression of the new CEO, "How can there be a high-level personnel change at this time?" ”

"Yes, the market will also think the same, why is there a personnel change at this time?" Pissos echoed excitedly, "According to conventional logic, the last time Bear Stearns' internal fund collapsed, there was already a CEO who resigned to take responsibility for it. In December, a co-chairman was also responsible for the resignation. But now there are not too many rumors in the market, but they have changed their coach at this time, why is this? Why? Why? ”

Paulson looked at Bissos in a daze, but his heart was on fire, and he suddenly realized that the matter was too valuable.

……

Almost at the same time, Soros also received news about Bear Stearns' personnel changes, and he immediately called a conference call, a secret conference call with only three participants. (The novel "The Son of Finance of the Great Era" will have more fresh content on the official WeChat platform, and there will also be a 100% lottery gift for everyone!) Open WeChat now, click on the "+" sign in the upper right corner to "add friends", search for the official account "qdread" and follow, hurry up! (To be continued......)

PS: Thank you to Jiangnan Liu Feiyan, a book friend, for voting two monthly passes!