Chapter Summaries

Zhao Chen prepared to seek board authorization to acquire Bubble Mary shares, consulting Shen Jue and organizing legal and business materials for the meeting. Shen agreed to support the proposal with conditions, leaving Zhao to persuade the remaining independent directors before the board meeting.

• Zhao Chen reviewed Henglong's board members and identified Shen Jue, Xu Yong, Wu Hongyuan, and Sun Zhengping as key votes for his proposed Bubble Mary share acquisitions.
• Zhao Chen called Shen Jue and explained his plan to buy existing shares at a premium, capped at 50 million per transaction and 200 million in total.
• Shen Jue agreed to support the authorization if the average purchase price did not exceed a 1.2 billion valuation and each acquisition was reported to the board afterward.
• Shen Jue said she would persuade Xu Yong, while Zhao Chen planned to address Wu Hongyuan's compliance concerns and convince Sun Zhengping with Bubble Mary's business data.
• Zhao Chen asked Zhang Qingxue to review the acquisition plan and asked Chen Xi to prepare a briefing on voting rights and the Mololoy and Labobo copyrights.

Henglong Group’s first board meeting of 2018 assigned representatives to Yunnan Agriculture and Bubble Mary, then began reviewing the Bubble Mary investment. The meeting ended with Zhao Chen preparing to explain the investment strategy.

• Liu Mingyu opened the meeting and presented the agenda, including personnel assignments for Yunnan Agriculture and a report on Bubble Mary.
• Zhao Chen approved Zhou Hao as Yunnan Agriculture’s deputy finance director and appointed Chen Xi as Henglong’s board representative.
• Zhao Chen assigned Zhang Qingxue to Bubble Mary’s voting board seat and Chen Wei to its nonvoting observer seat.
• Chen Xi distributed a four-page report covering the Mololoy and Labobo rights and the legal basis for relinquishing voting rights.

Zhao Chen explained to the board how he secured Henglong’s investment in Bubble Mary and acquired key designer-toy IP rights under an urgent deadline. He left the meeting with the directors persuaded by his strategic case for the sector and his plan to build a 15–20 percent stake in Bubble Mary.

• Zhao Chen said Shen Jue alerted him on December 26 that Bubble Mary’s board was about to review another investment proposal, so he offered Wang An a one-billion valuation and relinquished voting rights to delay the meeting.
• Zhao Chen bought Mololoy’s overseas copyright for thirty million Hong Kong dollars, using it as leverage to bring Wang An back to negotiations.
• Zhang Qingxue explained that she bought Mololoy’s global rights from Wang Xin, while Chen Xi reported that Henglong secured a twenty-year global exclusive license for Labobo for eight million Hong Kong dollars.
• Zhao Chen and Shen Jue argued that designer toys were emotional consumption with substantial growth potential, and Zhao Chen said he planned to acquire a 15–20 percent stake in Bubble Mary.
• The independent directors raised no further objections, and Zhao Chen concluded that he had won the board’s approval.

Zhao Chen secured board approval for his Bubble Mart investment report and authorization to acquire existing shares, while promising to report future emergency decisions promptly. With the meeting behind him, he began moving the acquisition forward but faced Henglong’s 11.2 billion in debt and a difficult transformation ahead.

• Zhao Chen explained why rapid decisions were necessary and agreed to report emergency actions to the board immediately.
• Liu Mingyu presented a motion authorizing Zhao Chen to spend up to 200 million RMB acquiring Bubble Mart shares at an average valuation no higher than 1.2 billion, with each acquisition reported to the board.
• Shen Jue, Xu Yong, Wu Hongyuan, and Sun Zhengping approved the motion, and Wu Hongyuan requested Legal Department review of each acquisition.
• Shen Jue praised Zhao Chen’s preparation, and Zhao Chen told Chen Xi that Zhou Hao would go to Yunnan Agriculture first before she joined its board.
• Zhao Chen messaged Wang An that the board had approved the share acquisition and reflected on Henglong’s debt and the challenges ahead.

Bubble Mary's shareholders unanimously approved Henglong's private placement, while Zhao Chen prepared to invest $7.94 billion from his Bitcoin sale in US markets. The chapter left Chen Xi calculating how many Tesla shares the planned $6 billion purchase could buy.

• Wang An announced that all voting shareholders approved the private placement, and he set January 12–26 as the payment period and February 22 as the listing date.
• Zhang Qingxue told Zhao Chen that four small shareholders were willing to sell about 8% of Bubble Mary's shares, while Old Zhou and Liu Mingyuan remained unwilling to sell.
• Zhang Qingxue reported that $7.94 billion from Zhao Chen's Bitcoin liquidation had arrived in Henglong's overseas accounts and that US stock trading accounts were ready.
• Zhao Chen instructed Chen Xi and Su Wantang to invest $6 billion in Tesla, $1 billion in Apple, and $940 million in US Treasury bonds, while postponing any Nvidia purchase.
• Zhang Qingxue gave the recent Tesla and Apple closing prices, and Chen Xi began calculating the size of the planned Tesla position.

