Chapter 18. KNC International (1)

Seonwoo was taken aback.

“No, why?”

“What do you mean, why?”

“Why is the fire spreading to me?”

“Are you in or out?”

Seonwoo and I have known each other since middle school.

He doesn't know this, but we've known each other for another ten years after that. In fact, aside from family, he could be considered my closest friend.

When I lost my company and became unemployed, he didn't even ask for rent and continued to live with me. When I was wasting time playing games, he even suggested we open a chicken restaurant together.

When you receive a favor, you should repay it.

“I'm giving you a special opportunity to invest.”

...But there are a few other practical reasons.

First, I really need the money.

I don't know what will happen later, but right now, every penny counts. The more initial investment, the better.

And Seonwoo is a pretty skilled developer. A few years later, he even became a director overseeing game development.

Considering the future growth of the game industry, there are things he needs to take care of.

Well, if he doesn't want to, there's nothing I can do...

After a moment of thought, Seonwoo asked in a trembling voice.

“Um, how much do I need to invest?”

“How much do you have in your account?”

At my words, Seonwoo looked bewildered.

“Are you asking me how much I've checked for a new phone?”

“Just tell me quickly.”

“Hmm, about 120 million won.”

“Not bad.”

Unlike me, who served in the military, Seonwoo worked at a game company under a special military service program, which reflected in his salary.

He gets a lot of overtime pay for working late every day, and since he doesn't have much to spend on, he has saved up quite a bit.

I nodded.

“Good. Invest all of it.”

Seonwoo was startled.

“What!? All of it?”

I put my hand on Seonwoo's shoulder and said,

“Trust me and invest once.”

“...In you?”

His expression clearly said he didn't trust me at all.

Well, my performance hasn't been great so far.

“You saw how I made 20 times the investment in Redhole Studio. My investment skills are that good.”

“It seems like you just got lucky.”

I said confidently,

“This time, I have solid information.”

“You said the same thing when you invested in coins!”

“Hmm...”

A few years ago, a cryptocurrency boom swept the world.

Cryptocurrencies were treated as digital gold, and coins that increased by hundreds or thousands of times were common. When coins that were bought for a few cents years ago soared to tens of thousands of dollars, everyone jumped in, buying any coin they could.

Seonwoo, being a science student, was very interested in digital currencies, and I was very interested in investments. So we joined the craze and shouted "Let's go" together.

What was the result?

We almost lost everything. We were lucky to cut our losses when we were down by half.

“Do you know Aaron Baker?”

“The chairman of White Road?”

Aaron Baker is the world's best-known and best investor, and White Road is the world's largest investment firm.

He has been actively investing since his 20s and continues to do so even in his 80s.

“When he first started investing, one person in his town invested 10,000 dollars. How much do you think that money is worth now, 60 years later?”

“I don't know. Maybe 10 million dollars?”

“No. It's worth 600 million dollars.”

A 60,000-fold return!

Seonwoo was surprised but asked,

“So what?”

“I'll make more than that, so invest now. Don't regret it 60 years from now.”

“Hmm, will I even be alive 60 years from now?”

A very realistic point.

“So I'll make it grow more than that in 10 years.”

“...”

His expression showed even less trust.

I don't have a track record yet, so I can understand.

“Just trust me!”

In the end, Seonwoo agreed to lend me 120 million won. Adding the 100 million won I borrowed from my parents and my own 100 million won, we have a total of 320 million won.

But this is still not enough.

“Do you have more money?”

“No! I don't have any more, even if I sell everything!”

Is that really the case?

Even dried squid will yield some water when squeezed.

“How much can you get from a credit loan?”

Seonwoo looked at me in disbelief.

“What?”

“Since you have a job, you should be able to get a good loan, right?”

“You want me to give you all my savings and then take on debt?”

“It's fine, just max it out.”

“...You bastard.”

I said seriously,

“I have some information I got before I left the securities firm.”

“What kind of information?”

“I'll tell you later.”

Seonwoo shook his head.

“My mom said that anyone who tries to get you to invest by saying they have good information is a scammer.”

“Think about it. I'm going to put in all my savings, our parents' money, and even take out a loan. Would I do this if I didn't have solid information?”

“I guess...”

After about an hour of coaxing, I managed to get an additional 80 million won in a credit loan. It seems that with his work experience, he can get a decent loan.

“With 500 million won, we can do something.”

“What are you going to do? You're not going to disappear and stop answering my calls, are you?”

“Don't worry too much. I'll be trading through your account anyway.”

“Why?”

