Becoming the King of Bottom Fishing After Going All-In on A-Shares

Chapter 112 Earning 5.6 Million a Day

At 4:00 PM sharp, the closing bell rang.

The Hang Seng Index closed at 14330 points, a surge of 1628 points, or 12.82%, marking its highest point of the day.

The turnover reached HK$751 billion, a new high in nearly two weeks.

Wen Zhiyu wrote down the final numbers in his notebook: Hang Seng Index 14330, +12.82%.

Building materials 3.70, +85%.

Shenhua 13.40, +20.07%.

Conch 24.00, +32.89%.

After the market closed, Lu Chenzhou brought up his holdings interface.

Holding stock: China National Building Material (HK3323)

持股数量：11250万股成交均价：1.60港元收盘价：3.70港元持仓市值：41625.00万港元当日盈亏：+19125.00万港元（+85.00%）

Unrealized profit/loss: +23625.00 million HKD (+131.25%)

Holding 12.47% of the total H-share capital, the target of which has triggered a disclosure requirement: China Shenhua (HK1088).

持股数量：15802.50万股成交均价：10.20港元收盘价：13.40港元持仓市值：211753.50万港元当日盈亏：+11443.50万港元（+20.07%）

Unrealized profit/loss: +50567.00 million HKD (+31.37%)

Holding 4.65% of the total H-share capital, not triggering a disclosure requirement for the following stock: Conch Cement (HK0914)

Number of shares held: 1632.63 (original 1052.63 + newly purchased 580)

Average transaction price: HK$18.50 (weighted average)

Closing price: HK$24.00; Market value of holdings: HK$39183.12 million; Daily profit/loss: +HK$10958.12 million (+32.89%)

Unrealized profit/loss: +8983.12 million HKD (+29.73%)

Holding shares representing 3.77% of the total H-share capital, not triggering a disclosure requirement. Total market value of holdings: HKD 292561.62. Cash on hand: 0.

Total assets: HK$292561.62 Total profit/loss of the day: + HK$5.6 million Total floating profit/loss: + HK$9.26 million Zhang Yixing stared at the numbers on the screen, speechless for a long time.

Xia Yaozong leaned back in his chair and let out a long sigh: "In one day, the unrealized profit was 5.6 million. The building materials company has exceeded the threshold for disclosure, so an announcement needs to be made and the shares need to be locked up for six months."

Wen Zhiyu looked at Lu Chenzhou. "How do you plan to write the building materials' announcement?"

Lu Chenzhou thought for a moment: "Write the truth: purpose of the purchase, number of shares held, and subsequent plans."

"What are the follow-up plans?"

"We will continue to hold the shares, remain optimistic about the company's development, and do not rule out further increases in holdings at an appropriate time."

Xia Yaozong laughed: "You want to increase your holdings? It's already at 12.47%, another increase and it'll be heading towards 15%."

Lu Chenzhou glanced at him: "That's for later. Let's issue an announcement now and complete the necessary procedures."

While eating in the cafeteria, Xia Yaozong looked at Lu Chenzhou and asked, "What about tomorrow? What's the plan for tomorrow?"

"It depends."

Xia Yaozong smiled, leaned back in his chair, and stared at the ceiling.

"You always ask questions based on the situation. Can you give me a definite answer?"

Lu Chenzhou glanced at him.

"The market changes every day; accurate predictions are deceiving. Only observing the situation is true."

Zhang Yixing put down his phone and rubbed his eyes.

"I think I understand now. You're not trading stocks; you're waiting."

Wait until the short sellers are all dead, wait for the market to recover, and wait for value to return.

You don't have to do anything, just sit there, and the money will come to you.

Lu Chenzhou smiled and said, "With a larger amount of capital, the way we play the game will naturally change. Perhaps after a while, we will also make a bid for other companies."

Xia Yaozong sat up straight in his chair and stared at Lu Chenzhou.

"Raising stakes in other companies?"

Lu Chenzhou neither nodded nor shook his head.

He picked up his water glass and took another sip, as if he were talking about something very ordinary.

"Raising a shareholding is not necessarily a bad thing. If you are optimistic about a company and want to hold it for the long term, raising a shareholding is just a formality."

If you're just looking for short-term speculation, then making a shareholding announcement is a shackle. The key is which segment of the market you want to profit from.

"Which segment do you want to earn?" Xia Yaozong asked.

Lu Chenzhou thought for a moment.

"What I want to earn is the period from undervaluation to reasonable valuation. Once that period is over, the rest of the money will be earned by others."

He glanced at Wen Zhiyu, who had finished eating, stood up, and picked up his empty plate.

"We're leaving, we're going back."

Wen Zhiyu picked up her plate and followed.

Xia Yaozong sat in the chair, watching Lu Chenzhou's figure disappear through the door, then turned to look at Zhang Yixing.

Did you understand what he said?

Zhang Yixing leaned back in his chair, staring at the ceiling.

