Chapter Summaries

After Lin Shicheng told Zhao Chen that Elon Musk had announced plans to take Tesla private at US$420 a share, Zhao Chen feared the news meant history was changing. He calmed himself by deciding Tesla’s long-term prospects remained strong either way and saw a possible investment opportunity.

• Lin Shicheng told Zhao Chen that Elon Musk had tweeted about taking Tesla private at US$420 a share with funding secured, prompting Nasdaq to halt trading.
• Zhao Chen struggled to remember whether the tweet had happened in his previous life and worried that his actions since being reborn had changed the future.
• Zhao Chen recalled that Musk’s 2018 privatization attempt had ultimately been abandoned amid shareholder opposition and regulatory pressure.
• Zhao Chen steadied himself by focusing on long-term investment trends and reasoning that he could profit whether Tesla went private or remained listed.
• Zhao Chen checked that Tesla trading was still halted and decided not to call Lin Shicheng or read the news analysis, considering the situation a possible investment opportunity.

Zhao Chen decided to hedge his Tesla shares with put options, betting that Musk’s privatization plan would fail and the stock would fall. After Su Wantang backed his judgment, Zhao asked Lin Shicheng to obtain options quotes, then sat with Su waiting for news.

• Zhao Chen concluded that Tesla’s privatization would likely fail and its share price would fall, so he planned to buy put options while keeping his common shares.
• Zhao Chen told Su Wantang about Musk’s tweet and his assessment, and she told him to do what he thought he should.
• Zhao Chen called Lin Shicheng and asked how to hedge his 16.6 million Tesla shares with put options.
• Lin Shicheng explained strike prices, expiration dates, and premiums, and recommended building the position in batches.
• Zhao Chen asked Lin Shicheng to get Goldman Sachs quotes for options with $350–$380 strike prices and one-to-three-month expirations, covering 166,000 contracts.
• After the call ended, Zhao Chen sat beside Su Wantang and waited.

Zhao Chen planned to hedge his Tesla shares with in-the-money put options, seeking protection rather than leverage. After Lin Shicheng delivered banks’ quotes and described the market’s confidence in Musk’s buyout, Zhao Chen recognized that the banks expected the options to expire worthless and awaited his decision.

• Zhao Chen explained to Su Wantang why he wanted to buy in-the-money puts expiring within three months as insurance for his 16.6 million Tesla shares.
• Zhao Chen and Su Wantang waited while Tesla resumed trading, and the share price closed at $378 after falling from $379.
• Lin Shicheng told Zhao Chen that Goldman Sachs, JPMorgan Chase, and Morgan Stanley had quoted premiums for puts with strikes of $350 and $340.
• Lin Shicheng reported that the banks were eager to sell the options because they believed Musk’s buyout was likely to succeed and the puts would expire worthless.
• Zhao Chen considered the market consensus and realized the banks viewed selling the puts as easy profit, while Lin Shicheng asked for his decision.

Zhao Chen arranged a $160 million hedge against his 16.6 million Tesla shares by buying three-month put options. The deals were finalized at a $350 strike price and a $10 premium, leaving him confident that gains on either the common stock or the puts would offset losses on the other.

• Zhao Chen instructed Lin Shicheng to buy 160,000 three-month Tesla put contracts with a $350 strike price and a premium capped at $10.50.
• Zhao Chen explained to Su Wantang that the puts would hedge delays or setbacks in Tesla’s privatization and benefit from share-price fluctuations.
• Lin Shicheng negotiated 80,000 contracts with Goldman Sachs, 50,000 with JPMorgan Chase, and 30,000 with Morgan Stanley, all at a $10 premium.
• Lin Shicheng informed Zhao Chen that the three agreements totaled $160 million and would settle the next day.
• Zhao Chen calculated that if Tesla fell to $330, the puts’ $320 million intrinsic value would exceed their $160 million cost and help offset the common shares’ losses.

