Chapter 44
Translator: Dreamscribe
“Kangseong Electronics must really be doing well. The stock price keeps rising.”
“They're about to hit record-breaking sales. The K7 turned out really well.”
Kangseong Electronics' stock price had surpassed 1.7 million won.
Such a large-cap stock was somewhat burdensome for the average investor to buy.
Nevertheless, the stock price kept pumping.
It wasn’t simply rising due to good news.
“Actually, word is that the pros are gathering.”
“Pros?”
“Yes. Someone seems to be spreading a rumor that a certain force has heavily shorted Kangseong Electronics. Hearing that, hunters from overseas are now gathering.”
“Huh. Whoever it is, it looks like their position got completely exposed.”
The reason Kangseong Electronics' stock price was high wasn’t just because it was the most successful company in Korea, but also because of the high percentage held by institutions and foreign investors.
Especially, the foreign investment ratio was a whopping 50%.
The proportion of domestic retail investors was much lower than expected.
Because the price was too high, and the volatility wasn’t that significant.
But even such a stock had caught fire.
Usually, when we say 'hunters', we’re referring to foreign investors.
Aren’t overseas investment firms constantly moving from country to country to shake down short-sellers?
Someone had just thrown them fresh prey.
While spreading the word that someone was trying to short Kangseong Electronics at its peak.
“So that's why the price is climbing like this? Just how much are they shorting?”
“They’re definitely shorting on a massive scale. Normally, to short sell, you have to sell the stock first, right? Institutions suddenly started offloading a large volume of shares, so the price seemed to dip slightly. But because the hunters swarmed in after hearing the rumors, the price is now soaring like crazy again.”
Usually, when short-selling volume is released into the market, the price should drop.
But instead, it was rising.
Because the short-selling force kept releasing volume, and the hunters who rushed in from overseas after hearing the rumor were driving the stock price up to squeeze the shorts to death.
“Whoever it is, they’re seriously fucked.”
“Yes. It’s a disaster...”
As Senior Managing Director Tak let out a deep sigh, CEO Hwang tilted his head in confusion.
“But why are you reacting like that? It's not like we’re the ones who shorted.”
“......”
“Senior Managing Director Tak?”
That’s when CEO Hwang had a sudden realization.
“Tak... Don’t tell me we’re the ones......”
“CEO-nim. Please don’t be shocked. The short position that got exposed is ours.”
His heart felt like it had dropped straight to the floor.
“Was it Jin-ho who did it?”
“Yes. I only found out about it when I received the report this time. Just like last time, he used prime brokers to carry out stock lending transactions and borrowed the shares.”
“How much has he put in?”
“Since it would be risky if the price keeps going up, it seems he divided the short sales, but he’s planning to put in up to 1 trillion won. The remaining capital will be used as margin.”
In Korea, it is extremely difficult to place short positions worth hundreds of billions of won.
But for a company the size of Kangseong Electronics, it’s possible.
Isn’t it the largest domestic company with a market cap of over 270 trillion won?
But still, 1 trillion won!
Although there was a time during a stock price manipulation scandal when 3 trillion won worth of sell orders were released right before market close...
Holding a short position worth 1 trillion won would be a first in KOSPI history.
“And Kangseong Electronics is doing so well right now?”
“Yes. Should we stop it now? I don’t think he’s deployed the full 1 trillion won into the market yet.”
Disguised investment.
A strategy of borrowing shares from various institutions and funds to invest.
Even in Germany, Jin-ho had smoothly exited the market using this method.
As long as it’s done this way, the position may be at risk of exposure, but it’s hard to uncover the full identity behind it.
Because all transactions are carried out anonymously through brokers.
If such safety measures hadn’t been in place, CEO Hwang would have stepped in and stopped it himself.
But to be doing this while Kangseong Electronics is booming...
And even conducting the transactions via stock lending so that Kwangwoon Securities’ name doesn’t show up...
“If the stock price keeps going up like this, additional margin will be required, and if that limit is exceeded, it’ll result in a margin call. The 1 trillion won we worked so hard to accumulate could disappear in an instant. If that were the end of it, that would be fine, but if the stock price keeps rising, even our company could be at risk......”
Senior Managing Director Tak swallowed dryly.
Normally, Jung Jin-ho could make any kind of investment and he wouldn’t have cared.
