mynovelweb Chapter 57 Full Warehouse Yahoo
Chapter 57 Full Warehouse Yahoo
July 5, 1996, Los Angeles.
IceCloud's investment in Alienware's startup is on track, with an initial administrative structure established and the technical team, led by Nelson and Alex, working diligently to optimize the "Blade" prototype. IceCloud has handed over day-to-day operations to the two founders and the newly recruited management team, while turning its attention back to the volatile capital markets.
His hotel suite's living room had been transformed into a makeshift trading command center. A laptop was connected to a high-speed internet connection, and next to it lay printed Yahoo financial reports, industry analysis reports, and several sticky notes filled with numbers and formulas.
On the screen, Yahoo's (YHOO) stock price chart clearly showed a typical post-IPO pullback pattern. This pioneering internet portal, which debuted on Nasdaq on April 12th at $13 per share, experienced a brief period of euphoria before its stock price steadily declined, accompanied by continuously shrinking trading volume.
Lingyun's gaze was fixed on the current stock price—hovering around $3.9. Compared to the offering price, the drop was as high as 70%! Recent trading volume had shrunk to an extreme level, selling pressure had dried up, and the daily candlestick chart showed a bottoming pattern of small bearish and bullish candles.
"The panic selling has run out, speculators have left, leaving only true long-term investors and desperate panic selling," Ling Yun muttered to himself, his eyes sharp as an eagle's. "This is the 'extremely low volume' I've been looking for."
He quickly did the mental calculations. Previously, through Mr. Zheng's currency exchange and some short-term profits from US stocks, he had approximately five million US dollars at his disposal. His Goldman Sachs account had 10x leverage, meaning he could directly access fifty million US dollars in purchasing power.
A bolder plan took shape in his mind. He needed more ammunition to build a sufficiently large position at this historic low.
He picked up the phone and dialed Richardson's number directly.
"Richardson, it's me, Ling Yun."
"Mr. Ling! Hello! How's everything going with Alienware?" Richardson's voice was as warm as ever.
"Everything went smoothly. Now there's another matter that requires your assistance." Ling Yun's tone was calm, yet carried an undeniable decisiveness. "I believe the time is right for Yahoo to build its position. I need to add another $30 million in leverage on top of the existing amount."
There was a two-second silence on the other end of the phone, clearly Richardson was processing this sudden and enormous request. An additional thirty million, combined with Lingyun's existing funds and leverage, would bring the total operating capital to an astonishing level!
"Mr. Ling... are you sure? Yahoo's stock price is still on a downward trend, and the market lacks confidence in this kind of unprofitable internet company..." Richardson reminded him out of professional habit.
"I'm sure," Ling Yun interrupted him, her tone unwavering. "What I'm optimistic about is its future portal status and traffic value, not its current financial statements. Execute it, Richardson. I'll bear all the risks myself."
Sensing the absolute confidence in Ling Yun's tone, Richardson said no more: "Okay, Mr. Ling! I'll immediately apply to the risk control committee. Based on your account's existing high-quality assets and previous transaction records, approval should be granted as early as this afternoon!"
"As soon as possible." Ling Yun hung up the phone.
That afternoon, Goldman Sachs officially notified him that the additional $30 million in financing had been approved.
At this moment, Ling Yun's total capital scale has reached: 500 million of his own funds + 2000 million of initial leveraged funds + 3000 million of additional leveraged funds = a total purchasing power of 8000 million US dollars! After deducting some reserved funds and considering the need to control the position, he plans to use about 5000 million US dollars for this position building.
The target is Yahoo, and the cost must be kept below $4.
The US stock market opened at 1 p.m. on July 5.
Lingyun did not blindly rush in with a market order. Doing so would not only make costs uncontrollable, but could also cause the stock price to rise instantly due to a large influx of orders, attracting market attention and leading to a significant increase in subsequent share accumulation costs.
He adopted a more covert and patient strategy—placing buy orders at different price levels.
He placed buy limit orders of varying quantities at multiple price levels, including $3.70, $3.75, $3.80, $3.85, and $3.90. These orders were mixed in with numerous retail orders, like traps set by experienced hunters, waiting for panic selling or unconscious sell orders to come to them.
On the trading screen, Yahoo's stock price continued to fluctuate narrowly between $3.85 and $3.95, with low trading volume. Occasionally, a few or a dozen sell orders would appear, but they would be instantly absorbed by buy orders placed by Lingyun at lower prices.
Throughout the afternoon, Lingyun kept a close eye on the screen, occasionally adjusting the number of orders at each price level based on the trading activity to ensure a smooth buying pace and prevent any unusual activity.
At the close of trading, Yahoo's stock price settled at $3.88, and he successfully acquired approximately 3.2 million shares.
July 6th, Friday.
Perhaps due to the weekend effect, or perhaps because the last wavering holders chose to exit, Yahoo's stock price experienced a slight wave of selling pressure after the market opened, briefly touching a low of $3.72 for the day.
This was exactly the opportunity Lingyun had been waiting for.
He acted swiftly, increasing the density and number of buy orders between $3.72 and $3.85. These buy orders, large and small, silently absorbed all the sell orders flooding the market, like sponges absorbing water.
His actions were as calm as a machine, devoid of any emotional fluctuation. For him, a drop in stock price was not a loss, but a golden opportunity to accumulate shares at a lower cost.
Trading was unusually active throughout the morning, but almost all of it was at low levels. Lingyun's holdings increased rapidly.
By the afternoon, selling pressure had noticeably weakened, and the stock price began to slowly recover. Ling Yun judged that he had already absorbed the vast majority of the cheap shares in the bottom area. Without further hesitation, he placed a limit order with the remaining funds at around $3.95, slightly above the market price, aiming to clear the battlefield and complete the final position building.
When the closing bell rang at 4 p.m., Yahoo's stock price was fixed at $3.96.
Ling Yun let out a long sigh, leaned back slightly, and stretched his stiff neck.
He retrieved the account's holdings information:
Securities: YHOO (Yahoo! Inc.)
Number of shares held: 13,000,000
Average cost: $3.80
Total investment: $49,400,000 (approximately US$4940 million, with the remainder reserved for reserve funds and transaction fees).
In just two days, he used nearly $50 million to build a position of 13 million Yahoo shares at an average cost of $3.80!
This holding size is not to be underestimated, even among institutional investors.
Looking at the record on the screen representing his massive holdings, a satisfied smile finally appeared on Ling Yun's lips.
He knew he had secured this high-stakes gamble at the most ideal and cheapest price point available after Yahoo's IPO. This was more than just a simple investment; it was a perfect execution of his revitalized advantages and his accurate prediction of future trends.
The wave of the Internet is about to sweep in with overwhelming force, and he already holds a very important ticket to board it.
The next step was to wait patiently, waiting for the tide to rise and propel him and his Yahoo behemoth to the pinnacle of the era. He shut down the trading software; outside the window, the Los Angeles cityscape was ablaze with lights, dazzling yet full of unknowns.