After following up on CNOOC's second IPO, everything went well. After spending the weekend at Dumeijiao Manor on the west coast, Chen Qing set off to return to China in the new week.
Simon also flew to the East Coast again.
This is October 9, 2000.
on Monday.
There is less than a month left before voting in the 54th U.S. presidential election on November 7.
Simon boarded the private plane at 8 o'clock in the morning on the West Coast. Due to the time difference, Simon arrived in New York at about 2 o'clock in the afternoon on the East Coast.
After leaving the airport, Simon took a car directly to the Cersei Capital headquarters in Rockefeller Center in midtown Manhattan without resting.
On the office floor of Apollo Management, a subsidiary of Cersei Capital, Leon Black, the president of Apollo Management, was already waiting, along with the chief financial officer of AOL, named Locke Delkins.
A meeting agreed in advance was about a financial audit report that Simon received from here the weekend before.
The audit target was a 'famous' name in Simon's memory: Enron.
In the past, the Enron financial scandal not only led to the largest corporate bankruptcy case in U.S. history up to that time, but also triggered a series of chain reactions. One of them was that the new technology wave that had collapsed at that time was once again severely affected. The ground took a sap, triggering another round of plummeting in the Nasdaq index.
After history was changed beyond recognition by Simon, the big butterfly, everyone originally forgot about this incident. Unexpectedly, this company headquartered in Texas took the initiative to establish contact with the Westeros system.
First of all, I have to mention Enron. This is an energy company headquartered in Houston, Texas, established during the wave of corporate mergers in the United States in the 1980s. In its early days, it was mainly engaged in the natural gas business and owned a huge natural gas pipeline network in the southern United States.
After Enron was established in 1985, it began a long-term and continuous expansion that has continued until now. Its business shifted from natural gas to electricity, water, papermaking and other fields.
After the rise of the new technology wave, Enron followed the pulse of the times and expanded its reach into the telecommunications field, mainly involved in the broadband infrastructure business, thus intersecting with AOL.
In order to accelerate the expansion of its own network and reduce costs at the same time, in some southern states and counties, AOL has chosen to lease some of Enron's broadband lines, and also has some cooperation involving marketing, after-sales and other aspects.
That's how things started.
As the Nasdaq index continues to rise, Enron, whose own business also has a new technology label, has a recent market value of more than 70 billion U.S. dollars. In just the past two years, the company's stock price has increased by nearly 300%. , equivalent to the increase in the previous ten years.
On the other hand, for the quarter from April to June 2000, Enron's single-quarter net profit was US$163 million, and its estimated full-year net profit was only about US$650 million. This means that the company's price-to-earnings ratio has already It has reached an exaggeration of more than 100 times.
At the peak of the current Internet bubble, as a new technology concept stock, the price-to-earnings ratio exceeds 100 times, which is actually quite normal.
The problem is that Enron is not satisfied, so it has recently come up with a telecom expansion plan that plans to invest US$3 billion in the next two years. It plans to further expand its broadband line network and even plans to connect network cables to Mexico.
Enron itself could not come up with a huge amount of US$3 billion. Even though the company claimed to have annual revenue of US$100 billion, natural gas sales, which was the focus of revenue, was actually a low-profit area due to price controls.
Therefore, financing can only be provided externally.
Even though the Nasdaq index has soared into the sky and made many people feel that it is teetering, when it comes to new technologies, there are still a lot of potential investments flocking to it.
This includes the Westeros system itself.
AOL cooperated with Enron and obtained the materials immediately. The two parties contacted each other and introduced Apollo Management Company, a subsidiary of Cersei Capital, which is mainly responsible for investment and mergers and acquisitions, into the situation.
However, compared to AOL or other crazy investors who are focused on throwing money into technology stocks, as a Wall Street veteran, Leon Black has led a team that has gone from junk bonds to capital hedging, from vulture investing to super mergers and acquisitions since the 1980s. , countless ups and downs, and seen too many ways to play, so I quickly discovered Enron's problems.
Big question.
The first is the telecommunications business related to this expansion. After all, it is necessary to expand. Of course, investors must look at their investment results in the past few years.
A conference room at Apollo Management.
