Chapter 64. Thomas Motors (3)

This is truly an unprecedented situation.

That's why no one has suspected it until now.

The three people reacted with disbelief, but David seemed to have an idea.

"Come to think of it, in the interview, Brad Button always said that the T1 FCV was 'in motion,' but never said it was 'driven.' I always found that odd..."

It makes sense that he avoided using the term 'driven' if it was just rolled down a hill.

If they were caught, he could claim that he only showed the video and never said it was 'driven.'

Edward raised a question.

"Even so, can a huge truck really move just by gravity?"

I nodded.

"It wasn't filmed from the start, but rather from when it was already moving. If you look closely, the road seems to have a slight slope. If they placed it in neutral at the end of the road that wasn't shown in the video and let it roll, wouldn't it keep moving down?"

"It's too fast for that."

"What do you think, Edward?"

"There must have been a separate power source installed."

The other two also seemed to agree with this.

Edward spoke more strongly.

"Thomas Motors is a company that everyone is watching. If that were the case, automotive sector analysts and experts would have noticed."

I agree with that.

What were the so-called experts doing that they didn't notice this?

Anyway, I'm not an expert in this field, and it's hard to convince anyone with just words.

The most definitive way to verify if this is real or not is...

"Let's go and conduct an experiment."

"Huh?"

I said to Edward.

"Instead of just talking about it here, find out where the location in the video is, and go there in a car to try it out. See if it can roll down in neutral. Wouldn't that work?"

"That's true, but..."

I also spoke to the other employees.

"Gabriella, go to Mississippi and check the hydrogen car factory. Morris, try to contact your friend who works at Thomas Motors again. If you can meet other employees, do so, and collect any information, no matter how minor."

The three of them nodded.

"Understood."

After the employees left to do their tasks,

David asked me.

"What do you plan to do?"

"Isn't this a good opportunity?"

At my words, he smiled wryly.

"Stock price predictions are either one of two things: it will go up or down. But even if you know the direction, it doesn't guarantee you'll make money."

The reason is that timing is hard to get right.

Is it easier to make money when the stock price goes up or when it goes down? Obviously, the former is easier.

Many people have made money by buying, but few have made money through short selling.

Buying stocks is about making time work for you. You can adjust the timing of your trades, and if it drops, you can wait for it to rise.

On the other hand, short selling requires not only the right direction but also the exact timing. Additionally, transaction costs can snowball over time.

That's why the former is called a long position, and the latter a short position.

Even if you know it will drop eventually, it's useless if you can't time it right. During the 2008 financial crisis, investors who predicted the crash and took short positions became stars in the financial market.

But those who took short positions before that all went bankrupt.

Even Michael Burry, the protagonist of 'The Big Short,' would have gone bankrupt if the financial crisis had been delayed by a year.

However, there is one way to get the timing right.

"What if we make it happen?"

There's nothing more certain than creating the timing yourself.

That's why short sellers take a short position and then release reports claiming the company is in trouble to drive the stock price down.

Shark Management also took this approach.

In fact, Shark Management is one of the major investors in Thomas Motors, currently holding 3.9% of the shares.

Michael Preston had been suspicious of Thomas Motors for a while. After reading David's report, he became convinced, invested in short selling and derivatives, and then used all his influence to expose it to the media and Wall Street.

The report's contents were proven true, and the stock price, which had risen to $65, plummeted to $12, erasing over $30 billion in market capitalization.

David achieved a huge success, making five times his investment.

"It's not as easy as it sounds."

Unlike Korean securities firms, which only produce bullish reports, American securities firms frequently release sell reports.

But does the stock price always plummet when a sell report is released?

Not necessarily.

"The Madoff fraud was exposed in 2008. Do you know when the first fraud allegations were made?"

"When was it?"

"In 1999. An analyst noticed something was off, released a report, and reported it to the SEC (Securities and Exchange Commission). But no one paid attention. A few years later, others reported it, but it was the same. It wasn't until the financial crisis that an investigation began and the fraud was exposed."

It took nearly 10 years from the first fraud allegations to the exposure of the truth.

"Every day, numerous reports are released on Wall Street. Many of them point out problems, but not all are accurate, and most are forgotten."

I nodded.

"True. While working at DA Securities, I saw hundreds of reports every year predicting Tesla's downfall."

Yet, it continued to thrive.

Investors who sold their shares or shorted based on those reports suffered huge losses.

David asked, puzzled.