“I used to work at a securities firm.”

Using insider information for trading is illegal. Therefore, securities employees must regularly report their stock holdings and trading activities.

Now that I've quit, I no longer have to report, but there's a risk of being suspected of using insider information obtained during my work.

“Oh, right. You said you can't trade using information from the securities firm, right?”

“That's right.”

Strictly speaking, the information I have isn't from the securities firm, but if they want to make an issue out of it, they will.

So it's safer to do it in his name.

We're just roommates, so even if we get caught, there's no reason to suspect me. Still, to be extra safe, I added another precaution.

“Do you still have your U.S. account?”

“I haven't used it in a while, but I think I still have it. Why?”

We created an account together when we were in college to invest in U.S. IPOs.

“I need to use it.”

“Why specifically the U.S. account?”

“We need to be safe.”

Domestic securities firms are known for handing over customer information to investigative agencies at the drop of a hat. But foreign securities firms won't do that without a proper warrant.

Another reason is that I plan to set up an investment firm in the U.S. with the money we make.

I don't need to tell him that yet.

* * *

How is the price of a stock determined?

In principle, it moves according to performance. If sales and profits increase, the stock price goes up, and if they decrease, it goes down.

However, the world doesn't always work according to principles.

Sometimes, stock prices are determined by supply and demand, regardless of performance. Since the number of stocks is limited, if there are more buyers, the price goes up, and if there are more sellers, it goes down.

But there are also people who try to manipulate the market to artificially inflate stock prices and make a profit.

These are the manipulators.

In the stock market, manipulations happen every day. Occasionally, there are major events that can shake the country.

The term "manipulation" may sound grand, but the method is simple.

The manipulators work together to artificially inflate the stock price, then sell at a high price. During this process, all sorts of creative methods are used.

I don't remember all the manipulations that happened over the past ten years, but I clearly remember this one.

It was a bizarre case involving the government.

Daesung Corporation.

Originally a small and medium-sized trading company listed on KOSDAQ, it fell into crisis as sales and performance declined, and debt and losses grew like a snowball.

At this point, a man named Cheon Deok-yu appeared.

He merged his company with Daesung Corporation through a backdoor listing and became the major shareholder. He then changed the company name to KNC International.

Cheon Deok-yu suddenly announced his ambition to mine minerals in Africa and changed the company's main business to resource exploration and mineral mining.

He then announced the acquisition of mining rights to a closed mine in Congo and created a subsidiary to process and distribute minerals.

After the announcement, the stock price didn't move much.

However, a stock that had been around 1,500 won a month ago started to rise recently and is now approaching 3,000 won.

The stock price has nearly doubled without any significant performance or good news.

The top trading securities firms included foreign firms like Merrill Lynch, JPMorgan, and HSBC.

While Seonwoo was at work, I sat in front of the computer and stretched my fingers.

“Should I start now?”

Even though the stock price has doubled, KNC International's market cap is only 700 billion won.

The trading volume is not very high. A significant portion of it is likely to be trades between the manipulators.

Since the market cap is small and the trading volume is low, the stock price can rise with just a little more buying. I placed orders in small amounts whenever there was buying pressure to continuously buy the stock without drawing attention.

Over a few days, I bought a total of 302,000 shares.

After the buying was done, I told Seonwoo.

Seonwoo, who had listened to everything, slowly asked,

“So you bought all the shares of a KOSDAQ penny stock?”

“Yeah.”

Seonwoo searched for the stock on his phone.

“The market cap is 700 billion won, and it's a heavily indebted company with no significant performance.”

“Yeah.”

“How much did you buy it for?”

“Average price of 3,430 won.”

Seonwoo looked amazed.

“You bought a stock that was 1,500 won last week for 3,430 won?”

“I didn't buy much at that price.”

The current stock price is artificially inflated by the manipulators. I managed to secure more than 1% of the issued shares by quietly joining in.

“How many shares did you buy?”

“382,000 shares.”

Seonwoo asked, puzzled.

“Wait. The math doesn't seem right.”

“What's wrong?”

“3,430 won times 382,000 is over 1.3 billion won.”

“That's right.”

You must be a former heist member or something, your math is so fast.

“With 500 million won in capital, how did you buy over 1.3 billion won worth of stock?”

“I used the excellent system of margin trading.”

“...What?”

Margin trading is a system where you borrow money from a securities firm using the stocks in your account as collateral. Using this, you can leverage more than twice the amount of money you have.

After a moment of silence, Seonwoo shouted,

“Hey, you crazy bastard!”