Leon Black personally explained some of these links to Simon: "We have invested in many aspects of the Internet industry, so we are very clear about the investment return ratios in related fields in recent years. However, the data given by Enron, the investment income part It is obviously much higher than our similar investments. We happened to have some data from America Online. We compared it and immediately discovered the problem. Simon, look here."
With that said, Leon Black pulled up a ppt page on the big screen in front of the conference room, which contained some tabular data, and continued: "America Online has a broadband network lease agreement with Enron in Austin, Texas, and the agreement is 5 It is US$35 million per year, payable in installments, but Enron deliberately omitted the five-year contract period in its financial data. For people who don’t know the truth, they will subconsciously think that Enron’s agreement with AOL is US$35 million per year, which means It is equivalent to indirectly increasing the financial report by 5 times. Moreover, this is just a small trick. After more in-depth research, we found that Enron’s public financial reports, not only telecommunications, but also other energy, power and other main businesses, are full of false data. , such as including a large number of forward sales contracts that may not be realized into revenue, such as placing multiple debts in the name of subsidiaries to whitewash the balance sheet of the parent company, and so on. Just in the past five years, Enron’s operations have Revenue has increased from US$13 billion to US$110 billion, an increase of more than 8 times. Through recent investigations, I am certain that at least half of the revenue data are absolutely false.”
After Leon Black finished speaking, he returned to the conference table and sat down, looking at his boss who was leaning on the office chair with one hand tapping the table and the other holding his chin in deep thought.
Simon waited for Blake to sit down before speaking: "Which accounting firm is Enron's?"
"Andersen," Leon Black said, quickly flipping through the documents in front of him and pushing a folder over: "In the past two years, Andersen's Houston branch received US$25 million and US$27 million from Enron respectively. The audit fee in U.S. dollars is equivalent to 30% of the firm’s division’s annual revenue, which is 70% higher than the normal rate.”
Hush money.
This thought flashed through Simon's mind for the first time.
Listed companies in the United States, in accordance with the requirements of the SEC, have a third-party accounting firm, which can be regarded as a means of supervision.
However, now it seems that it is obviously of no use.
Ah.
Thinking about the series of companies under his family, Simon slightly raised the corners of his mouth and smiled silently.
It was useless in the first place.
Therefore, there is no need to ask more about the board of directors, which is nothing more than a community of interests that does not perform any supervisory function.
As for why Enron's management was so frantic in making false accounts, it is not difficult to understand based on what Simon has seen and heard over the years, even if he has no memory of the past.
In the final analysis, it is still profit.
The income of corporate executives, especially those of listed company executives, is usually directly linked to the company's revenue, stock price and other figures. The more eye-catching these figures are, the higher the remuneration they will receive.
With this in mind, Simon briefly flipped through the documents pushed over by Leon Black.
In addition to the details of the cooperation with Arthur Andersen, one of the world's five largest accounting firms, there is also information on Enron's board members, detailing the interests of some of the members who are known as independent directors and Enron-related non-profit organizations.
Obviously, Enron's matter has been thoroughly investigated here.
Glancing up at Leon Black and AOL's Chief Financial Officer Locke Delkins, Simon noticed a bit of anticipation in their eyes. Simon asked again: "Who are the people who know about this?"
Leon Black said: "On both sides of us, there is no more than one pair of hands. There is no problem in keeping it secret."
Simon nodded slightly.
The matter before us is definitely not just a matter of the Westeros system avoiding an investment trap.
Simply put, it's a bomb.
As long as the Westeros system throws this bomb out, once it detonates, it will not only blow up the Nasdaq, which is already at its peak, but it can even affect the voting in the upcoming U.S. presidential election. It can be said to have a huge impact. And move the whole body.
As for my own side, what benefits can I get
Great benefit!
Just like Simon's operation in 1987, two words: short.
If the Enron bomb were thrown, it would not only blow up the Nasdaq, but also have almost no chance of surviving the New York Stock Exchange. The three major U.S. stock indexes, and even global stock markets, would suffer heavy losses in the chain reaction.
As long as the Westeros system establishes enough short positions around relevant trends, it is easy to reap huge profits of billions or tens of billions of dollars in a short period of time.
