Debuted right after graduating from high school

As their business grew, they broadened their horizons.

When Fan Wumian learned that the Mountain Bandits Fund in mainland China and Hong Kong, together with the Boshi Fund, had raised more than 237 billion RMB in escrow funds in a single month, he lamented that life wouldn't be any better than it was now in the short term.

Unexpectedly, they received news from Goldman Sachs that they planned to acquire their 25% stake in Paulson's hedge fund for $25 billion.

In other words, Goldman Sachs, which made a fortune last year, has valued Paulson's hedge fund at a full $100 billion, and it is very likely that it will be increased slightly through negotiation.

Upon hearing about this, Fan Wumian immediately began to calculate whether the price was reasonable.

Paulson & Co. currently manages over $28 billion in client assets. With several closed-end funds that surged last year coming to maturity, based on current returns, they are expected to earn $3 to 4 billion, of which a quarter will go to Fan Wumian.

Even assuming that John Paulson, who rose to fame in one battle, can maintain the fund's size at over $300 billion in the future thanks to his immense popularity, his returns will not be enough to trigger the 20% excess performance fee.

Based on a standard management fee of 2%, this $300 billion would bring the company a gross profit of around $6 million per year. Since hedge fund management teams are small, they would likely have a pre-tax net profit of around $5 million.

Based on the lowest possible figures, assuming the closed-end fund is dissolved early, Fan Wumian should receive $10 billion in performance fees afterward. The extra $15 billion would be equivalent to cashing out dividends for several years in advance.

Hedge fund companies generally do not have accurate market valuations because their performance fluctuates so much. If a private equity fund product suffers losses at a certain time, a large number of clients will be lost, resulting in a reduction in the size of Paulson's hedge fund.

Given the significant uncertainties, Goldman Sachs' offer is quite reasonable, suggesting a relatively optimistic outlook on Paulson's hedge fund's prospects.

When Fan Wumian called Manager Qi of the family office, the manager also suggested:
"If the price is still good, I think we should seize the opportunity to sell. It seems that Goldman Sachs may have some needs, such as trying to join forces with Paulson's hedge fund to squeeze profits from major clients."

“In Mr. Fan’s hands, Paulson’s hedge fund might only have two or three hundred billion US dollars in assets under management, but in Goldman Sachs’ hands, the total assets could increase to five or six hundred billion US dollars. They have accumulated so many years of experience in the investment banking market, and countless companies and tycoons around the world are Goldman Sachs’ major clients.”

"Although the subprime market may still have room to fall further, and signs of a financial crisis are becoming increasingly apparent, it may be difficult to quickly sell this 25% stake once profits are completely squeezed out."

"Holding onto a stock for two or three years might cause you to miss out on many other investment opportunities. Once a financial crisis breaks out, cheap stocks will be everywhere in the market, and those who have a lot of cash on hand will be the ones who thrive the most."

After listening, Fan Wumian clearly noticed that Manager Qi's tone was excited and he was losing his composure.

From another perspective, the interests of his subordinates and his boss are often not aligned.

Paulson's hedge fund made money, which had little to do with the executives in the family office. However, with $25 billion in external investments at their disposal, the family office members could easily reallocate assets and continue to earn huge bonuses.

Therefore, while it's important to listen to the voices of the senior executives under him, he can't let them manipulate him. Fan Wumian needs to weigh the pros and cons and make a decision based on his own interests.

However, Fan Wumian had long been thinking about selling his shares in Paulson's Hedge Fund. He and its founder, John Paulson, didn't get along and couldn't see eye to eye, making it difficult to maintain a long-term partnership. It was just that Goldman Sachs' sudden offer to acquire him had somewhat disrupted his previous plans.

Feeling deeply conflicted, Fan Wumian continued:
“I understand the importance of holding cash going forward. In fact, I was planning to cash out these shares in a few months anyway.”

"It's possible that the news of my previous assessment of Paulson's hedge fund reached Goldman Sachs. Wall Street really can't keep secrets; they found out that I was willing to sell."

“I also prefer to cash out, but the $25 billion figure is giving me a headache. After all, Paulson’s hedge fund performance is still increasing. If we wait until the end of the year to trade, we might be able to get around $15 billion in dividends in one go. The remaining 25% stake in Paulson’s hedge fund is definitely worth more than $10 billion. The difference could be as high as $10 billion.”

