Man in the Middle (24 page)

“I read the papers,” Stuart said, “and it’s a ten-hankie story. What’s your point?”

“These guys went ahead and lowered prices,” Peter answered. “At first, ten percent. Sales went up, but not much. Then they lowered prices another ten percent. Guess what happened?”

“They lost enough money that half of them are going out of business by year-end?”

“That’s what I thought, until I tried to buy a PC this weekend. They hit a price point where elasticity of demand was huge.”

“Elasticity of demand? You read too many fucking books, dude.”

“I’m saying sales went through the roof. Inventories are down—way down.
Ergo
: no write-offs as previously announced. Soon, as early as next week, we’re going to get an about-face on those profit warnings.”

“No way, Peter. In fact, Howard has a huge short position in these stocks and he’s tight with someone at Guerren, Clark in San Francisco. Between you and me—and I mean only you and me—his contact’s head of Corporate Finance. The guy’s information is perfect ’cause Guerren, Clark underwrites half these companies’ stock deals. If what you say is true, Howie-Boy would know.”

“Maybe not,” Peter said. “None of these companies is contemplating selling stock to the public—not with their share price in the shit-can.”

“That’s true,” Stuart conceded.

“That means corporate finance business is at a standstill. Muller’s guy might not be up-to-date—when there’s no business pending, these guys are lazy assholes—you’re the one who told me that.”

“If I said so, it’s true.” Stuart leaned back and chomped on a stick of gum at a hundred miles an hour.

“Also, this is a rapid turnaround,” Peter continued. “That last price cut was recent. The stock-out’s recent. I called several CFOs. They confirmed inventories are historically low. And as they sell add-ons to all the computers moved in the last few weeks, the current Street estimates for next year will also go up. These shares are going to double—no, when this news hits the marketplace, they’ll triple in price.”

“You sure, Petey? If you’re right, Howard’s going to get his ass handed him. He’s not used to losing money, and not even heaven’s gonna save the guy at Guerren, Clark.”

“I’m certain,” Peter said, his body coursing with excitement.

“You gotta run this by Muller. He’s got a position, and you can’t go long the group while he’s short stock.”

“Do I call him?” Peter asked.

“He’s not going to be a happy camper, dude. You better go knock on his door. Say something nice about Robert E. Lee to cut the ice . . .” Stuart grinned.

“Why are you smiling?”

“No reason. Go.” The smirk grew.

A moment later, Muller grudgingly beckoned Peter into his office. When Peter explained what he’d told Stuart, Muller exploded, “Fundamental research is for losers. I have my facts first-hand. Sit down, shut up, and try not to shit in your pants.”

Muller phoned Stratton’s second floor analyst on the PC industry. The man confirmed: “The industry is in deep financial shit.”

Next, Muller phoned an unidentified contact. Thanks to Stuart, Peter understood this was Muller’s inside connection at Guerren, Clark. He too scoffed at Peter’s analysis. “These companies are hopeless losers,” he confirmed. “We’ve written them off as clients until this cycle turns, and that might take two years.”

“Now, Neil,” Muller said at the end of this second call, “get out.”

In the past, assuming he was wrong, Peter would have hung his head in shame. This time, feeling he was on solid ground, Muller’s dismissal merely pissed him off.

“What did Fat-Head say?” Stuart asked.

“Sadistic bastard threw me out.”

“You sure of your facts?”

Peter nodded his head while rage created a moist steam over his eyes. “That’s one ass I’d love to kick.” He pointed his nose at Muller’s office.

“Go to Morgan. She has an open-door policy. She’s a bright bulb, knows Muller’s a jerk. But beware, dude, if you’re wrong, you’re road kill.”

“If I’m right?”

“If you’re right, and it makes as much money as you say it will, you get
beaucoup
kudos from Morgan the Great. I myself would never take the chance, nor do I understand enough about balance sheets and income statements to create a credible analysis. As I told you, my greatest skill is trading money for information. That’s all any of us do—except you, of course. Go see Morgan, if you dare.”