As CEO Hwang said, if he let it get to him, he might end up acting out of unnecessary worry and meddling.
So he tried his best to ignore it, but this was something he simply couldn’t look away from.
If Jung Jin-ho were merely losing the investment funds he had earned up to now, it wouldn’t matter, but if this spiraled out of control, the company itself could go under.
This is why a short squeeze is terrifying.
If the pros band together and go all in, the risk is high enough to bankrupt an entire company.
“CEO-nim. That’s why we should liquidate the position even now...”
“No. Didn’t you say the money has already been put in? Pulling out now would already lead to significant losses. And have you forgotten our rules?”
Rule number one. Never doubt Jung Jin-ho when it comes to investing.
Rule number two. Follow rule number one.
“But this-!”
“Enough. That arrow has already left our hands.”
CEO Hwang said that and picked up the coffee cup in front of him.
“I choose to believe in Jin-ho.”
“......”
But perhaps the body couldn’t lie.
Tremble, tremble-
Because of his shaking hand, the coffee inside was spilling out completely.
***
When people talk about Kangseong Electronics, they often call it the nation’s stock.
But in reality, Kangseong Electronics could be considered a foreign stock, given how low the domestic ownership ratio is.
Even among institutions that hold large stakes, including the national pension fund, foreign institutions vastly outnumber domestic ones.
In particular, Whiterock was one of them.
Whiterock is the world’s largest asset management firm, managing over 7,000 trillion won in assets and holding shares in nearly all global conglomerates, including Kangseong Electronics.
It was from there that they borrowed a small amount of shares, and through brokers, borrowed small amounts from other institutions and overseas investment funds to take short positions.
They say dust gathers into a mountain.
The shares gathered that way amounted to a staggering 1 trillion won.
However, when compared to Kangseong Electronics’ total equity, 1 trillion won amounted to only 0.37%.
It was a conglomerate so massive that it was hard to believe it was a Korean company.
Still, even if the overall share ratio was small, building a 1 trillion won position was naturally something that took time.
“Department Head. It’s all sold.”
But the transaction happened much faster than I had expected.
The volume released for short selling was bought up in an instant.
“So the rumor was really true. They say the pros from overseas are all gathering to carve it up...”
“What should we do? Isn’t it already too late to reverse this?”
Overseas big players were charging in like cavalry, swarming into the Korean stock market.
They had one goal.
To sweep away their target in one strike.
Every time a large position was exposed, the death squad would rush in, and now our department had become that target. If the stampede came down like a storm, there’s no way we could handle the overwhelming volume.
“......”
I’m human too, so I was a bit shaken.
I never imagined I’d be the one hunted by the infamous short hunters I had only heard about in stories.
No, if I was aiming for a short position of this scale, I probably should’ve been prepared for this from the beginning.
“Department Head.”
Everyone was looking at me.
They knew it too.
At this speed, we would soon be forced into a position liquidation.
Had I made the wrong decision?
I quietly reached out toward the Kangseong Electronics stock.
“......”
I felt nothing.
That could only mean one thing.
“Let’s wait.”
Grit my teeth and endure it.
***
Russia, Malaysia, Netherlands, and so on.
The K7’s popularity was so explosive that it was causing supply shortages in various countries.
Though still not enough to rival Raptor, which holds the number one spot in the global smartphone market.
If they could ride this momentum and strike gold with the next model too, they might be able to claim a decent share.
As if to prove it.
The stock price was continuing to rise.
Of course, due to the hunters rushing in from overseas, the stock price had become a bit abnormal.
‘It should be about time for news articles about those guys to come out.’
By now, the short squeeze should have triggered, and urgent news should have started popping up everywhere.
But instead of the expected breaking news, something completely unexpected appeared.
“Wh-What is all this? It exploded on a plane?!”
“Fortunately, the fire broke out before takeoff, so there were no casualties.”
“That’s not the point here!”
Cases of the batteries inside the K7 either catching fire or exploding were starting to increase.
At first, it was believed to be a staged incident meant to maliciously slander the K7.
But as the rate of incidents increased, they initially offered free replacements. Eventually, however, a major incident occurred.
“Is it true that the U.S., along with Europe, has completely banned the possession and use of the K7 on all flights?”
“Yes. The bigger issue is that not only airports, but now all public facilities are subject to a ban according to an announcement from the U.S. Department of Transportation...”