Barring unforeseen circumstances, John Paulson will likely dissolve several funds specifically targeting the subprime mortgage crisis and the U.S. housing market before the end of 2008, thereby earning performance-based bonuses.

At that time, a huge dividend will be deposited into Fan Wumian's account. The estimated figure of 15 billion US dollars will not seem too exaggerated.

Paulson & Co., which had already made a name for itself, was still able to stand out from many asset management companies on Wall Street, gain the trust and favor of its clients, and thus further monetize its reputation.

If the funds managed by then still reach around $300 billion, then Fan Wumian's 25% stake might be worth $15 billion or even $20 billion, depending on the specific size of the funds under management.

This means that if the transaction is conducted one year apart, the interest rate difference could be between $500 million and $1 billion, which is a bit painful for Fan Wumian.

The main reason is that even if he received $25 billion from Goldman Sachs during the same period, it would be difficult for him to outperform Paulson's hedge fund.

This is such a big deal, there are a lot of issues to consider, and missing a single decision could result in a loss of hundreds of millions of dollars, so we should be very careful.

After listening to Fan Wumian's words, Manager Qi counted on his fingers and said:
"The budget for the Myth+ video website is still unsettled, and the real estate projects in mainland China also require funds for development. Add to that bank interest, car factory expenses, and so on. I feel that Mr. Fan, you should consider the cash situation."

“Even if they sell their shares in Paulson’s hedge fund, they still hold a majority stake in WM Rogers’ hedge fund, which is clearly a form of risk hedging.”

"Perhaps the Federal Reserve will soon be drastically cutting interest rates to try and solve the subprime mortgage crisis. Selling it and holding a large amount of cash could make your situation safer."

Fan Wumian listened attentively and replied:

"I've thought about these things too. I really don't want to bear too much pressure anymore. I just want to enjoy a comfortable period of time."

"Could you please help me estimate the exact value of the shares I hold? Given Goldman Sachs' ruthless and unscrupulous style, they would never do a losing deal. I'm worried that I might be set up by capital."

"If the difference isn't too significant, then let's try to reach out and discuss it. We can't factor all future profits into it, after all, they also need to make money."

Paulson & Co. is a single company that submits a financial report to Fan Wumian every month, so calculating its valuation range is not difficult.

About two hours later, Fan Wumian met with Manager Qi, a valuer, and an analyst. They went to a restaurant for lunch to discuss how to negotiate with Goldman Sachs. Given John Paulson's current prestige and the expected performance-based commission, Fan Wumian's 25% stake was valued at between $25 billion and $3 billion. Goldman Sachs' calculations were likely similar, though they had set a floor price.

The fact that Goldman Sachs offered such a generous price for the acquisition also shows that Goldman Sachs is indeed very optimistic about Paulson & Co.

Since Fan Wumian has not yet had the opportunity to receive the huge performance bonus, Goldman Sachs only needs to pay a few billion US dollars in this acquisition process. If they are lucky, Paulson's hedge fund's profits will increase even more, or even less.

Manager Qi has a friend who is a senior partner at Goldman Sachs. After making a private phone call to him, he learned that Goldman Sachs is probably looking to strengthen its presence in the asset management market in order to seize market share from companies such as Bear Stearns, Merrill Lynch, Lehman Brothers, and Citigroup.

When it comes to attracting investors, no fund manager on Wall Street today is more appealing than John Paulson.

Zwyn Rogers is in the second tier. After making a fortune from the subprime mortgage crisis, he began to shift his focus to shorting individual stocks at Fan Wumian's behest, which also attracted the attention of many large clients.

Thinking that there's no time like the present, since they intend to cash out and recoup their funds, there's no need to wait any longer.

After lunch, Fan Wumian found a place to have a coffee, and then took Manager Qi and the valuation analyst to the Asia-Pacific headquarters of Goldman Sachs in the Yangtze River Center Building.

The process went more smoothly than expected.

