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

Chapter 119 Meeting

In the trading floor of Phillip Securities in Hong Kong, retail investors began to waver.

The middle-aged man in the plaid shirt stared at the betting odds, gritted his teeth, and placed a bet.

10000 shares, 0.51, traded.

He stared at the transaction record, his heart pounding.

He didn't know what he was doing; everyone else was selling, and he was buying.

But when he saw that person buying, he felt that maybe he should buy some too.

The older stock market investor next to him glanced at him and asked, "You followed suit?"

"I followed along a little."

"Aren't you afraid of dying?"

"If Lu Chenzhou isn't afraid, why should I be?"

Even the young man who wore glasses made up his mind.

He placed an order for 5000 shares at 0.52. The order was filled.

His hands were shaking, but he didn't cancel the order.

The middle-aged man in the gray jacket neither sold nor bought.

He held onto his cost basis of 0.72, looked at the stock price of 0.52, and hesitated for a long time.

Then he unfolded the crumpled sales slip, then crumpled it up again.

He didn't sell. He saw that Lu Chenzhou had bought more than 5000 million shares, and he felt that he could wait a little longer.

In the afternoon, Lu Chenzhou switched to SJM Holdings, buying as much as foreign capital could acquire, and stopping once he reached 4.99%.

At 4 PM when the market closed, Lu Chenzhou checked his holdings details.

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：3.97港元持仓市值：44662.50万港元当日盈亏：+1662.50万港元（+3.87%）

Unrealized profit/loss: +26662.50 million HKD (+148.13%)

Holding stock: China Shenhua (HK1088)

持股数量：5602.50万股成交均价：10.20港元收盘价：14.74港元持仓市值：82580.85万港元当日盈亏：+1204.54万港元（+1.48%）

Unrealized profit/loss: +25451.35 million HKD (+44.51%)

Holding stock: Conch Cement (HK0914)

持股数量：2132.63万股成交均价：18.50港元收盘价：25.75港元持仓市值：54915.22万港元当日盈亏：—1040.32万港元（—1.86%）

Unrealized profit/loss: +15460.00 million HKD (+39.19%)

Holding stock: Galaxy Entertainment (HK0027)

持股数量：10500万股成交均价：0.543港元收盘价：0.60港元持仓市值：6300.00万港元当日盈亏：+598.50万港元（+10.50%）

Unrealized profit/loss: +598.50 million HKD (+10.50%)

Holding 4.99% of the total H-share capital.

Holding stock: SJM Holdings (HK0880)

持股数量：27500万股成交均价：1.275港元收盘价：1.30港元持仓市值：35750.00万港元当日盈亏：+687.50万港元（+1.96%）

Unrealized profit/loss: +687.50 million HKD (+1.96%)

Holding 4.99% of the total H-share capital.

合计持仓总市值：224208.57万港元帐上现金：约8.14亿港元总资产：305608.57万港元当日总盈亏：+3112.72万港元（+1.03%）

Total floating profit/loss: HK$68859.85. Xia Yaozong stood by the window, staring at the numbers on the screen.

Both stocks have a 4.99% return.

Lu Chenzhou bought them all by himself.

Throughout the day, no institutional investors followed suit; some retail investors did, but not many.

After the market closed, Li Mingyang was doing a post-market analysis in the trading room of China International Capital Corporation (CICC).

"Chief Lin, Galaxy Entertainment's total trading volume today was 1.8 million shares."

Lu Chenzhou bought 6500 million shares, accounting for 36%.

Foreign investors sold approximately 9000 million shares, while retail investor buying and selling were roughly balanced.

Lin Zhengmao didn't turn around: "What about the Chinese-funded institutions?"

Li Mingyang flipped through the data: "Guotai Junan Securities, Shenyin Wanguo Securities, China Merchants Securities... none of them followed, not a single one."

Not even a single penny?

"Not a single one; they're watching."

Lin Zhengmao was silent for a few seconds: "That's right, we're watching too."

Li Mingyang hesitated for a moment: "Chief Lin, shouldn't we...?"

