CH395 | Heir

A heavy silence lingered in the office.

Warren Buffett took a refreshing gulp of the remaining cola before continuing.

“So, you’re planning on waging quite the war against the short-sellers.”

“Calling it a war is a bit excessive. Think of it more as a small skirmish. Still, it will be a very entertaining one—the kind you rarely see in the stock market.”

“Hmm. I’m not particularly interested in you fighting the short-sellers. What matters to me is the oil industry. Does this endeavor contribute to the development of that sector?”

It was an unexpected question.

Warren Buffett was a true investor, and his focus was solely on the growth of the industries he had invested in.

“I’ve poured enormous capital into advancing the oil industry. In fact, I was even able to discover a massive oil field in Guyana. But to achieve greater results, we must first break the short-sellers now.”

“Do you truly believe greater results can be achieved?”

“Yes. Back in school, my teachers used to say we had less than thirty years until oil was depleted. But now, the estimate has actually grown to fifty years. The oil industry is far from finished.”

Warren Buffett nodded, seemingly agreeing with my point.

However, he wasn’t quick to shake hands, and instead posed another question.

“Don’t you think the electric vehicle market, led by Taewoo, will eventually harm the oil industry?”

“At first glance, the two industries might appear to overlap. But the reality is that electricity production still relies heavily on oil. And in regions like China, India, and Africa, oil consumption is increasing at a rapid pace. Even if electric vehicles gain a firm foothold, overall oil consumption will, in fact, continue to rise.”

I spoke without pausing for breath.

Perhaps moved by my passion, Warren Buffett finally extended his hand.

“I’ll support your fight against the short-sellers. But you must fulfill the promise regarding the shares I’ve lent you.”

“I’ll make sure of it.”

“I’ll inform the head of our Korean branch. You can draft the contract there.”

“Thank you.”

“Well then, I should be going. It seems Korea has quite a few undervalued companies. I plan to take this opportunity to look around.”

Warren Buffett left with his characteristic gentle smile.

I accompanied him to the entrance of the Finance Tower. Once his car disappeared from sight, President Han, who had been waiting nearby, quickly approached me to ask about the outcome.

“How did it go?”

“Go to Berkshire’s Korean branch and draw up the contract. We’ve agreed to lease the shares in Hess that Berkshire holds.”

“So, we’ve joined hands with Berkshire? The short-sellers are going to be thrown into chaos.”

“Just the news that we’ve partnered with Warren Buffett will send stock prices soaring.”

The truth was, I didn’t actually need Warren Buffett’s cooperation.

But it was an excellent way to apply pressure on the short-sellers.

If the original plan had been to strike them down in one swift blow, Berkshire’s involvement had upgraded it into a slower, more suffocating method—one far more brutal.

“Once the contract is signed, I’ll release the information to the American press.”

“Then all that’s left is to meet the U.S. ambassador. Wasn’t that scheduled for tomorrow?”

“Yes. I’ve arranged a lunch meeting tomorrow at Captain Kang’s restaurant.”

To completely cut off the short-sellers’ breathing space, support from the U.S. government was necessary.

Strictly speaking, it wasn’t even active support I needed—just tacit approval or indifference. That was why a meeting with the ambassador was essential.

By now, I had built quite a strong rapport with U.S. Ambassador Kang Jun-yong.

When we met at Captain Kang’s restaurant, we even exchanged jokes as greetings.

“Chairman Kim, you’re here! Aren’t you fighting a little too hard against the short-sellers these days? Honestly, I’d love to quit this ambassador’s post and join the battle myself—but alas, I don’t have the money for it.”

“Ambassador, your duty is to handle great matters. You should keep far away from the stench of dirty money. Wouldn’t it be a problem if that smell clung to your clothes?”

“Hahaha! Exactly. That’s why I settled in Washington instead of going to Wall Street, isn’t it?”

With that joke, we enjoyed our lunch together.

Once the meal had ended, Ambassador Kang spoke first.

“You’ve kept me waiting long enough. Now, tell me—why did you want to meet me? I’m dying of curiosity.”

“I’m planning to give the short-sellers a serious blow. But the method is so aggressive that I’ll need the U.S. government’s approval.”

“You’re not planning to hire a gang or commit acts of terrorism, are you? As long as it’s nothing like that, it should be fine. If it’s just a financial-engineering battle, I doubt the White House will care much.”

Of course, aggression wasn’t limited to physical clashes.

There were plenty of financially engineered methods that were equally ruthless—and the approach I had in mind was far more aggressive than Ambassador Kang imagined.

“It’s not illegal, but I do intend to use a few loopholes. If the SEC—the U.S. Securities and Exchange Commission—decides to pursue it, that could be an issue.”

“What exactly are you planning that requires this level of caution?”

“I’m going to delist Hess.”

Delisting.

The act of stripping a company of its qualifications to trade on the stock exchange.

Normally, this happened to companies on the brink of bankruptcy or those caught in severe corruption scandals.

“I heard Hess’s stock price has recovered quite a bit. So why suddenly bring up delisting?”