Bang-!
Chairman Kang Sung-ho slammed the table, and the executives all froze in silence.
As if trying to suppress his own anger, Chairman Kang Sung-ho took a deep breath and then opened his mouth.
“...Have you identified the cause? When the first explosion happened, you said it wasn’t a big issue.”
His voice was almost fading out.
“At that time, it was difficult to identify the cause... but after running various tests, we discovered that insulation tape was missing from some cells, the separator was damaged, and the electrodes were bent, which created insufficient space between components, likely causing the issue.”
“Can it be fixed through after-sales service?”
The president of SDI, responsible for the batteries, swallowed dryly and responded.
“...It’s impossible. We’ll have to remake them from scratch.”
A cold wind blew through the meeting room.
It would have been understandable if he screamed in rage, but the chairman didn’t even seem to have the energy to do that now.
“.......”
How much time passed like that?
"Let's recall everything."
“Pardon? By recall... do you mean a full product recall?”
“Yes. Recall them all.”
“But Chairman, if we do a recall now, we’re talking about millions of units.”
The financial damage was unimaginable.
“If we don’t resolve this situation properly, we’ll have to leave the smartphone market forever. Is that what you want?”
“.......”
Even the U.S. Department of Transportation had stepped in to impose a total ban on the K7.
If they didn’t act fast to extinguish the fire, Kangseong might have to shut down its mobile phone division.
This was the greatest crisis since the founding of the Kangseong Group.
“And after recalling every phone, replace them all with new ones. Also, announce that the battery design and testing systems will be completely revamped to ensure this never happens again.”
But hadn’t his father always said this?
Turn a crisis into an opportunity.
“Spend whatever it takes. Overhaul everything from the production process to the testing phase.”
He had also said this.
Change everything except for family.
It seemed now was that very “time” he had spoken of.
***
Today, the employees in the Prime Department truly felt what a life-or-death moment meant.
It really felt like a blade was pressed against their throats.
And just as that blade was about to pierce their necks.
“They’re- They’re selling!”
Foreign investors began dumping their shares like mad.
Even the hunters, who had held their positions without flinching despite news of battery explosions on airplanes, began offloading their holdings after today’s announcement from Kangseong Group about a massive product recall.
They had tried to choke the short sellers to death, but now, fearing they might die instead, they were all frantically liquidating their positions.
“Wow. I really thought I was going to die from the anxiety.”
“No, not from anxiety, we almost actually died. If the stock price had gone up any higher, we wouldn’t have been able to provide more margin, and our position would’ve been forcibly liquidated.”
It was truly by the slimmest of margins.
If Kangseong Electronics' announcement had been even slightly delayed, all the money would have been lost.
It was like a dramatic movie scene, where the bomb is defused just one second before it explodes.
“Ha. My whole body is drenched in sweat.”
“Same here. My heart's still pounding so hard I can’t breathe.”
That’s when a question arose.
"But...... did Department Head know in advance that there were problems with the battery?"
“Must have, right? That’s probably why he went into such a dangerously risky investment.”
“Still, even so... how many hearts does he have? This time was seriously dangerous.”
“It was dangerous, but... watching all those hunter bastards get wrecked was kind of thrilling too.”
“Wow. Just imagine how shocked those hunters must be. They probably thought it was a game they couldn’t possibly lose.”
But once again, it was not the foreign investors who won, Department Head Jung Jin-ho did.
However, it wasn’t over yet.
The key now was when to exit the position.
After Kangseong Electronics made their announcement,
and the stock price began to crash,
Department Head Jung continued monitoring the situation for several days without issuing any orders.
“It’s still dropping hard.”
“This might keep going for a while, don’t you think?”
“Kangseong Electronics did say they’re going to overhaul their entire system from the ground up.”
“Has the Department Head said anything yet?”
“No, not yet. I think he wants to observe for a few more days...”
Just then, the tightly closed office door of the Department Head burst open.
“Everyone.”
“Ah, yes! Department Head!”
Startled by the sudden voice, everyone stood up naturally from their seats.
“Please liquidate all positions.”
Now?
But the stock looks like it’ll fall even more?
Still, no one questioned him.
The moment the words left his mouth, everyone returned to their desks and began liquidating their positions.
“Ah. After you finish liquidating the positions, please reinvest everything back into Kangseong Electronics.”