“What does Muller do if I back-door him on this?”

“Whether you’re right or wrong, he hates you.”

“He already hates me. He hates everyone.”

“Wrong. He has a hard-on for everybody. You haven’t seen hate yet. He’ll make Sherman’s March through Georgia look like a cake-walk.”

“You telling me to back off?” Peter asked, more a challenge than question.

“No. That’s not what I’m saying. Morgan Stenman’s respect is worth any amount of Muller-fallout. You do what you gotta do, dude.”

“Then I do it.”

From the privacy of the conference room, Peter phoned Stenman. He explained that he wished to outline a trading opportunity.

“What might that be?” she asked.

He reviewed the highlights.

“And you spoke to Howard?” she asked.

“I did.”

“His reaction?”

“He phoned our in-house analyst, then a secret contact. They both said I was nuts.”

“Are you?” she asked.

“I’m expected to carry my weight. Make money. That’s what I’m trying to do. Is there another way to be successful at Stenman Partners?”

“No. Meet me in room 202 at five o’clock. I have been meaning to have a little chat with you anyway.”

Peter put the silent phone down. “Short and sweet,” he mumbled.

Before returning to work, Peter experienced a vague worry. Why, he wondered, had Stenman “been meaning to have a little chat . . . anyway?”

Stenman Partners’ second floor was divided into two sections. The first consisted of offices for analysts. From the elevator or stairs, one had to pass by a male receptionist who resembled a well-dressed paratrooper. Once past this humorless protector, a person had to input a six-digit pass-code to enter.

Inside the main floor, ficus trees and hyacinths lined and deodorized the hallways. Besides the hum that accompanies silence, Peter noted that the office trappings tended to get more luxurious and expensive as one progressed down the halls—as did the prestige and incomes of office occupants. At the end of this high-rent alleyway, the head of research had his corner suite. This individual’s income went beyond Peter’s ability to compute: twenty million dollars in a bad year, a hell of a lot more in a good one.

A right turn at the head of Research’s office yielded another set of doors. This led to the Promised Land: Morgan Stenman’s hallowed turf.

Stenman shared her half of the second floor with the executive dining rooms, of which room 202 was one. A second set of cameras, infrared detectors, and expressionless men greeted him.

Sign in, metal search, pat down.

“Hiding the Crown Jewels,” Peter quipped. The two men could have been deaf.

Once beyond the heavy metal door, the digs got really fancy—even more opulent, in fact, than Peter’s unschooled imaginings of New York’s white-shoe investment banking houses. Impressionist oils hung from the twelve-foot paneled walls. The hallway—illuminated by crystal chandeliers suspended every twenty feet—had deep carpet that Peter likened to a wall-to-wall yellow-brick-road. He carried with him an intertwining of anxiety, excitement, privilege, and fear—but mostly fear. For the first time since making the call two hours earlier, he began to doubt the wisdom of his action. He suddenly didn’t want to jeopardize his position.

Too late? Maybe not, he thought. He’d re-run his hair-brained idea by Stenman, then apologize for the insipid stupidity—admit he had made an arrogant miscalculation. Tell her how much he admired Howard Muller, how much he loved working as a trader. He practiced his verbal backtracking as he looked for room 202. Once he found the door, Peter had his revised strategy ready. He’d bow his head and make a joke about his ignorance—maybe repeat the comment he’d made at their first meeting about putting his foot in his mouth so often that he was good at getting it out.

With his left hand inside the pocket of his sport coat, Peter rubbed his index finger against his thumb, wishing he had his moonstone. He knocked.

The door opened automatically.

Peter glanced to the small video-cam mounted in the corner of the hall. He entered and saw his blurred image on a screen, one of many electronic devices built into a cabinet along a far wall. Beside Stenman was a second woman. At first Peter thought she was a child. She stood small, but had rounded hips and breasts, and showed no affect through blue eyes. Her forehead rode a bit too high, but led the eye to the complex white-weave of a widow’s peak—an imperfection that added to, rather than detracted from, the overall impression. Peter had a difficult time diverting his attention, as if looking at her was addictive. Had this been a poker game, Peter would have folded at the ante.