Zhao Chen hedged against the fallout from Tesla’s failed take-private plan by buying put options as Elon Musk’s claims drew scrutiny and the stock fell. Musk later explained his funding discussions, but legal experts said his “funding secured” tweet had overstated the facts, leaving the SEC investigation and market uncertainty unresolved.

• Zhao Chen completed $160 million in put-option agreements with Goldman Sachs, JPMorgan Chase, and Morgan Stanley, setting a $340 break-even point.
• Elon Musk said the take-private proposal still required shareholder approval, while Tesla shares cooled and closed near $370.
• The SEC began questioning whether Musk’s statements and Tesla’s actions complied with federal securities law, and Tesla shares fell below $346 during trading.
• Elon Musk mocked short sellers as two more lawsuits accused him of inflating Tesla’s share price, and the stock closed at $352.45.
• Elon Musk published a Tesla blog post describing Saudi Arabia’s sovereign wealth fund’s interest and estimating the take-private plan would require about $20 billion.
• Keith Higgins and John Coffee said Musk had overstated or failed to secure funding when he made his tweet, while the SEC declined to comment.

Zhao Chen’s Tesla put options became highly profitable as Elon Musk abandoned his plan to take Tesla private and the share price fell. In early September, traders at the banks that sold the options began realizing the scale of their losses.

• Tesla’s board formed a special committee as the SEC escalated its investigation, and Tesla shares fell below the $350 strike price of Zhao Chen’s puts.
• As Tesla shares slid, Zhao Chen held his position, expecting Musk’s eventual abandonment of the take-private plan to push the price lower.
• On August 24, Elon Musk announced that he was abandoning the plan, and Tesla shares continued falling in the following days.
• By August 29, Tesla shares had dropped to $298, giving Zhao Chen’s put options a net profit of $672 million while his common shares still showed an unrealized gain.
• In early September, Michael Chen, James Holbrook, and Sarah Wu recognized that their banks’ jointly sold put options had become a major liability.

As Tesla’s share price continued to fall, Goldman Sachs, JPMorgan Chase, and Morgan Stanley asked Era Vanguard to close out its put options at $295 per share. Zhao Chen refused, expecting Tesla’s decline to continue, and said Era Vanguard would not sell any of its 16.6 million shares.

• The banks’ hedging losses grew as Tesla’s falling share price forced them to sell stock, while market rumors claimed Era Vanguard might use its put options to exit its Tesla position.
• On September 10, Michael Chen asked Lin Shicheng to contact Zhao Chen about closing all 160,000 put-option contracts at $295; JPMorgan Chase and Morgan Stanley made similar requests.
• Zhao Chen considered Tesla’s ongoing investigations, production problems, and financial strain, and concluded its share price was likely to fall further.
• Zhao Chen told Lin Shicheng to reject the offer, deciding to keep the put options and hold all of Era Vanguard’s Tesla shares.

Zhao Chen reassured Elon Musk that Era Vanguard would not sell its Tesla shares, explaining that its put options were only a hedge. He then closed all 160,000 contracts at $270 for a net profit of $1.12 billion, leaving Tesla’s bulls free of fears that its second-largest shareholder would soon sell.

• Elon Musk called Zhao Chen to ask whether Era Vanguard’s put options meant it planned to sell its Tesla holdings.
• Zhao Chen promised Elon Musk he would not sell any of Era Vanguard’s 16.6 million Tesla shares and said the puts were a hedge against volatility.
• Zhao Chen weighed Tesla’s production, financial, legal, and bond-related troubles and instructed Lin Shicheng to negotiate a closeout at $270.
• Lin Shicheng negotiated with Goldman Sachs, JPMorgan Chase, and Morgan Stanley, and all three banks agreed to the terms.
• On September 18, Zhao Chen closed all 160,000 put option contracts at $270, earning $1.12 billion net and reassuring Tesla’s bulls that Era Vanguard would not reduce its stake in the short term.

Zhao Chen reaffirmed his commitment to Tesla and sought to have Era Vanguard lead SpaceX’s new funding round. After Elon Musk said Tesla was expected to turn a profit in the third quarter, Zhao instructed Lin Shicheng to prepare up to two billion dollars for SpaceX shares.