"I understand. He's reminding us that with more money, the rules of the game have changed."

Back when we had tens of millions, we could buy or sell whatever we wanted.

With a current capital of 30 billion, liquidity must be considered when buying or selling a single stock.

In a while, if the scale reaches 50 billion or 100 billion, then it won't be about stock speculation anymore; it will be about asset allocation.

Xia Yaozong was silent for a moment: "Yixing."

"Um."

"Which company do you think Shen Zhou will bid for?"

'

"I don't know, but he's right."

With larger sums of money involved, the rules of the game change.

He used to be a hunter, hunting in the forest with a gun.

Now he is an elephant, and when he walks by, the whole forest shakes.

He can no longer run like he used to.

He needs to choose a direction and take it slowly.

Xia Yaozong did not ask any further questions.

The two walked out of the science park gate, and the night wind rushed towards them, carrying the dry chill unique to late autumn.

Xia Yaozong shrank his neck and zipped his jacket all the way up.

"Is he still himself?"

Zhang Yixing stopped, turned around, and looked at Xia Yaozong.

"He is, but his opponents are different now."

Previously, his opponents were retail investors, speculative funds, and those who, like him, quickly entered and exited the market.

Now his opponents are foreign capital, investment banks, and institutions that manage tens or hundreds of billions of dollars.

He hasn't changed, he's just grown up.

Xia Yaozong stared at Zhang Yixing for a few seconds, then smiled.

"When did you start talking like him?"

Zhang Yixing turned around and continued walking forward.

"Spending time with him for a long time, you naturally become like him."

On Baidu Tieba, there was a huge argument about how much money Lu Chenzhou made.

「知舟资本的募资条款大家都看过了：管理费0.5%，年化收益100%以内部分收20%，超过100%的部分收50%。

The problem now is that Lu Chenzhou established his position on October 28th and closed the market on October 30th. In just three days, his total floating profit and loss was HK$9.26 million, with a return of 46.28%.

注意：46.28%没有超过100%，所以按照条款，他只能拿20%。9.26亿×20%=1.852亿港元。这是他的业绩提成。

Adding his initial investment of HK$1.42 million, plus management fees, his current net worth is approximately HK$3.27 million. In just three days, he went from HK$1.42 million to HK$3.27 million, netting a profit of HK$1.85 million.

"But that's not the most outrageous part. The most outrageous part is that if this market trend continues to rise and the returns exceed 100%, he takes 50% of the excess."

假设他的帐户最终赚了200%，第一个100%他拿20%等于2亿，第二个100%他拿50%等于5

He received a total of 7 million in commissions. Adding his initial investment of 1.42 million, his net worth exceeded 8 million.

"Can he earn 1.85 million in three days, or 8 million in three months? How far do you think he can go?"

"This 9.26 million is unrealized profit, not actual profit. The stock price is still rising. He hasn't sold yet, so it doesn't count as profit. It's just a number. Only when he closes his position can it be considered a real gain."

"Unrealized profits are still profits. Try having unrealized profits exceeding 9 million in your account and see what happens."

"The management fee of 0.5% is collected annually, not daily. His management fee for three days would be about 8.2 yuan, which is negligible. His actual income is the performance-based commission."

"Did you miss a problem? Lu Chenzhou's own principal is HK$1.42 million, accounting for 14.2% of the total funds raised."

The account currently has a total unrealized profit of 9.26 million, and as an investor, he can still receive 14.2% of the profit.

His role is that of both a fund manager and an investor; the two sums of money need to be accounted for separately.

"Let's recalculate. The first transaction is the fund manager's performance fee: the total unrealized profit of the account is 9.26 million, with a return of 46.28%, and he takes 20%, which is equivalent to 1.852 million Hong Kong dollars."

The second investment, as an investor, yielded the following returns: his principal of HK$1.42 million, representing 14.2% of the total funds raised, resulted in a floating profit of HK$9.26 million multiplied by 14.2%, which equals HK$1.315 million.

合计3.167亿港元。加上他1.42亿的本金，他现在的身家是4.587亿港元。三天，从1.42亿到4.59亿，净赚3.17亿。」

"I watched it three times. Three days, 3.17 million? I wouldn't earn that much in three hundred years of salary."

"This is still unrealized profit; he hasn't closed his position yet."

"Why close out your position? Building materials are only at 3.7. You've more than doubled since you bought in at 1.6. Morgan Stanley's target price is 0. When they shorted, they could short from over 9 to over 1. Now that they're going long, what do you think their target price will be?"

"He never mentioned a target price. He only said it depended on the situation." But from my observation, his style is to finish the fish and leave the rest for others.

"He profited from the rise in building materials prices from 1.6 to 3.7, but only he knows how much of the tail is left."

"You're all calculating how much he made, but has anyone calculated how much those foreign short sellers lost? Goldman Sachs, Morgan Stanley, Citigroup, and UBS, the combined amount of their liquidation was at least several billion Hong Kong dollars."