Zhao Chen arranged a $6 billion stock-buying plan and warned his team about the risks of linking the funds to his Bitcoin sale. As Chen Xi and Su Wantang prepared to execute the trades, Zhao Chen proposed buying Tesla options first.

• Zhao Chen planned to build a Tesla stake of about 11.27%, potentially increasing it to 15%, and a small Apple stake while keeping funds liquid in short-term Treasury bonds.
• Zhao Chen assigned Chen Xi to execute trades and Su Wantang to manage fund transfers and compliance, with Zhang Qingxue handling Treasury bonds.
• Zhang Qingxue warned that investigators could connect the US stock purchases to Zhao Chen's Bitcoin sale and raise concerns about the funds' source, insider trading, or market manipulation.
• Zhao Chen told Zhang Qingxue to strengthen the account firewalls and instructed Chen Xi and Su Wantang to proceed with the stock purchases.
• Zhao Chen realized that buying nineteen million Tesla shares directly could raise the price and proposed buying options first.

Zhao Chen arranged a leveraged Tesla investment, buying September 2018 call options before beginning to acquire common stock. The options purchase was completed, and Chen Xi began buying shares as Zhao planned to build the position further while keeping funds available in Treasury bonds.

• Zhao Chen chose Tesla September 2018 calls with a $290 strike and directed Chen Xi to seek a package price within his limit.
• Chen Xi obtained Goldman Sachs's quote for 50,000 contracts at a $31.20 premium, and Zhao Chen approved the deal.
• Zhao Chen ordered an initial purchase of 500,000 Tesla shares, set a 10-million-share initial stock target, and reserved $940 million for Treasury bonds.
• Goldman Sachs filled the 50,000 call contracts in three batches for a total premium of $156 million.
• Chen Xi began buying Tesla common stock through the Citigroup account as the US market opened.

Zhao Chen directed Henglong’s purchases of Tesla shares and options, then disclosed a 5.95% stake that made Times Pioneer Capital Tesla’s third-largest shareholder. The disclosure sparked a share-price jump and speculation about the fund’s backers, and Zhao Chen waited to see what would happen next.

• Chen Xi bought Tesla shares in small batches as Zhao Chen used the options gains to hedge Henglong’s rising stock costs.
• After Henglong’s exposure exceeded 5%, Zhao Chen ordered a final one-million-share purchase before filing Schedule 13G, bringing their holdings to five million shares and their total exposure to 5.95%.
• The SEC published Times Pioneer Capital’s Schedule 13G filing on January 15, and Tesla’s premarket price jumped from $323.50 to $333.
• Bloomberg, CNBC, and The Wall Street Journal scrutinized the fund’s sudden investment and raised speculation about possible government ties.
• Su Wantang warned that the speculation could prompt an SEC investigation, and Zhao Chen said he was waiting for the SEC’s response or for something else to change.
• An unexpected turn occurred at three that afternoon.

After ChainAnalysis linked the Bitcoin whale’s sales to Times Pioneer Capital, Tesla’s stock fell and the fund’s identity drew intense media scrutiny. Zhao Chen kept the fund’s ownership concealed and waited to see how other investors reacted before deciding whether to buy more Tesla shares.

• ChainAnalysis accused Times Pioneer Capital of receiving proceeds from a 350,000-Bitcoin sale and using them to buy Tesla, triggering a sharp drop in Tesla’s share price.
• Chen Xi asked Zhao Chen whether they should buy, but Zhao Chen chose not to act, saying the selloff was panic and that buying could look suspicious.
• Chinese financial outlets reported on Times Pioneer’s Tesla stake and Bitcoin profits, while failing to identify who controlled the fund.
• Zhao Chen explained that offshore entities shielded him from being linked to Times Pioneer and said ChainAnalysis’s on-chain analysis alone was unlikely to prompt an SEC investigation.
• Zhao Chen warned that short sellers might use the allegations to drive Tesla’s price down and said they could add to their position if other investors had not acted by the US market open.

Zhao Chen decided to counter the pressure on Tesla by buying shares in premarket trading, using Era Vanguard’s purchases to signal that the fund was not fleeing. After Era Vanguard bought one million shares and drove the price upward, the market began to suspect it was behind the unusual buying.

