anwhile, while Ha Si-heon was away on an external schedule.
The office of Pareto Innovation Capital was filled with intense heat.
The cause was the news streaming from a large screen on the wall.
[The U.S. governnt has designated 35 hospitals nationwide for Ebola treatnt, and they will be operated under the direction of the CDC's REP team……………]
“No way!"
“Haha, what did I tell you!”
Cheers and groans mingled throughout the office, and soon, hundred-dollar bills fluttered around like dancing leaves.
The results of the office betting pool on CEO Ha Si-heon’s Ebola investnt had just been announced.
“This can't be happening……………!"
Most of those raising their voices in frustration were talents recruited from outside.
In contrast, those counting money with bright smiles were all forr employees of Goldman.
“It might not make sense, but it's reality, right?"
They had already witnessed several instances where Ha Si-heon’s absurd predictions ca true.
‘If Ha Si-heon is involved,’ even things that defy common sense could very well beco reality.
They knew this from experience, which is why they were able to rake in a decent profit from this bet.
“How the hell did he get this right?”
“Try clearing your mind and just accepting what’s right in front of you."
“But! Just because there’s an Ebola outbreak in Africa, the demand for hazmat suits rises in the U.S.? That’s not logical at all!”
It was a prediction that seed completely preposterous.
Yet Ha Si-heon made that very prediction at a summit where top financial figures were gathered.
His statent quickly spread across Wall Street through summit attendees, and for a while, employees of Pareto were mocked because of it.
Every ti soone asked, ‘What nonsense is your boss spouting now?’, so began to regret joining the company, wondering, ‘Did I co here too hastily?’
On Wall Street, reputation is everything.
Being part of a fund that beca a laughingstock was, in itself, a blow to one's pride.
Worse yet, it also led to real, tangible problems.
Ha Si-heon had actually carried out massive investnts in hazmat manufacturers, protective equipnt companies, and research facility suppliers.
‘If this fails………’
Forget being laughed at—financial loss was the real problem.
And when a fund’s performance drops, bonuses naturally shrink.
Since bonuses at hedge funds often surpass base salaries, this was a serious matter.
So they had been watching the situation nervously……
“And this actually happened?"
Amazingly, Ha Si-heon’s outrageous scenario had beco reality.
Thanks to that, Pareto Innovation not only maintained its reputation but also secured its bonuses.
So lost $300 in the bet and felt regretful.
Others were simply baffled by this bizarre turn of events…………
At the sa ti, the employees in the office felt a strange kind of thrill.
The feeling was like………
“A rollercoaster?”
“Exactly! Once you get hooked on this, it's addictive!"
The employees from Goldman knew this unique pleasure well, and each began to share old stories involving Ha Si-heon.
Especially Dobby—also known as Renton—was particularly eager to talk.
“This is nothing. Back during the Epicura incident………”
Normally, new funds tend to have so awkwardness among the newly gathered talent, but Pareto Innovation was different.
Thanks to their boss's extraordinary actions, team unity naturally grew stronger.
This was an extrely encouraging sign.
Because in the finance world, the most important asset is people.
Especially in hedge funds, where the employees’ abilities directly translate to profits, competition for top talent is fierce.
So in this industry notorious for high turnover, there needs to be a strong motivation to keep great employees around.
Whether it's excellent pay, a strong reputation, or a unique sense of enjoynt only that place can offer.
Among those, at the very least, Pareto Innovation Capital had definitely secured the fun factor.
There was never a dull mont here.
Because the CEO was a madman whose next move no one could predict.
anwhile, amidst the festive atmosphere, one person was quietly observing everyone.
It was Gonzalez.
Among the excited and eager faces, Gonzalez was searching for sothing different.
Having already lost interest in the Ebola case, he was now searching for signs of the next incident to co.
As he scanned the office, his eyes landed on a face that, unlike the others, showed concern.
‘There it is.’
Ha Si-heon’s execution trader, Gray.
Unlike the others in the office, Gray wore a look of confusion and distrust.
A sign of sothing.
Gonzalez waited for his chance, and when he saw Gray leave for lunch, he followed him.
And at a quiet deli, he asked a question.
“Did Sean give you so kind of weird order?"
An order that had left Gray this confused.
Surely, it held important clues about the next move.
“So where is it this ti?”
“Do I really have to tell you?”
Gray answered with a troubled look.
Sharing work-related information among colleagues was common, but he was being extrely cautious.
Which ant he was holding onto information too valuable to just let slip.
Bingo.
Gonzalez smiled and pulled a checkbook from his pocket.
He tore out a $10,000 check and handed it to Gray, saying,
“Is this enough? To give you a reason to tell ."
***
When I returned to the office, an unexpected person was waiting for .
It was Gonzalez.
“What brings you here?”
“Allergan.”
A na suddenly brought up with no context—Allergan.
It was my next target and the battlefield where I would face off against Ackman.
“If you haven’t assigned personnel yet, I’d like to volunteer……”
“That’s not going to happen.”
I cut him off firmly.
Gonzalez ca from the natural resources departnt and had zero expertise in healthcare.
He had strengths in networking, but he wasn’t suited for hands-on work.
There was no way I would choose him as a key player in this critical battle.
But then, Gonzalez said sothing unexpected.
“Banorte, Fonadin.”
“?”
“xico’s pension fund and sovereign wealth fund. They each hold 0.7% and 0.3% of Allergan shares.”