“This is Sarah Guzman, an associate,” Stenman said.

Peter stepped forward and took her hand. “It is . . .” her delicate fingers felt almost hot enough to burn . . . “it is nice to meet you,” Peter said, unable to manufacture anything other than a pat greeting. With his face stained red, he felt foolish as he tried to guess her age: anywhere from thirty to forty. He wished she had returned his light smile with one of her own.

“I am one of Morgan’s partners and an associate of hers for many years. She thinks one day you might be one of the great ones, if you are willing to make the necessary sacrifices. Are you willing, Mr. Neil?”

“Yes,” he said, wondering why she was attending this meeting. “That’s why I’m here.”

Stenman filled a chair, leaning her cane against the outside of the armrest. She nodded to Sarah. “We asked our PC analyst to review your findings,” Sarah said. “He did some checking and now agrees with your conclusions. I reprimanded him for his lazy habits.”

Peter sighed. He had to prove nothing now. So why did Muller have to be such an ass?

“I’m grateful you listened to me,” Peter said, his comments directed to Stenman.

Sarah Guzman glided to the wet bar and began mixing drinks. A glass of Chardonnay for herself. A Perrier for Stenman. “Peter,” she said. “Double Jack, a splash, two ice-cubes?”

“Yes. Jack. Just that way,” he replied, wondering how she knew. He accepted the drink, sipped, and watched Sarah deliver Stenman’s water. He sipped again.

“As I said,” he began, “I’m pleased you listened to my analysis. Better lucky than smart, I guess.”

“You are too modest, Peter, and it is we who are grateful,” Sarah said. “Never before has someone so new to our organization contributed so much.”

Morgan Stenman only nodded. In all the time Peter had known her, Stenman never said much. He marveled at how she seemed a master at having others speak on her behalf, as if telepathically directing the show. When Stenman blinked twice in rapid succession, Sarah continued: “This will be a multiple hundred million-dollar swing to the partnership. Tomorrow, Howard Muller will commence covering his short position. Once he has done so, you are free to initiate a long position. Morgan has authorized two hundred million additional to your trading book.”

Peter gulped more bourbon. “But I’ve never taken a position over thirty million,” he said.

Stenman spoke: “Do you know what the average bonus will be this year, for those in your trading room?”

Peter shook his head.

“It will average over a million.” With that statement, Stenman went back to sipping water.

“I had no . . .” Peter’s head shook, and his Adam’s apple danced in his throat.

“Bonuses always have a component of seniority,” Sarah said, picking up where Stenman left off. “Loyalty pays dividends. But with this PC transaction of yours, and a few other projects Morgan intends to put you on, you will be up there.”

While Peter stood in stunned silence, Sarah Guzman reached for an envelope lying on the dining table. She opened it. “Having said that,” she began as if given a self-delivered cue, “this is a convenient time to discuss another matter.”

Peter tried to force a pleasant face. Looking at her made his pulse race so fast he felt winded.

“You are loyal, correct?” she asked.

“Yes,” Peter said without hesitation.

Sarah’s short brown skirt hiked as she moved towards him with slow, fine steps. She had white legs. Light glanced off one knee and highlighted a dark freckle that caught Peter’s attention for a split second. When she stood beside him, she seemed a foot taller than her four-foot-eleven inch-es—she had a way of cocking and swaying her head so that she drew a man’s attention down. In her hand she held an enlarged photo, but the image was turned away from Peter. Drops of sweat confirmed to him that something about this situation had activated his autonomous nervous system.

Stenman made her way to the dining table. She picked up a miniature toasted cracker—Beluga caviar was painted across its face in a heavy mound. Sarah waited for her to turn around before continuing. “We have had so much unwarranted attention over the years. The President of the United States calls Morgan Stenman the ‘epitome of the American Dream.’ He phones to ask for advice on economic and foreign affairs, even while the SEC harasses her.”