The greatest charm of finance is using other people's money to make money for oneself, and He Zhengcheng is doing just that now. He initiates a project, and if the investors agree, they transfer the money. If they don't agree, then there's naturally nothing more to it.
A new week began, and the main futures contracts had mostly completed their position changes. As expected, the Hong Kong Stock Market and the Hang Seng Index plummeted. Victory is never achieved overnight; there are always reversals along the way. At this time, He Zhengcheng was refining his plan to participate in the eBay IPO. This refinement involved using a host of grand-sounding terms and data to support his viewpoint. How can one sell at a high price and stand out in market competition without boasting?
However, a setback quickly arrived. Zhang Zhiyuan soon provided him with some more detailed information.
eBay would indeed issue approximately 3.5 million new shares this time, but eBay currently had about 36.2 million shares. The issuance of 3.5 million new shares was estimated to be priced between $14 and $16. The market value of eBay was estimated to be between $556 million and $635 million. If the offering price were raised again, reaching the historical final IPO price of $18 per share, with a total share capital of 39.7 million shares, its market value would be approximately $714.6 million. This far exceeded He Zhengcheng's initial estimate.
"A market value of $600 million?" He Zhengcheng asked.
"That's right. Although the company's current profitability is not optimistic, internet companies are highly sought after on NASDAQ. Many shareholders were unwilling to sell early. If it weren't for the major turmoil on Wall Street this time, some people, fearing the impact, would not have considered cashing out early. You probably wouldn't have had this opportunity," Zhang Zhiyuan explained.
"Then do I have a chance to join eBay's board of directors, and how much can I buy?" He Zhengcheng asked about what concerned him most.
"Joining eBay's board of directors is out of the question. You likely won't be able to buy more than five percent of eBay's shares. This time, they are giving me face, so you can probably get 500,000 new shares and 500,000 existing shares. And no matter what eBay's final price is when it goes public, you have to buy them," Zhang Zhiyuan said.
500,000 new shares, approximately one-seventh of all new shares, seemed like a lot, but the gap from his expectations was too large. Of course, if he didn't have that much capital, everything would be for naught.
"Okay, I agree, but you must introduce me to eBay's management," He Zhengcheng said.
"No problem! I trust your judgment. The funds Goldman Sachs invested in you this time can be freely allocated," Zhang Zhiyuan finally said.
"Thank you!" He Zhengcheng said gratefully over the phone.
"You're welcome. Your account has been opened. As soon as the funds arrive, you can trade anytime. Which stock are you planning to buy?" Zhang Zhiyuan asked.
"I saw Yahoo's stock price plummet last night. This is an opportunity, and I want to buy a bit to try. internet company stocks are so popular this year, I believe my first investment in US stocks shouldn't result in a loss," He Zhengcheng replied.
"Do you need financing?" Zhang Zhiyuan asked.
"Of course! Whether it makes me lose money or earn money, whether I use it or not, having leverage is much better than not having it," He Zhengcheng said.
"Then I'm relieved!" Zhang Zhiyuan exclaimed.
Whether to use leverage is a matter of choice; whether one has leverage is a matter of capability. He Zhengcheng would not be so confused. Communication with Zhang Zhiyuan went smoothly, but as soon as he thought of Shanhai Capital and the lack of money, he felt very annoyed.
On September 1st, the Hang Seng Index and stocks continued to fall, and even the Lenovo shares he bought declined. He knew Lenovo's stock would rise but didn't know the exact time; otherwise, he could have bought warrants.
"Damn funding issues!" He Zhengcheng watched the Hang Seng Index fall below 7000 points and bought 20 lots near 6900 points. This time, the Hang Seng Index did not fall below 6800 points as it did in his previous life. Perhaps the confidence of the bulls was growing. The problems exposed by Long-Term Capital Management grew larger, causing some Wall Street shorts to leave, but self-forming shorts reappeared. These people believed that since a financial crisis could happen on Wall Street, Hong Kong was likely not immune. This was not without reason, but the premise was that the Wall Street stock market would collapse. Was this possible? Perhaps, after all, Wall Street had experienced a brief financial crisis in '87. But He Zhengcheng wasn't worried about this at all; instead, he was concerned that the eBay matter wouldn't go smoothly.
As expected, upon hearing that eBay's valuation had increased, Ji Jiasheng became even more unwilling to invest.
"According to what you said, eBay's market value could rise to $700 million, which means we would need at least HK$300 million to have a chance of joining eBay's board of directors. But right now, we've only raised a total of $200 million, or HK$1.56 billion. According to the plan, we are currently contacting Lenovo's shareholders and will purchase approximately HK$200 million worth of shares. You want to single-handedly decide the use of one-fifth of the company's funds, and subsequent funds will be difficult to arrive quickly. This will make it very difficult for the preliminary work of the rest of us to proceed!" Ji Jiasheng stated.
"Then can you help me get in touch with Li Ban Cheng, or even his confidante, Zhou Kaixuan?" He Zhengcheng had also contacted people from Li Ban Cheng's foundation, but to no avail.
"I can't just contact him whenever I want; it takes time!" Ji Jiasheng replied.
"Then what about Mr. Liang Botao?" He Zhengcheng asked.
"I'll find a time to arrange a meeting with him, but the financial crisis isn't over yet, so he might not have time," Ji Jiasheng said.
"Oh, alright then!" He Zhengcheng was a bit helpless. After returning, he transferred $500,000 to his Citigroup account.
Whenever he looked at the current NASDAQ, he felt an impulse to buy all the companies he was familiar with, such as Microsoft—ahem, no, not Microsoft, let's pick another, like Apple, Amazon, or Yahoo, which only had a market capitalization of a few billion dollars. If Google had also gone public at this time—uh, no, not Google, at this time it was just a domain name.
Alas, even if a bubble had already formed, the growth potential of these companies was undeniable. Buying now wouldn't lead to loss or deception. If his memory served him right, the NASDAQ index rose to a peak of 5000 points, and now it was less than 1500 points. That scoundrel Long-Term Capital Management was truly too powerful; if it weren't for its impending bankruptcy, why would Yahoo's stock price have fallen so much?
After several consecutive days of decline, Yahoo's stock price was nearing $50, which was equivalent to its price in April. In this era where the NASDAQ internet bubble was about to take off, a period of several months without an increase in stock price was considered a failure. And yet, such an opportunity still existed. (Note: Yahoo's stock price reference is based on data queried from Sina Finance.)
"$55, 9,000 shares." He Zhengcheng looked at his stock account with satisfaction. Although there was a slight loss, he didn't care at all. Yahoo's accumulated advantages meant that even if NASDAQ crashed now, this stock price would eventually rise again. However, he didn't use leverage and only used his own funds.
It was September. His father had already embarked on an inspection trip to the mainland, his mother had gone to the hotel, and his younger brother was also sleeping at the hotel. His younger sister was at school, leaving him alone in the room.
"What a rare moment of peace!" Thinking about the setbacks during this period, a sense of loneliness flowed through his heart in the empty house.
He Zhengcheng, who others saw as having a smooth and successful journey, felt a bit like a failure now. If Ji Jiasheng, Xu Xin, and others knew this, they might just be so shocked they'd spit out a mouthful of salty soda.