• Elon Musk thanked Zhao Chen for keeping Era Vanguard’s 16.6 million Tesla shares while closing out its put options.
• Musk invited Era Vanguard to participate in SpaceX’s roughly five-hundred-million-dollar funding round, and Zhao asked to lead it.
• Musk said Tesla’s Model 3 production had improved and predicted the company would turn a profit in the third quarter.
• Zhao told Su Wantang he would keep holding Tesla shares and expected the coming financial report to change the market’s view.
• Zhao instructed Lin Shicheng to prepare to lead SpaceX’s round and said Era Vanguard could use its two billion dollars in cash to buy shares.

At Henglong Group’s shareholders’ meeting, executives reported improved finances and gains from the group’s stock investments, while Zhao Chen proposed transferring assets to Henglong Capital and injecting it with another 2.5 billion yuan. The chapter ended with Shen Jue challenging his plan to invest the money in baijiu.

• Chen Qiming reported that Henglong Group had reduced its liabilities, increased its net assets, and earned 1.78 billion yuan in net profit during the first three quarters of 2018.
• Chen Xi detailed Henglong Capital’s holdings in Tongce Medical, Pianzaihuang, and Bidiya, which together had about 834 million yuan in unrealized gains.
• Zhao Chen proposed transferring Henglong Group’s Bubble Mart and Yunnan Agriculture Group stakes to Henglong Capital, and the board approved the transfer.
• Zhao Chen proposed injecting 2.5 billion yuan from group headquarters into Henglong Capital to invest in the baijiu industry.
• Shen Jue questioned Zhao Chen’s reasoning, noting that the consumer sector and baijiu stocks had been declining, and Zhao Chen glanced at Su Wantang without answering.

Su Wantang and Zhao Chen argued that baijiu stocks were undervalued despite weak market sentiment, and Chen Xi presented a 6.25-billion-yuan investment allocation. The directors unanimously approved the plan, leaving Henglong Capital set to build stakes in Bidiya, Shanxi Fenjiu, and Wuliangye.

• Su Wantang presented data showing falling baijiu production but rising industry concentration, and Zhao Chen argued that the sector’s fundamentals remained strong despite falling share prices.
• Zhao Chen recommended Shanxi Fenjiu, citing China Resources’ investment and the opportunity to buy below its acquisition price before pessimistic third-quarter results were fully priced in.
• Chen Xi proposed spending 3.27 billion yuan to raise Henglong Capital’s Bidiya stake to 4.99%, 1.86 billion yuan on Shanxi Fenjiu, and the remaining 1.12 billion yuan on Wuliangye.
• Chen Xi said the purchases would be made gradually, while Zhao Chen set target costs below 40 yuan for Fenjiu and below 45 yuan for Bidiya and proposed reassessing Wuliangye after its third-quarter report.
• Wu Hongyuan endorsed the plan, and Liu Mingyu called a vote that passed unanimously.

Chen Wei proposed and won unanimous approval for a transparent, steep National Day promotion to clear Henglong’s housing inventory and recover cash. The campaign brought in 750 million in recovered funds, while Henglong’s strategic focus remained on other businesses.

• Chen Wei argued that the real estate downturn was long-term and proposed 15% discounts, with up to 20% off slow-selling projects; Zhao Chen, Shen Jue, Sun Zhengping, and Wu Hongyuan supported the plan, which passed unanimously.
• Chen Wei took the approved plan to the marketing center, requiring clearly marked discounts with no price manipulation, and Henglong launched its promotion across Chongqing and Chengdu on October 1.
• Henglong recorded 113 million in reservations on the first day, while competitors debated matching its discounts and struggled to compete with its prices.
• Henglong’s seven-day campaign produced 780 million in transactions and recovered about 750 million, far exceeding competitors’ results.
• Chen Wei reported that the promotion shortened the inventory sell-through period by six months, and Zhao Chen told her to accelerate construction and improve turnover.

