What's wrong with me being a rich man?

Chapter 448 The First Under Heaven

Vania experienced an epic stock price crash, wiping out $140 billion in market value in a single day. This triggered a collective plunge in the US pharmaceutical sector, indirectly dragging down the S&P 500 Healthcare Index by 2.4%.

Financial fraud, pharmaceutical companies unscathed.

Global media coverage of the Vanilla incident began with its most recognizable label from the past few days, and also focused heavily on the instigator of this plunge – the mountain peak.

Of course, international reports use its English name, "King Cobra Research".

Some media outlets have drawn parallels to King Cobra, a villain in Marvel comics who can fire bullets containing the venomous substance "Cobra Bite," and have thus dubbed the attack by Guo Shanfeng "Cobra Bite."

It's $140 billion, but it will definitely not stop at that number.

The plunge in Vania's stock price is not over; it still has a market capitalization of $250 billion, and the continued backlash from public opinion and regulators will inevitably push its stock price even lower.

Ackerman at Pershing Square is numb.

He had thought next week's congressional hearing would be a turning point to launch an attack, but he never expected that the past 24 hours would bring about Vania's dramatic change of heart.

This means that the acquisition of Vania and Allergan has completely fallen through, and the more than $30 billion that Vania has invested will not only fail to generate profits, but may also be dragged down by the overall pharmaceutical sector in the short term.

However, this part of the financial loss is not the largest and is still manageable, since it was from buying Allergan stock, and the latter's fundamentals have not been affected.

The most serious issue now is that Pershing Square also secretly increased its holdings in Vania by $10 billion, and according to the latest information, it has already lost more than $2 million.

According to the original plan, Pershing Square would make money regardless of whether Vania's hostile takeover succeeded or not, and based on the latest offer, it would already have a profit of at least $20 billion.

Now that Vania has been directly defeated, the threat of a hostile takeover has vanished. Not only has the $2 billion profit vanished, but they also have to put money into it. The total loss, both inside and out, is more than $2 billion.

If we also consider the potential settlement costs that Allergan might incur if it initiates a lawsuit...

That’s not all!
The future reputation and potential funding of Pershing Plaza!

Ackman built his hedge fund quickly by profiting from the 08 financial crisis, attracting a large number of clients and managing over $120 billion in just a few years. He was well aware of the benefits that fame could bring, and his frequent appearances supporting Vania and hostile takeovers were also an attempt to replicate the attraction of client funds.

Profits are gone, losses are huge, and reputation is ruined...

I lost my wife and lost my troops!
"What do we do next?" Partner Eric rushed into the office, asking for advice.

"Keep dumping! Vania's finished, it's definitely finished!" Ackerman, his eyes bloodshot, glared at Eric, working tirelessly. "No! Wait for Vania to release positive news, whatever the news, whatever the market conditions, dump if you can!"

After Hillary Clinton spoke out through the media, some of the secret shares in Pershing Square were snapped up at the opening.

Eric looked at Ackerman with equally bloodshot eyes: "Is there any more good news? Is there any more?"

After noticing the ominous signs, Vania Pharmaceuticals issued an urgent statement claiming that the current short-selling reports and statements were highly misleading, but this was clearly not enough to withstand the multi-faceted attack.

According to Eric's assessment, market sentiment has now spiraled out of control.

Stock prices are driven by expectations and consensus. There's a saying that even a fool's consensus is still a consensus. Similarly, out-of-control emotions are still emotions, and once panic spreads, it's very difficult to stop it.

Ackerman said in a hoarse voice, "It will happen. Wait for my call."

After Eric left, he paced back and forth in his office, but before he could think for long, he received a call from Vania CEO Pearson.

Pearson sounded somewhat urgent. The call was for two reasons: first, to seek help from Ackman's influential friends, and second, to ask Ackman, the star fund manager on Wall Street, to mediate the short sellers who were attacking Vania.

The bulls have disappeared from the scene, while traditional short sellers are frantically creating more public opinion.

When Ackerman heard the demands from the other side, his first thought was that they had gone mad. The short sellers were like jackals that had tracked down the trail, vultures that had seen carrion, and sharks that had smelled blood. How could they possibly stop in the face of profit?
Let alone themselves, even if Buffett came, the short sellers wouldn't give them face.

But he realized in the next instant that it wasn't Pearson who had gone mad; he was simply out of ideas.

