The Adored (30 page)

Wheelwright spent the majority of his time with his traders and their managers, Kish and Lenny. Monday mornings were the worst. Wheelwright would bring all traders into the conference room and begin quizzing them on investment strategies, which industries, which companies, what countries, “where are you putting our money and why,” he would begin, and then call someone out, “You, Jim Keough, you blew it last week on the trade for Johnson Controls. You stayed too late. Damn it, you made your profit target, why weren’t you out. You’re costing me money.” Jim Keough needn’t answer; the question was rhetorical, until he heard, “Well Keough, what do you have to say, where the fuck is your head?” Then Mr. Keough needed to answer.

This went on from 7 a.m. to about eight-thirty, getting all the traders in a killing mood. Then he would set them free on the public. It was never a pretty sight—in this short period of time, Brunswick Fund had become one of the most aggressive traders on the street and were developing a reputation for fantastic timing and ruthless execution. They usually followed the old FIFO accounting rule, first in and first out. You did excellent analysis of where to put your money, and you got in and out quickly, driving the price relentlessly until the general public caught on and the price went viral. And as the investment would gather steam, you were the first one out. You don’t violate that rule, as Mr. Keough did and try to stretch to get a larger bonus. “Next time you’ll find your ass out on the street, Mr. Keough, you got that?” “Yes, sir, Mr. Wheelwright!”

Yes, sir, Mr. Wheelwright. You bet your ass, Mr. Wheelwright thought.

It was also necessary to discuss the quality of investment development theory. Benjamin Graham, the economist and father of value investing, taught that you needed to make a decent return on any investment but that you also needed to protect the underlying asset from loss. So Wheelwright drilled them all on hedging strategies to protect the capital of the firm. But he also went into deep lead development with the managers of the firm; defined weekly sessions occurred with Edward, Kish and Lenny and of the unsaid but common use of insider leads, how they would be identified, couched and what the sources would be. For the sharks of Wall Street, all investments were made on insider information; it was just a matter of how cleverly you could cover it and keep any paper and technology trails at arm’s length. The information was everywhere; everyone had it. They would brag about it over tennis, slobber it out late over drinks, and be screwed out of it by some hustling trader with big tits. Wheelwright’s favorite saying was, “No one on the Street can keep a secret, no one. We just have to keep listening, eventually we’ll be told.”

For teaching examples of how not to trade on inside information, Wheelwright would use the weekly scandal as evidence. Galleon Group was a favorite late example.

“What we’re not going to do is pay for any inside information,” Wheelwright said. “If it falls in our laps, we don’t need to know the inside source. Then it’s not inside information. It’s like air; it’s just there, known. Information always has to be a one-off, which Galleon refined. But they were dumb in execution with paper, phone, and text trails everywhere leading back to who their suppliers were.”

Kish added, “Roomy Khan, what was Raj thinking. He knew the Feds had her from her helping him before. He had to know she was being watched.”

Leonard the liar joined in, “We can’t use anyone that careless. The approach I have used pretty well is a rolodex that includes about fifty sources. These are in our core industries, tech, solar, finance, and pharma. I classify the sources as a, b or c.

“A sources spread inside information to drive the price of the stock they already bought. As it keeps going up, they’re selling all the time. They’ll be invisible in an SEC action.

“B sources are those that share but want some information in return. This is easy, because you just give them all your A source stocks, driving those stocks higher. But the trade is a mutual exchange.

“C sources are ‘the’ insider, and what they want is something tangible in return. They want the cash. What Galleon did with the secret payments to Swiss accounts worked brilliantly. Some traders also want the cash done this way.”

Kish nodded.

“The C stuff is the most dangerous,” Edward said, “We don’t do C. Ever. Everything one off. Is that clear?” he said firmly, staring at Crane, red faced.

That was the way Edward operated. And now here stood Leonard Crane with his tip from Alice Kraft.

“I don’t like the sound of it,” Edward Wheelwright was telling Crane. “It’s inside information. You’re not sure who the company is and it’s happening in a few days. What am I missing, Crane?” he said in a rather irritated tone looking up from his desk.

“Wait. How can it be inside information when we don’t even know what company it is or even the industry?” Crane said defensively yet confidently.

“You said it yourself,” Wheelwright came back, “you can figure it out.”

“But that’s not the same as insider information. We do not have a name.”

“Maybe,” Wheelwright paused between the may and the be.

“We have to try. It’s a gift.”

“Your friend won’t see it that way.”

“I can end that right now.” Crane said.

“How?”

“I call her back and say we’re not interested. She said she had others to take it to. Done deal.”

“And then what?” Wheelwright wondered what Crane was planning next.

“I go after it with everything I have. I’ll get Fallon who was with me at Blackthorn on it.”

“No. If you’re going to start looking, you do it all by yourself,” Wheelwright said, no longer indifferent to the idea.

“And what you need to be doing is freeing up some capital so we can go after it, once I convince you its right,” Crane said, more peer to peer than subordinate to owner.

“Don’t worry about anything but your end. You need to do two things: one, get on the phone right now with your friend and close it out. Slam the door, but politely.

Second, come back in here by six with three possible names and why it could be any of the three, but why we need to buy just one.” Wheelwright said seeking comprehension.

“But it will only be one, “Crane said.

“Do your homework, damn it. If you want to buy this, it’s got to be air tight,” Wheelwright finished.

“Got it,” Crane said, rising, and as he exited, “See you at six.”

“Catch the door,” Wheelwright said.

As Crane closed the door, Edward Wheelwright sat thinking about what Crane was proposing. Then he picked up his phone and pressed one of the six programmed numbers.