Of course, the premise is that you must be careful and don't let anyone know that this is the work of the Westeros system. Otherwise, you may not even know how many enemies you have made. Maybe one day, secretly Someone reported a few snags.
His fingers jumped and tapped on the smooth conference table for more than a minute. Simon finally recovered his thoughts, closed the folder in front of him, and said to Leon Black: "You can contact Jim later and make unified arrangements. We can make targeted arrangements." The market has begun to establish a short position, but without me reminding you, you should understand that my only request is to keep it as confidential as possible."
Jim, of course, is James Raybould.
Such an opportunity, after all, is worth tens of billions of dollars in potential short-selling profits. If Simon lets it go, it will be hard to explain to the people below.
Then just go with the flow.
However, after careful consideration, Simon does not plan to release the news until at least next month's general election.
Obviously, releasing this news now and bursting the new technology bubble will definitely be detrimental to the Democratic Party's election to some extent.
However, things are not absolute.
After all, Enron is a Texas company, and as the Republican presidential candidate, George W. Bush is still the governor of Texas.
The Enron scandal burst the new technology bubble, and it will take a while for the stock market to impact voters. Even if the news is released tomorrow to really have an impact, the general election may be over. However, Al Gore immediately found an excuse to attack George W. Bush for his unfavorable financial supervision of Texas companies.
It had an immediate impact on Bush's approval rating.
In short, the bomb exploded immediately, and it was hard to say who would win.
Just remove this variable.
In any case, after several months of campaign sprint, with less than a month to go before the general election vote, from being far behind Gore at first, Bush's spending rate is now on par with Gore's.
As for the reason.
very complicated.
Perhaps Clinton's eight years in office, even if his results were very good, eventually caused some fatigue among the public. Coupled with the current president's various scandals, they have finally affected his old partner who has worked with him for eight years.
Perhaps, there are also campaign strategies from both parties.
Under Simon's secret operation, new technology and the Internet did not become the focus of the election. After all, if you are not careful, the flames may burn to the Westeros system. Simon will not allow this to happen.
However, there are still many topics that can be discussed.
Such as health insurance reform.
During Clinton's eight years in office, he successfully implemented a new health care bill.
For those who don’t know what’s going on, the health insurance bill should definitely benefit more people. In fact, just as the previous health care reform put more unnecessary burdens on many people and the national finance, Clinton's health care reform, because it focused on subsidies for the bottom class, increased the burden on the middle class, and actually caused dissatisfaction among many people.
Another example is tax cuts.
This is even more of a killer.
Regarding taxes, when the Democratic Party is mentioned, the public's first impression is often tax increases.
The Republican Party, of course, is all about tax cuts.
Since Clinton has been in office for eight years, the national finance has experienced a rare surplus. From the perspective of the Republican Party, the next step is of course to reduce taxes and reduce public burdens. George W. Bush also used this as his platform and attracted a lot of support.
In comparison, Al Gore cannot deviate too far from the overall policy direction of the Democratic Party, so he appears to be constrained.
All in all, it is still similar to Clinton’s slogan back then.
The problem is always economics.
To a certain extent, Al Gore is Clinton's successor. Even if he doesn't want to follow the rules, he can't go in the opposite direction. This gives George W. Bush, who has a more flexible strategy, an opportunity.
Changes in people's minds are also part of their nature.
Just like in reality or in stories, people who have too many good days can't help but give in.
The result of various reasons is that the current situation is evenly matched between the two sides.
However, this is just the appearance.
Through various operations, Bush's support in some key swing states has a tendency to suppress Gore, especially Florida, which Simon has been secretly paying attention to personally. As long as history does not change too much, this time, Florida will There won’t be much suspense about the state’s vote.
After all, there are memories of the past, and the Westeros system has invested enough in Florida. Therefore, the election results of this key swing state can basically be determined. The winner is undoubtedly George W. Bush, and this time it will definitely not trigger another incident. A slim lead of just a few hundred votes in a judicial battle.
Now that the overall situation has been decided, seeking stability now is the best strategy.
The Enron bomb can only be shelved for the time being.
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