Henglong Group's Q3 report showed that Zhao Chen's investment business had generated nearly 1.5 billion yuan in profit, far exceeding the shrinking real estate business. The market began valuing Henglong as an investment platform, and investors started copying its trades.

• Henglong Group reported that real estate net profit had fallen by more than 40% year on year, while its debt-to-asset ratio had dropped below 25%.
• The report revealed that Henglong had sold its Shunxin Agriculture stake for 648 million yuan in investment income, prompting investors and financial media to praise Zhao Chen's timing.
• Henglong disclosed more than 834 million yuan in unrealized fair-value gains from Tongce Medical, Pianzaihuang, and Bidiya holdings.
• The report showed that investment income made up about 1.48 billion yuan of Henglong Group's 1.78 billion yuan in net profit for the first three quarters.
• A brokerage recommended valuing Henglong as an investment platform, and long-term investors began copying its trades.

Henglong Group’s shares surged after its Q3 results, pushing Zhao Chen’s reported wealth above RMB10 billion and attracting intense media and public attention. Zhao Chen and Su Wantang discussed the valuation while keeping his Era Vanguard holdings secret, and Zhao Chen looked ahead to future gains from Tesla and SpaceX.

• Henglong Group’s share price climbed to a record HK$33.88 before closing at HK$31.2, up 43% for the day.
• Domestic media and social platforms highlighted Henglong’s transformation and Zhao Chen’s reported fortune, while investors debated the company’s valuation and remaining upside.
• Zhao Chen reviewed Henglong Capital’s holdings and noted that he was waiting for Q3 reports before investing in Shanxi Fenjiu or Wuliangye.
• Su Wantang asked about Zhao Chen’s wealth and his US stock holdings, and Zhao Chen said Era Vanguard’s assets were separate from Henglong and not yet ready to be cashed in.
• Zhao Chen anticipated that Tesla reaching US$1,000 and SpaceX going public could dramatically increase his wealth.

Chen Xi steadily increased Era Vanguard’s position in Bidiya while Zhao Chen learned that Era Vanguard would lead SpaceX’s latest funding round. The round was finalized with Era Vanguard’s stake set to rise to 5.4%, while the fund’s ownership remained secret.

• Chen Xi bought Bidiya shares gradually, raising the holding from 65 million to 85 million by around October 20 while keeping the overall average cost below 40 yuan.
• Chen Xi told Zhao Chen that Bidiya had stabilized above 48 yuan, and he said he trusted her to handle the investment.
• Lin Shicheng told Zhao Chen that SpaceX finalized a US$500 million funding round at a US$30.5 billion valuation, with Era Vanguard investing US$300 million as lead investor and Fidelity investing US$200 million.
• Lin Shicheng reported that Era Vanguard’s SpaceX stake would rise from about 4.47% to 5.4% after the round closed in mid-November, making it one of SpaceX’s top three shareholders.
• Zhao Chen learned that Wall Street was asking who owned Era Vanguard, but its offshore structures and Elon Musk’s silence had kept his identity hidden.
• Zhao Chen told Su Wantang the SpaceX investment was settled and said Elon Musk’s trust mattered more than the size of a stake.

Chen Xi watched Moutai’s disappointing third-quarter results trigger a historic selloff across the baijiu sector. She bought Fenjiu heavily at limit down, breaking the price free of its lock by the close.

• Chen Xi and Su Wantang reviewed Fenjiu’s third-quarter report, which showed strong year-on-year growth, and Chen Xi waited for Moutai’s results.
• Chen Xi read Moutai’s report and saw its third-quarter revenue and profit growth plunge to 3.2% and 2.71%.
• Moutai and baijiu stocks across the sector hit limit down on October 29, including Fenjiu at 31.7 yuan.
• Chen Xi watched Fenjiu’s queued sell orders grow, then began buying shares as panic selling eased.
• Chen Xi increased her purchases throughout the day, and Fenjiu broke free of limit down before closing at 32.8 yuan.

Chen Xi steadily accumulated Fen Liquor and Wuliangye shares during the baijiu sector’s downturn, then completed Henglong Capital’s Fen Liquor position at 4.99%. The chapter ends with Fen Liquor holdings totaling 43.2 million shares at an average cost of about 32.8 yuan, for an investment of 1.417 billion yuan.