Initially quoted at $28 billion, the offer was reduced to $25.5 billion. After Fan Wumian finished explaining how optimistic he was about the future of Paulson & Co., he cut the price down to $27 billion. After more than half an hour of negotiation, they finally reached an agreement on a price of $26.2 billion.

It's only an intention at the moment; no formal written contract has been signed. We need to wait for the head of the Asia-Pacific headquarters to report to several senior executives at Goldman Sachs before we can confirm whether the deal has actually been finalized.

Considering that the acquisition of Paulson hedge fund shares was originally the idea of ​​Goldman Sachs' senior management, there was unlikely to be any changes. As a result, when Fan Wumian left the Yangtze Center Building at around 3 p.m., he felt dizzy and unreal.

Business people know that having assets on paper is one thing, but actually having cash in hand is quite another.

In comparison, the impact of this acquisition deal was, in Fan Wumian's view, even greater than Jessica Alba's pregnancy.

He had no feelings for Jessica Alba; they got together purely for mutual thrills.

She unexpectedly became pregnant, and she even told him that she might keep the baby. To Fan Wumian, this was probably like inadvertently providing some seeds to others; how others nurtured them was actually not his concern.

Some high-quality men who sell their "seeds" to medical institutions in order to make money are even selected by hundreds or thousands of women, resulting in an exaggerated number of offspring, without any apparent impact on their lives.

Fan Wumian made it very clear to Jessica Alba from the beginning that he would not get married and did not want to take on too much responsibility; at most, he could only provide some material support.

If she really decides to give birth, he might visit her occasionally, and also have a chance to catch up with Jessica Alba. As for other guarantees, he wouldn't dare to make them casually. He clearly doesn't have the sense of responsibility to be so overwhelmed that he would willingly give up his current wonderful life for the sake of his offspring.

After digesting the shock of Jessica Alba's unexpected pregnancy these past few days, Fan Wumian is no longer so surprised. After all, with so many young girlfriends around him, it's impossible for him to be a devoted husband and father.

Even if you only have one child with your female partner on average in the future, that's more than enough to form a basketball team or even a football team, so it's hard to devote too much energy to raising them.

------------

The next morning, Fan Wumian received news that Goldman Sachs had agreed to the deal. Both sides were quick to finalize the transaction and immediately arranged for lawyers to begin drafting the contract, a two-way effort.

With a large sum of cash about to be in his hands, he began to think about where he should invest it to earn more returns before the financial crisis hit.

Businesses like real estate are only suitable for Xinhua Insurance Group. Fan Wumian felt that taking money from the pockets of the middle class was neither meaningful nor interesting.

After much deliberation, he chose ASML and Nvidia, two companies that make lithography machines, and planned to spend $8 million to $10 billion to buy a batch of shares in advance to hold long-term and "donate" to his family trust charitable foundation.

While making long-term plans for the future, it can also avoid some of the taxes incurred from transactions with Goldman Sachs. In particular, ASML, which just developed a prototype of extreme ultraviolet (EUV) lithography technology last year but has not yet officially started mass production, currently has a total market value that has barely exceeded $30 billion. Fan Wumian hopes to gain a certain degree of influence in this company.

The remaining funds will be used partly to incubate the Myth+ video website project, partly to supplement working capital for other companies, and the rest to further short-sell companies such as Bear Stearns, Lehman Brothers, and Citigroup.

And so, another few busy days passed.

The production crew of the variety show "Walking with Fan Wumian" was taken to the Maldives by Fan Wumian to visit the private island of Nanlishi, which he was planning to buy.

The island, developed by the LUX hotel brand, is in its final stages and is expected to open in a few months. With a circumference of 3090 meters, it is considered a giant resort in the area.

During the recording, they never mentioned that it was for their own enjoyment, only that it was an investment in the name of Valentino, and that a resort would be built in the future to receive tourists from all over the world.

Once we acquire this stunning private island, the news will inevitably spread sooner or later, so we might as well openly film it as a variety show.

Just like others who like to reward themselves with gifts and fancy meals after receiving their salaries, this island was Fan Wumian's little gift to himself.

After visiting the island, the film crew was given two days to relax under the guise of filming. After inspecting Nanli Island, Fan Wumian returned to Yanjing to continue recording content related to the Spring Festival Gala and the Olympics.

(End of this chapter)