“Pearson, don’t worry, don’t worry, I’ve already arranged to talk to my friends about this.” Ackerman controlled his voice and immediately agreed to the deal, even going straight to the initial cooperation. “Vanlia must stay calm at this time and insist on continuing to talk about the acquisition of Allergan. At least, you have to talk about it. Only if you release this kind of news will I have a reason to mediate my friends to stop the attack.”

Pearson was truly desperate and, upon hearing this, hesitated and said, "Can we still talk about the acquisition of Allergan? David has been using this to mock us."

“We need to stabilize the situation. Once we do, the panic will dissipate quickly,” Ackerman said, feigning composure. “If we can hold out until next week’s congressional hearings, there’s still hope for Vanlia. The Republicans will absolutely not let the drug price bill pass.”

He was certain of this: the bill didn't just concern Vania; many companies would be affected. Even with Hillary's appeals, it would never pass. On the contrary, the more she spoke out, the more determined the lawmakers were to vote against it.

The problem is... it's almost impossible for Vania to hold out for five days. The backlash from all directions will come in a chain reaction, and what's being thrown out now is just a false straw.

“Okay, I’ll talk about the acquisition and the company situation again in the next investor call.” Pearson made up his mind, encouraging himself and Ackman, “We can definitely hold on until the hearing next week.”

Ackerman ended the call, put down his phone, and wanted to sneer, but his terrible mood prevented him from even managing a sneer.

Besides the losses, what's even more infuriating is that mountain peak that suddenly appeared.

If it weren't for the intervention of the mountain peak, Pershing Square would have made a fortune.

He summoned his secretary and instructed the company to quickly contact the media to release information. In addition to discussing the positive news and stabilization of Fanlia, he also wanted to encourage investors to buy at the bottom. The main idea was that Fanlia's stock price had already dropped significantly, and the drug patents and patient base still existed.

Even if Vania isn't worth $400 billion, it's at least worth $300 billion!

After Ackerman finished all this, he instructed his partners to sell off their shares and run away the next day when the market opened. In the end, all Ackerman could do was pray and hope that everything would go smoothly.

However... things didn't go so smoothly.

As CEO of the publicly traded company, Pearson held a conference call, but he refused to elaborate on the details of the Philidor Pharmacy deal, only calling it industry practice, and his mention of continuing the acquisition with Allergan was also met with considerable skepticism.

Given the current situation, how could Vania possibly continue its hostile takeover bid for Allergan?
This is utterly delusional! As a direct result of this conference call, S&P downgraded Vania’s governance rating from “CCC” to “CC”, which would make Vania’s financing costs 500 basis points higher than the industry average.

This is undoubtedly another negative factor.

Yu Xing and Liu Wanying continued to monitor the situation at Vania and agreed that they could continue to wait for the stock price to fall to maximize their short-selling profits. Although they did not invest all their capital, they would still achieve their goal of accumulating short-selling profits against car companies.

At 8 a.m. Eastern Time, which was also nighttime in Lingang, Yu Xing was working overtime on matters related to the Silicon Carbon Group. He had just finished his work when he received a call from Li Song, a short-seller.

He didn't know why this person liked to talk to him about Vania, but after exchanging pleasantries, he inevitably heard the other person stammering about shorting the mountain peak again.

"President Yu, the massive hemorrhage at Vania is truly spectacular," Li Song exclaimed repeatedly. "Sigh, I wonder if I'll ever see Shanfeng reveal his true colors in this lifetime. I really want to know who's behind this."

Yu Xing responded with two indifferent replies.

Li Song then said, "I saw Ackerman on Twitter calling on the SEC to launch an investigation into Guoshanfeng. Mr. Yu, do you think this will uncover its true identity?"

Yu Xing frowned slightly and replied, "I think it's very difficult. It's not like we've been crossing mountains for more than a year or two."

“I think so too.” Li Song hesitated for a moment before saying, “President Yu, look at how much Vania’s stock price has fallen. Everyone is really panicking about it. Hmm, I think if you have the money, you can buy at the bottom and make a profit later.”

Yu Xing was taken aback.

what?
There are even donkeys below the lowest grade of donkey?
He stood there stunned for a full five seconds before trying to reason with him: "Mr. Li, what are you thinking? What kind of bottom-fishing is this? It's going to escalate further, you, you still..."