They bought at around 1.90, while Lu Chenzhou bought at 1.60. A difference of 0.3 HKD translates to 30 million for 100 million shares. And this is just one stock.

"Stop calculating, the more you calculate, the more useless you feel."

「知舟资本的募资条款是年化收益超过100%的部分收50%。三天涨了46.28%，年化是多少？三天46.28%，年化等于（1+0.4628）的（365/3）次方减1。

This number is too big; the calculator crashed. If this rate continues, it's multiplied by 10 every month, and by 10 to the power of 120 every year. Even if the universe were destroyed, he'd still be making money.

Therefore, it's impossible. This kind of explosive growth is unsustainable. Once the market returns to rationality, its annualized return will drop significantly. Only then will the clause of "taking 50% of the portion exceeding 100%" make sense.

"You're right, but that's for later. Right now, he's made a profit. 4.59 million in three days, that's a fact."

"His net worth is now HK$4.59 million, which is approximately RMB 4.05 million. He's 20 years old, started from scratch, and has 4 million. I'm 20..."

What were you doing when you were 18? Playing games at internet cafes.

"Stop talking, I'm going to work as a laborer."

"I work in private equity. To be honest, Lu Chenzhou designed this clause very cleverly."

The management fee of 0.5% is practically non-existent; he truly relies on performance to make a living.

He takes 50% of the portion exceeding 100%, meaning that if he wants to make big money, he must first help investors make big money.

This mechanism of aligning interests is more ethical than many private equity firms.

Many private equity firms charge a 2% management fee upfront, regardless of whether they make a profit or not.

He can't make money, and he can't get any money himself.

I dare say that fund managers like this make up no more than 10% of the entire market.

「他现在赚了46.28%，投资人分了80%的利润约7.4亿，他自己分了20%约1.85亿。

Including his own principal investment returns, he received a total of 3.17 million, while the investors received a total of 6.09 million. The investors' returns were twice his.

This allocation ratio is already very generous in the private equity industry. If the return exceeds 100%, his share will be even higher. Therefore, he has a strong incentive to earn more money.

"So the conclusion is that following Brother Lu will allow you to make money, and he won't treat you unfairly—it's a win-win situation."

"How much money do you think Wen Zhiyu invested? She's so close to Lu Chenzhou, could she have inside information?"

"She invested 3 yuan. She didn't have any inside information. She watched the market in room 608 every day, just like us. She only found out what to buy when Lu Chenzhou placed the order. Her only advantage was that she trusted him, she had trusted him from day one."

"How much does 3 become? You'd better give me a number."

"Around 100 million."

"More than 30 times, I didn't even make that much in ten years of saving in the bank."

"She wasn't after the money; she was after the person."

"Don't talk nonsense. They have a proper secretary relationship."

"Secretary? What secretary? The legal representative and secretary of Zhizhou Capital. Didn't you see the news? Lu Chenzhou said at the airport that she is my partner."

"Partners? She invested 3, and Lu Chenzhou invested 1.42 million. What kind of partnership is that?"

"Not a partner in terms of capital, but a different kind of partner, you know what I mean."

"I don't understand, what are you talking about?"

"If you don't understand, don't ask. Go back to your manual labor."

"Speaking of which, when do you think Lu Chenzhou will close his position?"

The cost of building materials has already increased to 3.7, while his cost was 1.6, more than doubling.

Judging by his style, he probably won't wait until the very peak. He mentioned the fish tail has thorns; is it the fish tail now?

"I don't know, but when he entered the venue on October 28, everyone thought he was crazy."

He currently has a paper profit of 9.26 million, and everyone thinks he's a god.

Will he leave when everyone thinks he's a god?

No. He'll leave before anyone even realizes what's happening, just like when he liquidated his entire stake in CITIC Securities on September 26th.

Everyone was chasing the rising stock that day, but he sold, and the next day CITIC Securities started to fall.

"So you mean, he's running away?"

"I don't know. But we wouldn't know beforehand when he ran away. He never said anything. He just said it depended on the situation."

"The phrase 'it depends' is now the most expensive phrase in the financial world."

"I'm not going to say anything more, I'm going to the rooftop for some fresh air."

"Don't think too much about it. You're not Lu Chenzhou. After you've had your fun, you still have to come back and do manual labor."

"How do you think Lu Chenzhou, with a net worth of 4.59 million, will spend it?"

"He wouldn't even order an extra serving of broccoli from the cafeteria. How does he spend his money, you ask?"

"A net worth of 4.59 million, eating broccoli in the cafeteria—what kind of superhuman spending habit is that?"

"That's why he can earn 4.59 million, while you can't."

"Stop talking, I'm crying."

"Guys, I've decided to start eating broccoli tomorrow. Maybe I'll become financially independent before I know it."

"Eating broccoli will only turn you green, not make you rich. Stop dreaming."