""

"Should I what?" Lin Zhengmao turned around. "Should I buy it with him? Or should I write a report to recommend it?"

He did not wait for Li Mingyang's reply.

"We don't know if he's right or wrong; if we did, we wouldn't be analysts."

An analyst's job is not to predict the future, but to analyze the present.

The current fundamentals do not support a bullish outlook on Macau gaming license stocks, so we are not bullish.

If they don't recommend buying, I won't buy.

He paused for a moment, then said, "Just watch."

In the corridor, the setting sun shone through the windows, turning the entire corridor orange-red.

Lu Chenzhou walked in front, with Wen Zhiyu following behind him.

"Did any Chinese-funded institutions follow suit today?" she asked.

Lu Chenzhou thought for a moment: "No, not a single penny."

Why?

"Because they are unsure, unsure whether I am right or wrong, so they dare not move."

He paused, then added, "Institutional investors are not like retail investors. Retail investors can buy based on their feelings, but institutional investors can't."

Institutions must write reports, pass risk control procedures, and be responsible to their clients.

They can miss out, but they can't make mistakes.

Missing a deadline won't result in a pay cut, but making a mistake will cost you your job.

"So they chose to watch?"

"So they chose to watch."

Wen Zhiyu stared at him for two seconds: "What about retail investors?"

"Retail investors followed suit a little, not much, but there were some."

Wen Zhiyu did not ask any further questions.

The two walked out of the science park gate, and the night breeze rushed towards them.

Lu Chenzhou looked down at his hands.

My fingers were still trembling slightly, not from nervousness, but from exhaustion.

My muscles are trembling after typing all day.

He put his hands in his pockets, turned and walked into the night.

London.

Permira Foundation London Headquarters

Mark Thompson stood by his office window, looking at the hazy skyline over the Thames.

Since the outbreak of the financial crisis, the City of London has been completely transformed.

Lehman Brothers' London office closed down, and hundreds of people left carrying cardboard boxes.

Merrill Lynch was acquired by Bank of America, and AIG was bailed out by the government.

The entire financial system collapsed like dominoes, and nobody knew which one would fall next.

Permira was not spared either.

LPs, university endowment funds and pension funds are calling like crazy asking: When will our money come back?

It's not that they don't trust Permira, it's that they themselves are short of money.

The financial crisis swept the globe, and everyone was running on liquidity; no one could wait.

Thompson returned to his desk and opened the files on it.

In October 2007, he spearheaded Permira’s largest investment in Asia.

They acquired a 20% stake in Galaxy Entertainment for HK$65 billion, at a price of HK$8.42 per share.

This is the standard strategy of private equity funds: acquire shares at a high premium, obtain a seat on the board of directors, participate in company decision-making, and then wait five years to exit with a 25% annualized return.

He thought it was a sure-fire way to make money.

As a result, a year later, the stock price fell from 8.42 to 0.60, and 65 billion became less than 5 million.

He had just bought the shares when the financial crisis hit, resulting in such a significant loss, which left him feeling helpless.

A knock came at the door.

The assistant pushed open the door and came in, holding a record of today's transactions.

"Mr. Thompson, today's Hong Kong stock data is out. Galaxy Entertainment traded 1.8 million shares, and one account bought 6500 million shares, accounting for 36%."

Thompson took the document: "What account?"

"Chenzhou Capital is a Hong Kong-licensed asset management company. Its actual controller is Lu Chenzhou, a 20-year-old junior at Renmin University of China. He started operating in September and grew it from 10,000 RMB to its current scale."

Thompson's finger stopped on the document: 20 years old, from 1 to billions. He was silent for a few seconds.

"Contact them and ask if they are interested in taking over a portion of our shares."

"What's the price?"

"Above 0.60, negotiable."

He paused, then looked out the window: "Our fund will mature next year; we can't wait any longer."

Kuala Lumpur, Malaysia.

Sitting in his office at the Hong Leong Group headquarters, Guo Lingcan had the same transaction record in front of him.

He opened the documents on the table.