A total of 1%.
If it ca down to a shareholder vote, that was a number that couldn’t be ignored.
Gonzalez’s proposal was clear.
‘If you bring in, I’ll secure 1% of friendly shares for you……?’
He had grasped that I was already anticipating the battle to co at the shareholder eting, and he played his negotiation card accordingly.
I couldn’t help but smile.
“If you had that kind of influence, why didn’t you say so during the capital raise?”
Back when we were desperate for institutional funds, he had kept his mouth shut, and now he was making offers?
It seed pretty shaless.
However, Gonzalez responded with a confident expression.
“At the ti, I didn’t particularly want anything.”
“And now you do?”
Gonzalez only smiled without giving an answer.
Still, I had a rough idea of what he wanted.
‘He probably wants to get a firsthand look at the situation from the inside.’
Normally, it would have been an offer I had no reason to accept……
But if he was willing to pay 1% of friendly shares as the price of admission, that changed things.
We didn’t know what would happen next, and I couldn’t afford to pass on 1% of shares.
I made a quick decision.
“There’s already a lead analyst assigned. But if you’re okay joining as additional personnel, I’ll allow it.”
It would mostly be a peripheral role rather than hands-on work, but Gonzalez smiled as if he was perfectly satisfied.
***
LBO (leveraged buyout) refers to rgers and acquisitions where a significant portion of the funding cos from debt or loans.
In other words, you buy a company—but with a huge amount of borrowed money.
However—
“Allergan…… isn’t it too large in scale for an LBO?”
Even a child knows that excessive debt is dangerous.
And it’s the sa when acquiring a company.
Too much debt ans higher risk, so LBOs usually target companies valued around $5 billion.
Even a $10 billion deal is considered a ‘ga deal’……
But Allergan had a market capitalization of $37 billion.
Normally, that would make it an unlikely candidate for an LBO.
However, I spoke firmly.
“It’s not impossible. Allergan is too healthy.”
Allergan had ample cash, almost no debt, and held the golden egg—Botox.
So, if we went all-in on debt and acquired the company first, then used Allergan’s na to take out loans, we could recover a good portion of the initial capital.
“It might be possible… but isn’t that too extre? How many companies would actually adopt such a plan……?”
Laurent trailed off.
As a PM recruited from a healthcare fund, he quickly grasped the situation.
Yes, there was one company that would carry out such a plan.
“…You’re not thinking of Valeant, are you?”
Valeant.
It was a Canadian-based pharmaceutical company that had seen explosive growth over the past few years.
How explosive?
Its stock price went from $10 in 2008 to $140 by 2014.
That dramatic rise was all thanks to CEO Stinson’s unique strategy.
Most pharmaceutical companies grow by developing new drugs through R&D and expanding their product lines.
But Stinson completely bypassed that process and chose to grow the company solely through M&As.
As a result, in just six years after taking office, Stinson executed more than 50 acquisitions.
That alone was bold enough……
But what he did after the acquisitions caused even more controversy.
He drastically slashed R&D spending to around 3% in the na of “cost-cutting,” and massively increased the prices of newly acquired drugs.
The price hikes were extre.
Take the drug for the rare Wilson’s disease, for example—monthly costs jumped from $1,800 to over $20,000, a 1,000% increase.
Patients and dical professionals, suddenly burdened overnight, voiced strong complaints……
But company revenue certainly went up.
Stock prices soared, and Valeant, having maximized its profits, devoured more companies like a predator.
And that insane predator’s next target was none other than Allergan.
The battlefield where Ackman and I would face off.
‘They’ve probably already made a move.’
If my mory served right, Valeant had already proposed a rger to Allergan earlier this year.
But Allergan had firmly rejected it.
Allergan placed great importance on R&D, while Valeant was a predator that grew only through M&As.
The two companies couldn’t be more opposite.
Allergan probably thought it was over and had let its guard down……
But Valeant hadn’t given up yet.
They were secretly preparing a hostile takeover, and even planned to collaborate with Ackman to send in a Trojan horse.
“That’s right. My focus for now is on Valeant’s LBO attempt.”
A look of confusion briefly crossed Laurent’s face at my declaration.
Valeant had never publicly shown clear intentions of an LBO, so preparing for such a move with certainty probably felt strange.
But he soon nodded in agreent.
“Understood.”
In any case, this was my fund, and the final decision rested with .
It seed he judged that going along was wiser than opposing it.
I looked at Laurent and asked a question.
“Assuming we’re going up against Valeant, what would you say is the most urgent priority?”
This was a kind of test.
As the PM, Laurent was the second most important figure in this operation after , and since this was our first ti working together, I needed to understand his mindset.
From how he reacted to the briefing so far, his understanding of the industry seed solid.
The real question was his strategic thinking……
“The opponent will launch a surprise attack. To stop it, we need to figure out when they’ll move.”
‘Predict the timing of the ambush and block it, huh……’
It was a textbook answer, but I shook my head.
That wasn’t my way.
If he was going to work at this fund, he needed to understand my thod.
“That’s just a defensive tactic to neutralize their strike. That’s not how real battles are fought.”
“Then what kind of approach…?”
I gave the puzzled Laurent a wise smile.
Then I firmly delivered an important ssage.
“There’s an old saying in the East. Every battle is won with the first strike.”
Yes, in every fight, the first blow wins.
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