“Huh? Are you shorting it again?”
“No. This time we’re going long.”
“......?”
All the employees tilted their heads.
“Long this time?”
Was this that so-called ‘give the disease then give the cure’ style of investing?
***
Of course, investing brought a rush of dopamine, but along with that came a great sense of responsibility.
As the amount of money entrusted to me grew larger, so did the weight on my shoulders.
Though managing all that money was thrilling, the mental stress it brought was not something to be ignored.
Especially in this case.
I had been so anxious lately that I’d even had nightmares about Kwangwoon Securities going bankrupt and hadn’t been able to sleep properly for days.
“If I’d known it was going to be this nerve-wracking, I wouldn’t have started in the first place.”
Sure, when the tables turned in the final moments and our position survived, the exhilaration was indescribably intense, but if asked to go through it again, I probably couldn’t do it.
“But still, Kangseong Electronics is impressive.”
With my limited perspective, I had thought that Kangseong Electronics might be pulling out of the smartphone market altogether.
Hadn’t they been completely cornered, to the point that the U.S. and Europe issued total bans on K7 use?
However, Chairman Kang Sung-ho responded incredibly fast.
He issued a recall for millions of phones, replaced them for free or refunded customers, and announced a complete system overhaul worldwide.
And he wasn’t just making announcements, he was actively dismantling and revamping their entire production line.
Perhaps seeing potential in Kangseong Electronics’ swift and bold response, the plummeting stock price began to rebound.
"So that's why you told us to buy."
When intuition struck about Kangseong Electronics stock that was falling hard, I liquidated the short position and established a long position again.
With the current rebound momentum, it seemed likely the stock could recover to pre-crash levels.
And given time, it even looked possible for them to reach their target price of 2 million won per share.
Turning a crisis into an opportunity.
Wasn’t that phrase the perfect match for Kangseong Electronics right now?
“What are you muttering to yourself about over there?”
“Huh? Oh, nothing.”
I turned off the news I was watching.
Right. It’s the weekend, I should be resting at home.
I was already mentally exhausted from everything with Kangseong Electronics, so I definitely needed a break.
“Oppa, should we go on a family trip sometime?”
“Hm?”
“You’ve been working non-stop too. Earning a lot of money is great, but what’s the point if all you do is stack it up? You don’t even get to rest or spend it.”
“Well... you’re right.”
A break.
I had been feeling that I needed some rest, too.
This time, it felt like my brain had completely melted from all the dopamine.
“Where were you thinking for the family trip?”
“Hmm~ anywhere’s fine. If you just pick the dates, I’ll figure out the place. But don’t you think Japan would be the best? It’s easy for a quick trip. It’s close.”
The most popular travel destination for Koreans is Japan.
And that number keeps increasing every year.
The problem? I’d never been abroad before.
“If Japan, then where?”
“Let’s see. I’ll show you the map. There are a ton of tourist spots.”
My younger sister, clearly excited, pulled up a tablet screen in front of me and started pointing things out one by one.
“The safest picks are Tokyo and Osaka. But there are other areas too. If Mom and Dad want to go to a hot spring area, then...”
She continued her explanation, circling each region on the map as she talked.
“Oh! And the hottest spot lately is here- Kumamoto!”
“!?”
But the moment she said 'Kumamoto', my body jolted.
“It’s got both urban and rural vibes, and it’s known for its tourist industry where you can see cars, motorcycles, and cutting-edge electronics. The hot springs are great too... Huh? Oppa, what’s wrong?”
My whole body and even my vision were shaking so badly I couldn’t sit upright.
“Oppa?”
“Ah... sorry...”
I barely managed to pull myself together.
It was an overwhelming sensation unlike anything I had ever felt before.
It felt like the entire apartment building was shaking.
“...Let’s go somewhere besides Japan.”
“Huh?”
“Somewhere farther, like the U.S. I was thinking I’d get you and Mom and Dad seats in first class this time.”
“Wow, first class?! Please wait just a moment, dear brother. In that case, for the U.S.-”
My sister completely erased Japan from her mind and began searching for other travel destinations.
But I couldn’t hear a word of her cheerful chatter.
'What was that feeling just now.......'
*****
TL Note: Yes, Kangseong is Samsung and K7 is Samsung Galaxy Note 7.