• Chen Xi reported buying about 17 million Fen Liquor shares and 19 million Wuliangye shares, and Zhao Chen told her to take her time.
• On October 30, Chen Xi continued buying as both stocks fell, while other funds also entered the market; Fen Liquor and Wuliangye rebounded by the close.
• Chen Xi calculated that Henglong Capital had accumulated about 30 million Fen Liquor shares and 24 million Wuliangye shares over two days, investing about 2.26 billion yuan in total.
• In early November, Chen Xi accelerated Fen Liquor purchases despite rising execution prices, bringing Henglong Capital’s holdings to more than 43 million shares by November 5.
• On November 6, Chen Xi bought the remaining 200,000 Fen Liquor shares, completing a 4.99% position at a total cost of about 1.417 billion yuan.

Chen Xi completed Henglong Capital’s positions in Shanxi Fenjiu and Bidiya, bringing its investment in five stocks to approximately 11.013 billion yuan. Zhao Chen reviewed the figures and discussed the investments, leaving further Wuliangye purchases for future opportunities.

• Chen Xi accelerated purchases of Bidiya and completed a 136-million-share position at an average cost of 42.68 yuan per share.
• Su Wantang compiled the final holdings in Shanxi Fenjiu, Bidiya, Wuliangye, Tongce Medical, and Pianzaihuang, totaling approximately 11.013 billion yuan.
• Chen Xi and Su Wantang brought the completed position report to Zhao Chen’s office, where he reviewed the figures.
• Chen Xi explained the investment outlook for Bidiya and Shanxi Fenjiu, citing industry trends and improving distribution policies.
• Chen Xi regretted that limited funds had kept Henglong Capital’s Wuliangye position small, but Zhao Chen said there would be more chances to add shares.

Zhao Chen expanded Henglong Capital’s investment team and told Chen Xi to monitor the fundamentals of its major holdings while keeping leverage within limits. A tip about Bidiya’s coming blade battery breakthrough caught his attention as he anticipated a major rise in his BYD shares and another investment opportunity.

• Su Wantang reported Henglong’s cash position and said the company’s leverage was about one and a half times, within the board’s limit.
• Zhao Chen told Chen Xi to track five portfolio companies’ fundamentals and expand Henglong Capital’s research team with sector specialists and a separate risk-control role reporting to Su Wantang.
• Chen Xi proposed recruiting a Dening Times employee with broad power-battery supply-chain knowledge, and Zhao Chen authorized her to negotiate his compensation.
• Zhao Chen and Su Wantang discussed Zhiyi’s law-firm internship and the purpose of Zhao Chen’s wealth, and Su Wantang promised to support him.
• Chen Xi messaged Zhao Chen that Bidiya’s blade battery technology might soon make a major breakthrough, and he anticipated a surge in his BYD shares and another coming investment opportunity.

Zhao Chen and his team analyzed Nvidia’s disappointing Q3 report and the market’s after-hours plunge, which confirmed that demand had collapsed after the cryptocurrency bubble burst. He told Lin Shicheng to wait for Nvidia’s market capitalization to fall below $90 billion before gradually buying shares.

• Su Wantang, Chen Xi, and Zhao Chen reviewed Nvidia’s Q3 results, including weak revenue guidance and a $57 million impairment charge tied to declining demand for crypto chips.
• Zhao Chen explained that Nvidia’s excess inventory and falling cryptocurrency demand had caused the downturn, which he called a predictable gray rhino rather than a black swan.
• Lin Shicheng reported that Nvidia had fallen more than 15 percent in after-hours trading, putting its market capitalization near $95 billion.
• Zhao Chen refused to buy immediately and predicted that panic selling, a temporary rebound, and another decline would come before a true bottom.
• Zhao Chen instructed Lin Shicheng to begin buying in small batches below a $90 billion market capitalization, and Lin began to update him on Era Vanguard’s available funds.