• Chen Xi and Su Wantang reported that Tesla’s share price was falling amid short-selling and doubts about Era Vanguard’s funding.
• Zhao Chen decided to buy Tesla shares below $315, and Chen Xi questioned whether further purchases were compliant.
• Zhao Chen showed Chen Xi and Su Wantang Zhang Qingxue’s legal memorandum, which said Era Vanguard could keep buying below a 10% stake without changing its filing category.
• Chen Xi placed three premarket orders, buying one million Tesla shares at an average price between $311.50 and $312.80.
• The purchases pushed Tesla’s share price from $311.80 to $313.50, and CNBC commentators speculated that Era Vanguard might be buying.

Zhao Chen’s team completed a two-million-share Tesla purchase, raising Era Vanguard’s holdings and signaling it would not retreat. The next trading session began with an aggressive buying push that drove Tesla’s price higher, as Zhao Chen sought to draw other bulls into the market.

• Chen Xi bought two million Tesla shares, bringing the team’s common-stock holdings to seven million and total risk exposure to twelve million shares.
• Zhao Chen told Zhang Qingxue to prepare an updated 13G filing and decided the team had bought enough for the night.
• The following day, Zhao Chen told Chen Xi and Su Wantang to use premarket buying to ignite the market and attract sidelined bulls.
• Chen Xi bought 500,000 Tesla shares in premarket trading, lifting the price from $312.80 to $313.50.
• After the market opened, Chen Xi bought one million more shares, absorbing sell orders between $314 and $316 and pushing Tesla to $316.50.

Era Vanguard’s buying sparked a broad rally in Tesla shares, and Zhao Chen held the position as the stock climbed to new highs over the following days. By January 22, with unrealized gains above $400 million, Zhao Chen suspected the rapid rise was a bull trap.

• Chen Xi bought two million Tesla shares for Era Vanguard, raising its common-stock position to nine million shares and lowering its average cost.
• Other institutions followed Era Vanguard’s buying, driving Tesla above $328; Zhao Chen stopped buying as bullish orders took over the market.
• Tesla closed at $328.68, and Zhao Chen said Era Vanguard would not add to its position the next day, while keeping its options hedge unchanged.
• Tesla rose to $332.40 on January 18 and $335.80 on January 19 as Zhao Chen reviewed company reports without trading.
• Tesla reached $344.80 on January 22, and Zhao Chen warned Chen Xi and Su Wantang that the rapid rally looked like a bull trap.

Zhao Chen planned to exercise some Tesla options and sell the rest, but Tesla surged before he acted and then plunged after Citron Research released a short-selling report. He recalled the stock’s coming crisis and recovery, but remained trapped between holding through heavy losses and taking action.

• Zhao Chen proposed exercising options on three million Tesla shares and selling options on the remaining two million to lock in profits while keeping more common stock.
• Tesla climbed to $360 on January 23, but Zhao Chen hesitated to execute the plan as Chen Xi waited for his order.
• Institutional selling and a Citron Research report about Tesla’s production problems sent the stock sharply lower.
• Elon Musk defended Tesla in three tweets, but the share price continued falling to $342.
• Zhao Chen remembered that Tesla would drop below $260 before recovering by the end of 2018, and considered whether he should act.

Zhao Chen sold Era Vanguard’s Tesla call options at a loss of $23.75 million to avoid liquidation, but refused to sell its nine million common shares. The market interpreted the options sale as defeat, and Tesla plunged while Zhao Chen continued holding the stock.

• After reading the Citron Research Report alert, Zhao Chen ordered Chen Xi to sell all 50,000 Tesla call-option contracts, and they sold for an average of $26.45.
• Su Wantang calculated that the sale had realized a loss of $23.75 million, and Zhao Chen told Chen Xi to keep all nine million Tesla shares.
• Bloomberg and CNBC reported Era Vanguard’s options liquidation, and analysts debated why it had kept its common stock.
• On Wednesday, January 24, news of the sale spread through global markets and triggered panic selling in Tesla.
• Tesla opened at $334, fell as low as $318, and closed at $321.50 as Zhao Chen watched without selling.
• The Wall Street Journal reported Era Vanguard’s options loss and noted that its next move with the nine million shares remained uncertain.

Zhao Chen held Era Vanguard’s nine million Tesla shares through a steep decline and an almost $194 million paper and options loss, refusing to sell despite mounting pressure. He shifted attention to other investments and resolved to stop watching Tesla’s price, believing it would eventually recover.

• As Tesla fell from $318 to $298.50, Zhao Chen refused Chen Xi’s suggestions to buy more or sell part of the position, saying the decline had only begun and he would not admit defeat by selling.
• After Era Vanguard’s losses neared $194 million, Zhao Chen kept all nine million shares as short sellers waited for the fund to dump them and retail investors began buying steadily.
• Zhao Chen told Chen Xi to continue the Bubble Mart share acquisition, visit Yunnan Agriculture, and carry out Haoyu Construction’s debt-reduction plan without letting Tesla disrupt the work.
• Zhao Chen wrote in his notebook that he had doubted himself and decided to stop watching Tesla’s share price, while telling Su Wantang he expected the stock to rise again.

