In the days after Strategic Meeting was opened, people on both sides of Era Vanguard and Henglong were busy implementing the new framework.
Chen Xi began to interview the three researcher candidates that she had been eyeing for a long time.
Lin Shicheng submitted the final draft of Schedule 13D Amendment Filing to EDGAR System,
Su Wantang held a whole afternoon meeting with people from the Civil Affairs Bureau in Shan City's Philanthropic Foundation office.
Shen Zhiyi worked overtime at the Henglong Legal Department to review the last round of compliance review reports before Yunnan Agriculture Group IPO.
And Zhao Chen is sitting alone in front of Suite's Floor-to-Ceiling Window,
I went through every transaction record in the past few months from beginning to end, as if to give a quiet end to this ups and downs chapter.
Wednesday, August 28th.
White-Haired Old Man did not go to Explorers Club.
He was sitting in his private office with two things spread out in front of him:
On the left is the final Risk Exposure liquidation report sent by PB Departments this morning.
He no longer needs to look at the numbers marked in red boxes;
On the right is the Black Notebook handwritten by him. From November last year to July this year, every Short Selling decision was recorded.
The barge on the Hudson River outside the window is pulling out a long white wake.
But he didn't stand in front of the window with a Whisky cup and look at the water as usual--
The cup was placed on the coffee table, with two fingers of amber liquid poured into it, and the ice cubes had long since melted.
Today is the day his fund officially sends its annual letter to limited partners.
He put off this letter for a long time, waiting for the final settlement figures.
Waiting for the SEC's closing letter, waiting for Bullock's words on CNBC, waiting for Tesla's stock price to return from 178 to 300.
He needs to know the full cost of this battle before he can give an explanation to the investors who have followed him for more than ten years.
He turned to the last page of the liquidation report, picked up the pen, and began to write the beginning of the letter.
He wrote slowly, and every word seemed to be extracted from the transaction records of the past few months.
"Dear Partner:
The purpose of this letter is to report the Fund's investment performance and review of major decisions in 2019.
As you are aware, the Fund has participated in the Short Sellers strategy targeting Tesla over the past eight months,
This strategy ultimately resulted in significant losses that exceeded the risk control limit.
The following is my complete review. The starting point of this Short Selling is not Tesla, but Nvidia.
In November 2018, an offshore fund named Era Vanguard began to build large-scale positions after Nvidia Financial Report plummeted.
As of January this year, it held more than 10% of the shares.
We judge that the leverage structure of this fund has a fatal flaw--
They pledged the shares of Tesla for financing and bought Nvidia with leverage, forming a fragile structure of cross-positions.
Based on this judgment, we teamed up with multiple institutions to focus on Short Selling Tesla, trying to trigger liquidation by breaking through the pledge safety pad.
The strategy itself was correct, but it underestimated a key variable."
When he wrote the word "underestimation", his pen stopped for a few seconds.
"We underestimated the financial depth and compliance readiness of our opponents.
Zhao Chen, the actual controller of Era Vanguard, from the end of 2016 to the end of 2017,
Through the Bitcoin transaction, an initial capital of approximately 7.94 billion US Dollar was accumulated.
All trading records for this profit have been fully disclosed to the SEC.
Our previous doubts about the compliance of its funding sources were officially rejected in the SEC's closing letter.
What's even more fatal is that we underestimate our opponent's willpower.
When the stock price dropped from 300 to 178, Era Vanguard not only did not reduce its holdings by one share, but instead took over the shares at the bottom and added pledges.
Their positions showed no sign of Panic Selling from beginning to end."
He turned a page and continued writing.
"The final losses of this round of Short Selling have been detailed in the accompanying financial report.
I need to be honest with you:
The root cause of this loss is not market fluctuations or changes in the regulatory environment, but my personal judgment errors.
I mistakenly believed that my opponent's ammunition was about to run out, and I did not take profits in time when the stock price hit around 178 US Dollar.
I wrongly believed that the SEC investigation would further crack down on the opponent's Capital Chain, and did not foresee that Era Vanguard could complete the regulatory response in such a complete manner.
I made the mistake of holding on to Short Selling until the stock price rebounded to a high level before closing the position, and missed two opportunities to leave the market with profits.
I personally take full responsibility for this."
He put down his pen and read the letter from cover to cover.
The barge on the Hudson River outside the window has sailed away, and its wake disappeared at the end of the Manhattan skyline.
He was silent for a while, then picked up the pen and added a paragraph at the end of the letter--
This paragraph is not for investors, but for himself.
"Since its establishment, this fund has always taken Fundamentals analysis and opponent risk control vulnerabilities as its core strategy.
This round of Short Selling has no major flaws in the logic chain, but it made a mistake at the execution level that cannot be quantified and hedged - arrogance.
We don't believe our opponents can do what we think we can do:
Stay calm at the most panicked prices, adhere to compliance in the most complex regulatory environment, and stick to your faith during the longest holding period.
Looking back afterwards, Era Vanguard has done better than us in each of the above dimensions.
This is not a trade that was defeated by the market, this is a trade that was defeated by the opponent.
In other words, it was a deal that was defeated by myself."
He signed his name and date at the end of the letter, then closed the folder, picked up the phone and called Trading Desk.
"The letter and liquidation report have been signed.
Will be sent to all LPs tomorrow.
In addition - inform them that the fund will be closed before the end of this year and the remaining assets will be returned in proportion.
I don't plan to do another round of fundraising."
He hung up the phone, lifted the Whisky cup and pointed it in the direction of the Hudson River outside the window, then raised his head and took the last sip.
The ice cube made a slight muffled sound when it slid to the bottom of the cup. He placed the cup on the coffee table.
The movement was very light, like gently putting down something that had been stored for too long and should have been put down long ago.
That afternoon, he put the Black Notebook into the office shredder.
The machine made a low humming sound, and the pages were swallowed one by one. From the record on the day Nvidia Financial Report plummeted last November,
From the scrawled handwriting when the stock price hit 178 in May, to the last comment on the day the SEC closing letter was delivered--
All turned into fine scraps of paper.
He pressed the stop button and pulled out the shredder's storage box to take a look.
On those pages where he had once circled countless numbers with a red pen, it was now impossible to distinguish a single line of writing.
He pushed the storage box back, put on the dark blue linen coat, and walked out of the office.
The door closed gently behind him, leaving only the low hum of the air conditioner vent in the corridor.