“Trout Solar, Mr. Trout’s office,” the female assistant answered.

“Is Winston there, please,” Wheelwright asked.

In the meantime Leonard Crane made his call, “Alice?”

“Lenny?” Alice Kraft answered.

“Yes. Alice, I talked with my guys, and there is no interest here. Sorry.”

“What do you mean no interest?” Alice Kraft said irately.

“They don’t want to get involved.”

“Lenny, what are you talking about? It’s a no brainer,” she came back at him.

“Alice, they don’t want to pay the money; it would be too difficult.”

“Then you can pay me separately from your share,” she persisted.

“I couldn’t make it worth your while, Alice. You did say you had other sources,” Crane said curtly.

“I do but I trusted you. We talked about this, about doing one of these. It is a way to kill it.”

“Alice, if it were my money I would,” Crane said hoping this exchange would soon end.

“Lenny, you fuck. I know you. You’re going ahead with it, aren’t you?” she said, now steaming.

“Alice, I don’t even know the company.”

“So no one can tag you with insider info, right Lenny.” She waited, and there was no reply. “Well it’s Rocket Solar. So now you have insider info. Better not use it, you bastard,” and she was gone.

“Alice,” Crane said into the emptiness of the network. “Goddamnit,” and he slammed phone down on his desk. “Fuck.”

Crane went to work doing research on Blackthorn clients from an old database listing he lifted before he left the company. He found five solar firms in the eight to twelve dollar price range. He quickly eliminated two based on price. The other three he began pulling the numbers: number of shares, float, revenues, earnings per share, profit. He zeroed in on margins, particularly gross and operating. He dug down through Bloomberg, Gartner, and Reuters databases tracking ratings and expectations.

He went to the analyst reports on those following the solar stocks. Two of the companies were followed by four analysts each, the third, had three that reported on it. He pulled up the analyst reports on his desktop and quickly skimmed each.

Of the three companies, two made solar wafers and panels. The third, Rocket Solar, made the reactors that converted sand to silicon and furnaces that turned the silicon into solar ingots that were then sliced into wafers. One of the analysts writing about Rocket Solar stated what Crane felt were two very promising comments. The first mentioned that “in viewing the landscape of solar, the producers of solar wafers and panels have recently seen large increases in orders from Germany and Spain, thanks to the generous subsidies for their solar industry.” It was dated one week earlier. The second comment stated, “If the demand continues for solar modules, pricing will dramatically increase since all major Chinese manufacturers are reportedly operating at capacity.” That confirms it, Crane thought.

Crane also noted the share volume on Rocket Solar had risen 35 percent; for the other two solar companies, one had share volume remaining the same and the other increased slightly, about 3 percent.

At 5:45 p.m. Crane was standing in Wheelwright’s doorway.

“I’ve got it,” Crane said.

“Show me,” Wheelwright said, and he moved to the round conference table by the window overlooking Madison Ave. He gestured to Crane to have a seat.

Crane proceeded to show the eight solar companies that Blackthorn followed, reported on and invested in. He narrowed it to the three in the general price range of ten per share. He then went through comparisons of each company’s business and all key statistics. “But here’s the clincher on Rocket Solar,” Crane said enthusiastically. “In addition to heavy demand and full capacity, Rocket Solar is the only one of the three making the solar reactors and furnaces.” He then proceeded to share the analyst comments.

“So, you can see, Edward, it is Rocket Solar that will be getting these large contracts,” Crane concluded.

Wheelwright stared at Crane, “And how did you handle it with your friend at Blackthorn?”

“She’s fine.”

“How did you handle it,” Wheelwright said, frustrated in not getting a full answer. In fact, “frustrated” had become a common reaction for Wheelwright when dealing with Crane. Kish had also voiced similar concern about not being able to get straight answers when it came to trading operations. They had discussed this feeling the very night before, “You always get an almost answer, no details, not the full truth,” was how Kish Moira described it.

This type dealing left Wheelwright so uncomfortable that not only were they not going to invest in Rocket Solar, they were not going to invest any further in Leonard Crane.

“Lenny,” Wheelwright began, “we’re not going to do this, and as you and I have talked about, things are not going as I would like, so we’re going to part here. We’ll give you six months’ severance, I’m sorry things haven’t worked out for you and Brunswick.”

Crane was stunned. Not only did he not have an investor for this opportunity of a lifetime, he no longer had a job.

So fixed was Crane on getting into Rocket Solar, he barely acknowledged Wheelwright, and that he was unemployed once again. Crane was met at Wheelwright’s office door by a security guard who, after Crane removed his personal belongings, escorted him out of the offices.

What Wheelwright did not tell Crane were the results of three phone calls that afternoon. The first was a returned phone call from Winston Trout. “Yes, it was true,” he confirmed to Wheelwright, “all the solars are flat out right now. The European subsidies are creating huge demand. It might be gone when they change governments, but right now they want solar energy. You might try your old flame Val Samson; you know she’s at Blackthorn now.”

“I did not know,” Wheelwright came back.

“She calls me every week looking for an edge. Give her a buzz, she’ll do anything for Eddie Wheelwright,” Trout taunted, laughing.

“Funny guy. Thanks, Win, I will give her a buzz,” Wheelwright said, adding, “And since you are so flat out, how about you and your bride picking up the tab for dinner Saturday.”

“Great with me, name the place,” Trout said.

“Santa likes La Bretagne, over on the Post Road.”

“Eight o’clock?”

“Great, you’re a prince, Win,” and Wheelwright meant it. Winston Trout was the most decent human being he had ever met. Besides Valerie McGuire Samson.