At Henglong Group’s annual gathering, Zhao Chen praised the employees’ work, celebrated the company’s financial recovery, and answered questions about hiring and his marriage. Employee Lin Xiaoman thanked him for the special bonus and asked whether employees would receive another one in 2018.

• Zhao Chen arrived at the banquet hall, joined Shen Zhiyi and her roommates at the head table, and greeted them.
• Zhao Chen told the assembled employees that Henglong had cleared its off-balance-sheet liabilities and paid the promised special bonus, then urged the company to pursue stability in 2018.
• Zhao Chen answered questions about hiring, reliability, and when he planned to marry, joking with the host and audience.
• Lin Xiaoman thanked Zhao Chen for the bonus and explained that she had sent half of it to her parents.
• Lin Xiaoman asked Zhao Chen whether Henglong would pay another special bonus in 2018, prompting cheers and laughter from the audience.

At Henglong’s annual gala, Zhao Chen promised employees a 20% special bonus if the company reduced its debt ratio below 25% by the end of 2018. After celebrating with the staff and bidding farewell to Shen Zhiyi, he told Su Wantang he would organize an executive meeting the next day to plan the difficult debt reduction.

• Zhao Chen agreed to give employees a special bonus if Henglong’s year-end debt ratio fell below 25%, and the crowd enthusiastically accepted the goal.
• Zhao Chen confirmed the bonus would remain 20% if Henglong met the target, while Zhou Xiaowen joked about wanting to join the company.
• Henglong employees performed a skit about the Finance Department’s overtime during the previous year’s rights issue, and the gala continued with performances and prize draws.
• Shen Zhiyi won a new phone, and Zhao Chen stayed to greet employees as they left the banquet hall.
• Shen Zhiyi complimented Zhao Chen before leaving, and Zhao Chen watched her car depart.
• Zhao Chen told Su Wantang he was serious about the bonus conditions and said he would hold an executive meeting the next day to develop a debt-reduction plan.

Zhao Chen reviewed Henglong Group’s liabilities and set plans to reduce its debt-to-asset ratio below 20% by year-end. Haoyu Construction and Henglong Headquarters each received debt-reduction targets, with detailed execution plans due in three days.

• Chen Qiming reported Henglong Group’s 11.2 billion in liabilities and calculated that the group needed to cut at least 6.63 billion to reach its target.
• Chen Wei pledged to reduce Haoyu Construction’s liabilities from 4 billion to below 1 billion by completing projects, collecting payments, and selling land reserves.
• Zhao Chen gave Chen Wei discretion to manage Haoyu Construction and promised support if needed.
• Song Zhongping proposed clearing Henglong Headquarters’ home inventory through discounts, and Zhao Chen told him to prioritize cash flow and recalculate the discount plan.
• Chen Qiming proposed selling non-core assets, and Zhao Chen accepted discounts of up to 20% provided buyers and funds passed compliance checks.
• Zhao Chen ordered Chen Wei, Song Zhongping, and Chen Qiming to submit detailed execution plans within three days.

Zhao Chen set Henglong’s 2018 debt-ratio target and let Tesla’s falling share price continue without daily updates. After secretly preparing something, he took Su Wantang on a drive to reveal a surprise, leaving its nature unknown.

• Zhao Chen assigned Henglong a goal of reducing debt by 6.63 billion and bringing its debt ratio below 20%, with plans to clear inventory and sell assets.
• Su Wantang asked about the debt-reduction target, and Zhao Chen said the proceeds depended on sales and might fall if the market declined.
• Tesla shares slid to $271 by February 9, while Chen Xi tracked the losses and waited to alert Zhao Chen when the price reached $260.
• Zhao Chen spent much of early February away from the office preparing something without telling Su Wantang what it was.
• On February 10, Zhao Chen drove Su Wantang out of the city and told her his surprise was ready.

Zhao Chen surprised Su Wantang with an art studio so she could return to painting, which she had abandoned five years earlier. After he left to meet Wang Zong about the Labobo licensing and share transfer, Su Wantang decided she would visit the studio often.

• Zhao Chen brought Su Wantang to a small courtyard and revealed the art studio he had prepared for her.
• Su Wantang remembered how she had stopped painting after her father's business failed and she married into the Zhao Family.
• Zhao Chen explained that he had searched Shan City for a quiet place with good light and a plum tree, and Su Wantang thanked him and embraced him.
• Su Wantang picked up a brush and found that her fingers still remembered how to hold it.
• Zhao Chen gave Su Wantang the studio key and left to meet Wang Zong about the Labobo licensing and transfer of existing shares.
• Su Wantang found Zhao Chen's crooked camellia sketch, smiled, and said she would come to the studio often.