"Every year? Didn't you only work there for six months?"

"Well..."

That was in the first cycle.

There are many sell reports on Thomas Motors, but they haven't significantly affected the stock price.

From an investor's perspective, what matters is not the company's intrinsic value but the fact that the stock price is rising.

As long as the stock price is rising, who cares if the company has problems?

It's not easy to change this direction.

When David released the report at Shark Management, the stock price didn't immediately plummet. For a while, there was no reaction, but then other hedge funds joined in, releasing sell reports and shorting the stock.

Only then did the stock price drop by 50%, and as the decline became real, other institutions and individual investors joined in, causing an 80% drop.

It took about a month for the stock price to fall from $65 to $12.

Unfortunately, Continuum Capital doesn't have the same influence as Shark Management, and we don't have the luxury of waiting that long.

To make the stock price drop quickly, we need to make a more explosive and convincing move.

Fortunately, there's a perfect event coming up.

"This week, the PureCell Day is being held near Thomas Motors' headquarters."

Tesla, a leader in electric vehicles, created the Battery Day, where they unveil new technologies and future visions.

Thomas Motors seems to have followed suit and created the PureCell Day.

David nodded.

"At this event, they will unveil a new car and announce a hydrogen infrastructure agreement with Huaan Group."

Following the T1 FCV, they will unveil the T2 FCV and, in partnership with Huaan Energy and Huaan Solutions, invest $1 billion to build hydrogen refueling infrastructure across the U.S.

Huaan Energy and Huaan Solutions will provide technology and capital for the project led by Thomas Motors.

Due to this anticipation, Thomas Motors' stock price has been hitting new highs daily.

"What if the new car turns out to be a fake and Huaan Energy cancels the agreement?"

If a key partner cancels a major investment plan, investors will become suspicious.

"Is that possible?"

The investment plan and negotiations are already complete. This event is just to formalize and announce the decisions.

"We need to meet with a Huaan Energy representative and try to persuade them."

Huaan Energy's overseas investment team leader, Min-woong Heo, is in the U.S. He is the second son of Huaan Group's chairman, Sung-hoon Heo.

"You're not planning to just show up, right?"

They wouldn't meet you.

"Of course not. I'll ask someone I know to introduce me."

"To whom?"

Fortunately, I have someone to ask.

"Wait a moment."

I called a contact I had from the past.

* * *

Yuseong Electronics Hwaseong Plant.

Another meeting of the semiconductor division executives was held here. The seasoned executives sat up straight.

The topic of this meeting was the acquisition of ADM, and the acquisitions of fabless startups RDQnet and NP Semi.

Yuseong Electronics' acquisition record had not been good, so acquisitions and mergers had been virtually halted for a while.

Suddenly, they announced plans to acquire multiple companies at once.

'What's the sudden interest in fabless acquisitions?'

'The companies we acquired before are now just liabilities.'

'What about the other two? I've never heard of them.'

'Isn't it better to focus on foundry investments?'

Everyone was skeptical but didn't voice their opposition, as the person who proposed this was Chairman Yoo Jae-ho.

Despite his young age of 47, Chairman Yoo Jae-ho's control over the group was solid. To the public, Yoo Jae-ho was Yuseong, and Yuseong was Yoo Jae-ho.

Even just the electronics division was a massive empire, and typically, each division president handled their own responsibilities.

It was rare for Chairman Yoo Jae-ho to personally chair a meeting or give direct instructions.

If things went well, the credit would go to the chairman, but if not, the responsible parties would bear the blame.

'It was easier when he just left it to us.'

'Why is the chairman personally leading the M&A?'

The executives could guess the reason.

It was due to the acquisition of Dongwoo Precision.

Dongwoo Precision, which was on the brink of collapse, was revived by Yuseong Electronics. Yuseong Electronics announced additional investment in development costs to stabilize the company, and Dongwoo Precision's stock price soared to the limit as soon as trading resumed.

It's still unclear whether they will develop new technologies using the NIL patent.

But if Yuseong Electronics hadn't acquired Dongwoo Precision, it would have gone to a Chinese company, which would have been a significant burden in the future.

The acquisition of Dongwoo Precision was a success just by eliminating a future threat.

The executives could feel that the group's strategy was changing.

Given that the chairman personally instructed the acquisition, there could be no opposition.

Therefore, the meeting focused on the acquisition methods, amounts, and how to create synergies after the acquisitions.