Yu Xing almost brought up the other party's "genuine research" short-selling identity, but held back and asked helplessly, "Mr. Li, are you really a PhD in finance? Did you buy your certificate?"

"What are you saying!" Li Song said firmly. "President Yu, the reason why Vania dares to raise prices is because it has a relatively monopolistic position in its specific drug categories. Do you think patients will stop buying the drugs after that? Vania definitely has a good customer base."

These days he's been studying Vania, talking about patents, markets, and the back-and-forth between fear and greed.

Yu Xing felt that if he listened any longer, he would become stupid.

He took a deep breath and informed the other party, "I will send a WeChat message to President Xu about this. President Li, if you're not afraid of losing everything, then go ahead and copy it."

Yu Xing hung up the phone immediately, but thinking about the extremely low level of the situation, he couldn't help but send a WeChat message to the other party: "I'm so damn angry, Mr. Li, if you're going to embezzle, please don't misappropriate company funds."

He rubbed his temples and sent three long voice messages to Xu Xin, recounting what had just happened and his thoughts.

A moment later, Xu Xin replied to the WeChat message.

She replied briefly: "I didn't know he thought that way, thank you, Mr. Yu."

Yu Xing breathed a sigh of relief. He really couldn't bear to watch the other party jump in.

Most importantly, even if the opponent jumps inside, it won't bring any benefit to crossing the mountain peak, so why bother?

He put away his phone, muttering "crazy" under his breath before he could calm his shock.

"Mr. Yu, when do you think this Vania will finally stop falling?" Secretary Zhang Yangxu, who overheard the phone conversation, couldn't help but ask.

Yu Xing shook his head: "I don't know, but it's definitely not now. Vania has a base of support, but it's not that strong. We'll have to wait for the SEC to give its investigation results before we can see. Mr. Li's move is purely because he saw the stock price drop a lot and wanted to speculate."

Zhang Yangxu nodded, thinking he would also take a look at the trend of Vania and find out what's going on.

Yu Xing hadn't walked far when he felt his phone vibrate. He thought it was Li Song again, but instead saw yet another piece of bad news from Xiao Ying.

Following S&P's adjustment of its governance rating, CVS, the largest pharmacy chain in the United States, announced the termination of its partnership with Philidor Pharmacy, which means that it directly cuts off approximately 7% of Vania's revenue.

With two negative factors compounding in the second 24 hours, Vania's opening today is destined to be another sharp drop.

Yu Xing figured that Li Song, who was keeping an eye on the situation, would finally give up completely this time.

Similarly, retail investors probably won't be thinking about buying at the bottom anymore.

As expected, when the US stock market opened, Vania resumed its downward trend, falling another 22% after a 35% plunge on the first day, and its market value failed to hold the $200 billion mark.

This valuation of Vania is now half of its peak market capitalization of $400 billion!
$200 billion evaporated, and more than 1300 billion Chinese yuan vanished!
This alone doesn't seem to satisfy the short sellers who have already moved in. Citron Research founder Andrew directly declared on Twitter that Vania's stock price will fall to zero, and hinted that an even more significant report would be released on Saturday.

Liu Wanying felt that Citron was just bluffing, so she decided to secure most of the profits first.

Regardless, Vania is destined to become one of the companies with the largest decline in market capitalization on the US stock market this year.

Because of its registered location, many American media outlets have given it titles such as "mysterious Eastern short seller," "deadly Eastern short seller," and "world's most toxic short seller," and have extensively reviewed its trading activities over the past few years.

Yu Xing slept well on Friday night, which made up for the losses of the past few days.

On Saturday morning, he visited the silicon carbon group's factory and accepted a pre-arranged interview with CCTV, leading reporters on a tour of the prototype vehicle and production line.

The reporter inquired about the significance and progress of the Lingang tram project along the way, and finally asked Yu Xing, the founder, about his business philosophy.

Upon hearing this question, Yu Xing smiled and said, "I've always been developing through trial and error, so I can't really talk about any business philosophy. If I had to say something... it would be a line from the Tao Te Ching: 'First, compassion; second, frugality; third...'"

My phone suddenly vibrated.

Yu Xing glanced at the screen subconsciously and saw the message Xiao Ying had sent: the SEC announced an investigation into Guoshanfeng, the world's leading short-selling success rate.

His smile remained unchanged as he spoke his final words to the camera: "I dare not be the first in the world."

(End of this chapter)