Hong Kong Stock Exchange disclosure records show that on August 15, 2008, he held 5.92% of Galaxy Entertainment.

On October 28, 2008, he reduced his holdings to 4.99%.

After 4.99%, no matter how much he sells, it won't be visible to outsiders.

He glanced at today's trading records; someone had bought 6500 million shares.

He put down the documents without saying a word.

Keep selling his stuff; there's no need to contact anyone.

Central, Hong Kong, Kwok-Co Building.

Galaxy Entertainment Chairman Lui Che-woo sat in his office, with today's transaction records in front of him.

Daughter Lü Huiyu stood beside her.

"Dad, someone bought 6500 million shares today, and Permira is contacting him, wanting to sell his shares."

Lui Che-woo picked up his teacup and took a sip.

"understood."

He neither said he would see it nor that he wouldn't sell it.

No need to say anything.

He didn't know that person, and that person didn't come looking for him.

Macau, headquarters of SJM Holdings.

Mr. He sat behind his large desk, in front of him was a stock price chart of SJM Holdings.

The daughter stood beside her.

"Dad, someone bought 2.75 million shares of SJM Holdings on the secondary market today, representing 4.99% of the company."

Boss He looked up. "Who?"

"Shenzhou Capital, the actual controller is Lu Chenzhou, 20 years old, a student from mainland China."

Boss He remained silent for a few seconds.

He recalled what happened after SJM Holdings went public.

Just six days after its listing, someone complained to the Hong Kong Stock Exchange and the Securities and Futures Commission that SJM Holdings’ public shareholding may be less than 25%.

Data from the Central Clearing and Settlement System shows that Langying Securities, Jiehao Securities, and Jinlifeng Securities collectively hold 7.26

100 million shares, accounting for 14.53%.

All three brokerage firms are related to the Ho family. The major shareholder of KJ Securities, KJ Holdings, had Angela Leong subscribe for 1200 million shares during the rights issue in 2005.

Chu Lee Yuet-wah, the owner of Kingston Securities, has a very good relationship with Angela Leong.

Li Zhiqiang also holds shares in Langying Securities, which is said to be his "top lieutenant".

The combined shareholding of the three securities firms, the major shareholder Sociedade de Macau (SJM) with 61%, and the sponsor Deutsche Bank with 6.13%, exceeds 75%.

Publicly held shares are likely less than 20%.

The Hong Kong Stock Exchange has not given a public response, but the rumors have been circulating in the market.

Currently, someone has bought 4.99% on the secondary market.

Mr. He leaned back in his chair, staring at the night view of Macau outside the window.

"What does he want to do?" he asked.

The daughter thought about it.

"It might just be an investment."

"possible?"

"He hasn't contacted us."

Boss He nodded and didn't ask any more questions.

Nine o'clock in the evening.

Room 302, Renmin University.

Lu Chenzhou had just returned from the playground when his phone rang. It was an unfamiliar number from London.

He answered the call.

"Mr. Lu? I am Chen Yongji from Permira Asia."

The voice on the other end of the phone had a British accent, spoke slowly, and carefully considered every word.

"Mr. Chen."

"Mr. Lu, we noticed that you purchased a large number of Galaxy Entertainment shares on the secondary market today. We hold approximately 20% of Galaxy Entertainment's equity and would like to know if you are interested in taking over?"

Lu Chenzhou leaned against the headboard and did not answer immediately.

"How many?"

"8.4 million shares."

"price?"

Chan Wing-kee paused for a moment. "HKD 0.80."

Zhang Yixing turned his head away from the computer, Xia Yaozong sat up from the bed, Yang Cheng put down the book in his hand, glanced at Lu Chenzhou, and none of the three of them said a word.

"0.80. That's 33% higher than today's closing price."

Our cost is 8.42.

That's your business.

There was a few seconds of silence on the other end of the phone.

"Mr. Lu, if you are interested, we can discuss this in person tomorrow afternoon in Central, Hong Kong."

Lu Chenzhou thought for a moment and said, "Okay."

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