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

I glanced at the QQ investment group and saw investors discussing today's stock market situation.

Lu Chenzhou posted a screenshot of his holdings details.

The moment the screenshot was sent, the group chat exploded.

"??????"

"3.2 million??? Brother Lu, when did you increase it to 3.2 million???"

"Eight zeros? Did I count correctly?"

"Wait a minute, 1.6 million in principal, 3.2 million in leverage, is Brother Lu using leverage again?"

The messages were scrolling by quickly, but people soon shifted their attention away from the numbers.

"Look at Huaxin Taifu, it rose 8 points today, and Brother Lu's short position only lost 0.29%. China National Building Material also rose 8 points, and Brother Lu's short position made 6.44%."

"What do you mean?"

"That means Lu Ge's short selling price was higher than today's post-rise price. He sold Huaxin Taifu at 17.15, and it closed at 17.20 today, so he only lost a little bit."

He sold China National Building Materials at 5.90, and today's closing price was 5.52, more than 30 cents lower than his selling price, so he actually made a profit.

"So, the market rose 3% today, and these two stocks rose 8%, but Brother Lu barely lost money and even made a profit of nearly ten million?"

"right."

"How did he do that?"

"I don't know, but he did it."

"That's incredibly accurate!"

"So he is Brother Lu, and you are you."

"But that's 3.2 million! And it's leveraged. What if it rebounds again tomorrow? What if Huaxin Pacific rises back to 18 yuan?"

"Then go ahead and redeem it."

"I'm not afraid, I'm just asking."

"I'm just afraid to ask."

"Alright, alright, stop arguing. Since Brother Lu dared to open a short position at this level, he must have calculated it carefully. When did you guys see him miscalculate?"

The group chat was silent for a few seconds.

"Too."

"That's true."

"From September 18th until now, I haven't missed a single day."

Not even once.

So stop worrying about it.

"But that's the Rong family's company, Huaxin Pacific. The Rong family has been the richest family for three generations. And Brother Lu, just a student, is shorting the Rong family's stock..."

He didn't finish speaking, but everyone understood what he meant.

The Rong family.

Those who study finance understand the weight of these two words.

There was a moment of silence in the group chat.

"Brother Lu once said something..."

"What did you say?"

Do you think Hong Kong is still the Hong Kong before 1997?

The group chat was silent for a few seconds.

Holy crap.

"That statement has some merit."

"So, what Brother Lu means is that times have changed?"

"Yes, times have changed. No matter how powerful the Rong family is, they still have to follow the rules."

China World Trade Center, CICC Research Department.

Lin Zhengmao was about to shut down his computer. Today, Hong Kong stocks rose by more than three points, but A-shares fell by nearly three points, which made him a little depressed.

My phone vibrated.

A message from Li Mingyang: "Chief Lin, check the group chat."

Lin Zhengmao opened the screenshot and zoomed in.

Huaxin Pacific, short selling, average transaction price HK$17.15, current market price HK$17.20, floating profit/loss -0.29%.

China National Building Material, short selling, average transaction price HK$5.90, current market price HK$5.52, floating profit/loss +6.44%.

Total short selling amount: HK$3.2 million.

Li Mingyang stood at the door, his voice low: "Chief Lin, this is the first time he has leveraged his short positions in CEFC China Energy and China National Building Material."

Lin Zhengmao remained silent.

The office was silent for five seconds.

"Have the trading room start building positions tomorrow. We lost money in A-shares, let's see if we can make some back from Hong Kong stocks."

He paused for a moment, then said, "We still need to control our positions. We can invest more in China National Building Materials and test the waters with 1000 million in Huaxin Taifu."

Goldman Sachs Asia Headquarters, Central, Hong Kong.

As soon as Wei Zhexuan stepped out of the office, Cheng Jiajun caught up with him.

"Boss, Lu Chenzhou has leveraged up his short positions in Huaxin Pacific and China National Building Material, and we also have a significant short position in China National Building Material."

Wei Zhexuan didn't stop walking: "How much is his position?"

"Double leverage, HK$3.2 million, the opening positions were almost at the highest point of today's rebound."

After thinking for a while, he said, "Keep an eye on it and report his latest portfolio changes to me every day."

Cheng Jiajun nodded: "Okay, by the way, Lu Chenzhou is currently planning to buy a shell company to circumvent regulations. Once his company is established, should we invest some money?"

Wei Zhexuan glanced at Cheng Jiajun: "We are Goldman Sachs, an investment bank, not a venture capital firm."

If Lu Chenzhou's company obtains SFC license number 9, it will be an asset management company.

If Goldman Sachs wants to make an investment, it needs to go through a complicated compliance process.

Anti-money laundering review, conflict of interest disclosure, regulatory filing, etc.

"For an investment of several hundred thousand dollars, is it really necessary to go through months of procedures?"

Cheng Jiajun didn't ask any more questions and watched his boss leave cautiously.

He breathed a sigh of relief when the elevator doors closed; the boss's gaze had been a little intimidating.

Although Goldman Sachs didn't invest, he had already made up his mind that he would definitely invest as soon as Lu Chenzhou's company started fundraising.

There's no way around it; in less than a month, it has skyrocketed from HK$150 million to HK$1.61 million. That's an incredibly attractive increase.

Even if the scale increases later and the profits are not as high as before, he can accept it.

The director's office in the Renmin University administration building.

When Wang Jianguo saw the screenshot, he was packing up to leave work.

He frowned slightly, then sat down again.

I gave you a week to handle this, and you just leveraged up to short it?

He picked up the phone and called Zhou Xingbang.

"Old Zhou, what's wrong with your student? Why is he using leverage to short sell? Has he gone mad?"

There was a moment of silence on the other end of the phone: "Mm."

Wang Jianguo paused for a few seconds, and seeing that Zhou Xingbang showed no intention of explaining, asked again, "What exactly is he thinking?"

"He went to Hong Kong and plans to buy a shell company to operate in compliance with regulations."

Wang Jianguo remained silent and did not respond.

After a long while, he said, "Tell him to be aware of the risks."

On Tsinghua University's BBS, the post about Lu Chenzhou reached 800,000 upvotes within an hour.

But this time, people aren't focused on how much money he made.

Instead, he leveraged his position to short sell.

"3.2 million? Double leverage? Didn't he not use leverage when he shorted the market before?"

"Yes, he didn't add leverage before, but he added it now, which means he feels that the certainty is higher now than before."

"But that's the Rong family's company! Leveraging to short the Rong family's stock? Is he out of his mind?"

"They asked, 'Do you think Hong Kong is still the Hong Kong it was before 1997?'"

"I won't comment on CEFC China Energy, but what the hell is China National Building Material? Morgan Stanley already says it's worth zero, so why would they need to short it?"

"What do you know? Morgan Stanley may talk, but how many people actually dare to invest and fail? He actually poured real money into it."

"And did you notice that Huaxin Pacific and China National Building Materials each contributed 1.6 million, each accounting for half?"

What does this mean?

"This shows that he used China National Building Materials as a base. The logic for shorting China National Building Materials is clear, the risk is small, and whether you make a lot or a little, you still make money. Huaxin Taifu is riskier, but the potential is also greater."

He's using China National Building Materials' safety net to gamble on a huge boom for CEFC China Energy.

"Holy crap, this guy really knows how to play the portfolio game."

"So he wasn't just gambling blindly; he had calculated it."

"This isn't the work of a gambler; this is the approach of an institution."