I'm in the county town, and you say I'm a big shot?

Chapter 613 This isn't hedging against risk, it's gambling.

Fang Qingye called Wei Xinghua in Shanghai and assigned her the same task, but instead told her: "Keep an eye on a US-listed company called Rock Agriculture and prepare to short their stock!"

“Okay. I’ll have the model team create a dedicated model for this stock analysis right away,” Wei Xinghua replied immediately.

At the same time, Fang Qingye called Bai Ou and asked her to prepare to allocate funds.

"We'll wait until tomorrow to conduct an on-site inspection and confirm our analysis." Fang Qingye picked up her teacup and took a sip.

At eight o'clock the next morning, Smith arrived at Fang Qingye's villa in his Buick right on time.

Fang Qingye finished his meal, said goodbye to Xia He and her daughter, and got into Xia He's old Ford. The two cars drove one after the other towards the northeast.

After leaving downtown New York City and crossing the George Washington Bridge, you enter Interstate 84 and head northwest. The autumn scenery along the highway is beautiful, with large foliage displaying vibrant colors. The vehicle passes through Hillburn and Newburgh before finally arriving at Poughkeepsie.

Poughkeepsie is a city on the Hudson River in New York State and the county seat of Dutchess County. It is a small city, with an online population of less than 100,000, smaller than a county town in China.

The two drove into the city and quickly found the location of Panshi Agricultural Company. Fang Qingye parked the car on the side of the road not far from the factory gate, and Smith got out of the car and walked up to him.

The factory gate was rather deserted, which Fang Qingye found strange. Logically speaking, this was the season for purchasing large quantities of corn, so why were there so few delivery trucks?
After watching for a few minutes, Fang Qingye felt a little hungry, so she pointed to a fast food restaurant about fifty meters away and called to her companion, "Felix, there's a McDonald's there, let's go get something to eat."

"OK!"

The two entered the store, and Fang Qingye deliberately found a seat by the window, through which they could see the entrance of Panshi Agricultural Company not far away.

They each ordered a set meal. While eating, Fang Qingye took out paper and pen from her pocket and started writing something in her notebook while watching the occasional trucks going in.

"Mr. Fang, what are you doing?" Smith, sitting opposite him, asked curiously.

"I'm recording the number of trucks hauling corn to see how much can be used in an hour, and to make a rough estimate of their purchase volume," Fang Qingye said in a low voice.

Smith was taken aback.

"Mr. Fang, what are you trying to do?"

"Don't ask. Go take a walk around the neighborhood and ask the factory workers if they've been stockpiling corn lately," Fang Qingye said.

Why is it me again?!

But seeing Fang Qingye holding a hamburger in one hand and a pen in the other, taking notes diligently, Smith swallowed his words.

Okay, I'll help you all the way.

After finishing his meal, Smith hurriedly left the fast food restaurant, while Fang Qingye continued to sit by the window, slowly sipping her cola as she watched.

The entrance is still deserted.

Strange, why is the order quantity so small?

Almost an hour later, Fang Qingye stopped recording. At that moment, Smith hurriedly walked in, looking excited.

"Mr. Fang, I've found out that the company's current corn inventory is lower than the average for the same period in previous years, at only about 400 million bushels."

"Why is it so low?" Fang Qingye asked in surprise.

One bushel is approximately 25 kilograms, which means the current inventory is 100,000 tons of corn.

According to last year's annual report, this company consumed 1000 million bushels of corn throughout the year. But the key point is, it's corn harvest season now. If you don't stockpile corn now, when will you?
Does Felix predict that corn prices will continue to fall?
"Is this news reliable?" Fang Qingye asked, still uneasy.

“Reliable,” Felix chuckled. “I was pretending to be a farmer in Pennsylvania with a large stock of corn, looking for buyers in their sales department. “Even though I was willing to sell it to them at slightly below market price, they still didn’t want it.”

“They said the inventory was enough, but then I secretly gave a staff member $1000 for a purchase. The staff member told me that their company now had 400 million bushels in stock and had already completed the plan.”

"Ha, you're a lawyer bribing company employees? You're breaking the law." Fang Qingye joked.

“No, no,” Felix replied seriously. “I’m not here as your lawyer, but as your friend to help you. Can I get the $1000 reimbursed?”

"Sure, put it in the account."

"OK!"

After finishing their meal, Fang Qingye and Fang Qingye drove around the factory for a long time. Still feeling uneasy, they drove to a nearby farm to inquire about the corn purchase situation.

Just as Felix had predicted, Pan-Rock Agriculture's corn purchases this year were significantly lower than the same period last year.

That's it.

The two drove back home.

On the way back, Fang Qingye pondered a question while driving.

Is the owner of this company, that man named Felix, really mentally unstable?

He had already discovered from the financial statements that the other party had invested a large amount of funds in the securities market, but the inventory had not kept up.

Logically, to hedge, you should stockpile the same amount of physical goods as you have short positions; only then can you achieve hedging.

The result is that the two are completely mismatched?
Why did he do this?
Are they trying to make a killing by shorting?
Just as Fang Qingye was considering this question, less than 500 meters away in the chairman's office of the Panshi Agriculture office building, Felix sat in a large executive chair, silently pondering something.

A week ago, Felix posted a $10 bail to be released on bail and return to his company.

Just then, the office door was knocked open, and his assistant walked in.

"The purchasing department has sent over the documents; all acquisitions for this year are now complete."

Felix nodded.

"Chairman, isn't 400 million bushels a bit too little? Our inventory is only 65% ​​of what it was at the same time last year," the assistant couldn't help but remind him.

“Didn’t you look at the finance department’s reports?” Felix glanced at him. “We’re short on cash, and we can’t afford to buy more corn.”

Why isn't that enough?
The assistant understood: it was because a large amount of funds had already been invested in the futures market to sell short!

Just last month, at a company executive meeting, Felix made a bold decision: he instructed the investment department to sell an extremely large number of short positions in the main corn futures contract ZCM1503 on the CME Chicago Mercantile Exchange!

The reason is that this year's corn harvest is abundant, and the future economic slowdown will lead to a decrease in demand, so corn prices are expected to continue to fall!
This isn't hedging; it's gambling.

If corn futures prices rise instead of falling, futures contracts may be liquidated, and spot inventory may be insufficient, putting companies at risk of bankruptcy!
Despite opposition from his subordinates, Felix persisted, as he was the company's largest shareholder.

Seeing that Felix remained unmoved, the assistant sighed inwardly and had no choice but to leave.

(End of this chapter)