After Zhao Chen said this, he put the tea cup on the table, his eyes moved from Lin Shicheng to Shen Zhiyi, and then back again.
"Lawyer Lin, starting tomorrow, buy GME on a large scale.
Common Stock and Options are added at the same time. The total exposure is no longer capped at 4.99%."
Lin Shicheng The hand that just picked up the coffee cup stopped in mid-air.
He put the cup down and confirmed a number first.
"Zhao Zong, let me first report to you the current exposure.
After Q3 Report's stock price dropped from 16 yuan to 8 yuan, Common Stock's 1.95 million shares remained unchanged, accounting for about 2.84% of the total share capital.
At the Options end, due to the decline in stock prices, the delta value shrank, and the conservative conversion exposure shrank from the previous two points to about 0.9.
Common Stock plus Options, the current total exposure is approximately 3.7%.
It's not because we have closed the position, but Options has passively contracted.
If I want to start buying heavily tomorrow, I need to Add Position about 4.3 million shares of Common Stock and the equivalent Options, based on the existing Common Stock and Options,
Only then can the total exposure be pushed to 8 to 10 percent."
"Okay. Just calculate based on this base number."
Zhao Chen picked up the tea cup and took a sip.
"After this purchase, Era Vanguard's position will exceed the 5% disclosure threshold.
The 13G declaration must be prepared.
There is no need to declare immediately, you can apply as soon as possible.
13G must be submitted within ten calendar days after exceeding 5%.
Start buying tomorrow, the day when the position exceeds 5% is counted as the first day, and it will be submitted on the tenth day.
During the nine trading days in between, we can continue to buy.
By the time the declaration is submitted, Era Vanguard's position has exceeded 5%."
Lin Shicheng quickly wrote down the date in his notebook and did the math.
"If we start buying heavily tomorrow, with GME's current daily average of Trading Volume,
It will take about two to three trading days to push from the base of 3.7% to 5%.
The tenth calendar day from the day beyond is--"
"January 4th."
Zhao Chen calculated the date,
"January 4th is Monday.
If we exceed 5% on December 23, the tenth calendar day is January 4, 2021.
Submit 13G declaration on January 4th.
Until then, Era Vanguard's position can be pushed from 5% to 8 to 10%."
Lin Shicheng circled the date and raised his head.
"Zhao Zong, I understand your strategy.
Buy in large quantities and declare on the spot, allowing the market to see that the position of Era Vanguard far exceeded 5% at the moment 13G was submitted.
But there is a problem - Citron's Short Selling report has just hit the stock price to eight yuan, retail investors' sentiment is splitting, and Short Sellers is adding more money.
Our large-scale buying at this time is equivalent to openly betting against Short Sellers.
If the stock price continues to fall, Era Vanguard will bear a much larger floating loss than now."
"Are you afraid of unexpected losses?"
"I'm not afraid of floating losses. What I'm afraid of is that Wall Street's institution will list Era Vanguard as a rival from now on.
Citron, Muddy Waters, Melvin Capital--these institutions have been shorting GME for several months, and their short positions are extremely large.
If Era Vanguard openly stands against them, every operation we make at US Stocks will be watched by them in the future.
Era Vanguard's positions on Nvidia and Tesla are already very large.
If we continue to have bad relations with the Short Selling organization of Wall Street, future compliance costs and market friction will increase significantly."
Zhao Chen leaned on the back of the chair and slowly rubbed his fingers on the cover of Zisha Pot.
Su Wantang was sitting on the armrest of the sofa and had been listening. At this moment, she picked up the tea cup and did not drink it. She just felt the temperature of the cup wall with her palm.
"Lawyer Lin is not unreasonable."
Su Wantang's voice is not high-pitched, but every word is pronounced very steadily.
"You have come all the way today by discovering value earlier than the market, not by confronting the market.
If Era Vanguard openly bets against Short Sellers, the nature of the bet will change.
In the past, you were Short Selling and had no choice but to fight back. Now that you are actively provoking a war and sniping at Short Sellers, you will be hated by the Short Sellerss of Wall Street."
Zhao Chen put down the tea cup, stood up and walked to the window.
GME's stock price continued to decline in after-hours trading, falling from $8.02 to $7.95.
Short Selling ratio still remains above 95%. At its peak, it once exceeded 100%.
Citron's report was pinned to the top by Bloomberg Terminal, and CNBC repeatedly played clips of Left's interview in its prime time program.
He turned around and looked at Lin Shicheng and Su Wantang.
"You are all right. If I buy heavily tomorrow and my open position exceeds 5%,
By submitting a 13G declaration, Era Vanguard will officially stand on the opposite side of Short Sellers.
Citron, Muddy Waters, Melvin Capital--these institutions will regard me as a target.
From now on, every action of Era Vanguard in US Stocks will be watched by them, and compliance costs and market friction will increase significantly.
I've done the math."
He took his hand back from the window sill and walked back to the conference table.
"But I also did another calculation.
The short-selling ratio of GME is more than 95%, the amount of circulating stocks lent out for short-selling exceeds 100%, and the average cost of short-selling is concentrated below ten dollars.
DFV started building a position in June 2019 at a cost of 53,000 US Dollar. As of today, the market value of his position has shrunk by 20%, and he has not sold any one share.
Ryan Cohen bought 9 million shares at 8.43 cents. Q3 Report later saw the stock price fall to 8 yuan and he did not sell any shares.
The retail investors on WallStreetBets Forum didn't run when the price was 16 yuan, and they didn't run when the price was 12 yuan. Now they are still carrying it when the price is 8 yuan.
But their confidence is collapsing. Under DFV's live replay, the reply changed from 'Hold the line' to 'How long can it last?'
Citron's report was the last straw."
He picked up Citron's report and turned to page nine, where Left responded to Short Squeeze's argument.
"Left devoted a whole page in this report to respond to Short Squeeze's argument.
He said, 'The high Short Selling ratio itself is a reflection of the market's judgment of a company's Fundamentals'.
This sentence is correct. But he missed one thing when he wrote this page--
When the Short Selling ratio reaches over 95%,
When the average cost of Short Sellers is concentrated below ten US Dollar,
When the stock price was eight yuan, the floating profit of Short Sellers was enough to cover the year-end bonuses of all their institutions--
Left thought he was writing a bearish report, but in fact he was pushing Short Sellers towards the cliff.
He told the market that GME was worth five yuan, but Short Sellers himself knew that if the stock price rose to twelve yuan, their insurance call notice would come down like an avalanche."
He put the report down and looked at Lin Shicheng.