“Undervalued companies sometimes delist in order to raise their corporate value, only to relist later. Hess, too, is far too undervalued right now. By delisting first and then relisting once oil production begins at the Guyana field, we can secure a much higher valuation.”

Voluntary delisting.

There had been many cases where hedge funds acquired companies and then took them private.

Once the company’s value was raised and it was relisted, the stock price was often set far higher than before.

“If you hold more than 95% of the shares, delisting becomes a management decision. But I don’t understand why you’d want to delist in the first place. How does this help in the fight against the short-sellers?”

“In a voluntary delisting, we can carry out a tender offer at a price above market value. Normally, the premium is around fifty percent, but I plan to offer a full one hundred percent premium.”

What shareholder would welcome delisting?

That was precisely why attaching a premium to the tender offer was essential.

And once a tender offer began, the stock price naturally rose to match the tender price.

“To voluntarily delist, you’d need to collect 95% of the shares, so the tender process is inevitable. Haha, if the stock suddenly doubles, the short-sellers will be in serious trouble.”

“Their losses would double from where they stand now. But I’m not satisfied with just doubling them.”

“Do you have another method? Once you’ve played the delisting card, there shouldn’t be another option, should there?”

It was true there was no other option.

But the same option could be repeated.

“If we fail to secure 95% in the first tender offer, we can simply run a second. If it takes as many as five rounds of tender offers, the price could rise nearly fivefold.”

“…And that’s why you said you needed the U.S. government’s help. Certainly, it isn’t illegal, but it could be problematic.”

Who would ever choose to delist a company just to crush short-sellers?

Normally, delisting was forced on companies that had lost to short-sellers and had no choice but to bow out.

But Hess was different. With Taewoo Group as its parent company—overflowing with cash—it could employ a strategy that was nothing less than crushing its enemies with money.

“This is a chance to wipe out the short-sellers completely. It’s also a perfect opportunity to make up for the mistakes of the Lehman crisis.”

“Indeed, there are many citizens who still resent the moral hazard of the financial institutions.”

Only a tiny number of financiers were punished after the Lehman debacle.

Even though it had shaken not only the United States but the entire world economy, not a single major financial institution took real responsibility.

The slap-on-the-wrist punishments became a national issue, dragging down the approval ratings of the Obama administration.

“The downfall of the short-sellers—now that would make for an excellent headline, wouldn’t it?”

“I’ll go to the U.S. myself and speak with the VIPs and the other key players.”

“For the sake of financial development, short-selling is necessary. But those who spread fake news for profit under the guise of short-selling—those must be eliminated, don’t you think?”

In truth, condemning the short-sellers was no different from spitting into the wind.

After all, I was the one who had profited the most from the oil war—and most of that profit had come through short-selling.

Hypocrisy. A double standard.

When I did it, short-selling was justified; when others did it, it was villainous.

Even so, the U.S. government had no choice but to side with me.

On one hand, there was the faction working to develop America’s oil industry.

On the other, the faction seeking to drag it down through short-selling.

From the U.S. perspective, wasn’t it obvious which side they would choose?

***

A few days later.

I received a call from David.

[Boss! The U.S. government has given its approval. The SEC—the Securities and Exchange Commission—has also agreed not to involve itself in anything related to Hess.]

“That was faster than I expected.”

[Think about it, Boss. The U.S. government is investing substantial sums in reviving the oil industry. And here come the short-sellers, trying to ruin it. Of course, they look like villains. The government can’t directly punish them, but with you stepping in to do it on their behalf, they’re happy to look the other way.]

In truth, it wasn’t really approval.

What I needed from the U.S. government wasn’t their help, but their silence.

And that was exactly why they had been able to respond so quickly.

“Then let’s begin with Phase One. Start spreading the news that Berkshire has acquired shares in Hess. And immediately follow it up with the news that Berkshire has entrusted those shares to Taewoo Group.”

[Buffett’s followers will buy anything he touches. Demand for Hess stock was already strong, and now it’s about to explode.]

Was there anyone who didn’t know Warren Buffett’s name?

Especially among those in the stock market, his reputation was practically universal.

The mere fact that he had chosen Hess would be enough to drive the share price sharply upward.

“And soon, I’ll send President Han to the U.S. Make sure the voluntary delisting and tender offers are carried out.”

[If that’s the plan, I’d better start moving now. There’s a lot to prepare.]

David hung up first.

He knew better than anyone that when it came to preparing for a delisting, he was the one who needed to work the hardest.

“I’ll head to the U.S. tomorrow. Since I need to handle the financial engineering aspects myself, it’s best I get there as soon as possible.”

“It will be tough, but it should also be fun.”

President Han, who had been listening to my call with David, kept a smile on his face the entire time.

He looked like a child eager to play with a brand-new toy.

And really, where else could one find a toy like this?

He was about to get his hands on the so-called King of Short-Selling and play with him at will.

Of course, the most entertaining part would belong to me.

No matter how close President Han was—my most trusted aide—I couldn’t possibly hand over the highlight of the show.