CH79 | DI

After the conference call with Epicura ended, there was a man who angrily threw his phone and erupted in rage.

It was none other than the portfolio manager (PM) of Capital Research Group.

“Shit, is this bastard out of his mind?”

Capital Research Group held a whopping 15.42% stake in Epicura.

Just four months ago, it was only 9%, but they had increased it in anticipation of a real estate spin-off.

However, CEO Whitmer was firmly opposed to the idea.

Today, they had mobilized five major shareholders in favor of the spin-off to exert pressure, but Whitmer remained unmoved.

“Why is he acting like this?”

The person cautiously asking beside him was an analyst in charge of Epicura.

He had also listened in on the call and couldn’t help but feel puzzled.

“There’s no way he doesn’t know he could be dismissed at this rate
”

Whitmer’s actions were difficult to understand logically. However, there was a more urgent problem at hand.

“Recalculate the expected loss if the REIT plan falls through!”

As the likelihood of the real estate spin-off became even slimmer, it was time to seriously consider pulling out.

The PM, having given instructions to the analyst, headed straight to the execution trader.

“Unload as much of our Epicura holdings as you can!”

The execution trader, responsible for carrying out actual trades, couldn’t hide his troubled expression despite being tasked with executing the PM’s orders.

“Disposing of a significant amount will inevitably result in losses.”

Capital Research Group held as many as 18.7 million shares.

At market value, this amounted to about $6.4 billion. Dumping even just 10% of that would cause the stock price to plummet.

“Start by offloading small amounts so as not to affect the market. Make sure no rumors spread!”

It was a tricky order, but executing such tasks was precisely the role of an execution trader.

He paused to think for a moment.

“So, no rumors, huh
?”

Using block deals or multiple brokers had to be ruled out.

While that would allow them to handle the volume quickly, news of the major shareholder’s sell-off would spread in no time.

“Let’s check out the dark pool first.”

A dark pool is a private trading system operated by financial institutions.

The trader first posted the shares on Goldman’s Sigma S.

Minimum price: $43.00

Current price: $44.39

The key feature of a dark pool is that all information remains confidential.

Participants input their desired price and quantity, and transactions are only executed when the conditions match.

Matching results:

B987654/200,000/$44.23

B876654/100,000/$44.05

That’s how it works.

All participants only learn the trade volume and price after the transaction is complete.

This confidentiality was the greatest advantage of dark pools.

Here, large quantities could be sold without impacting the market price.

Although there were criticisms of dark pools due to their opacity, transparency in information wasn’t always beneficial.

Without such systems, the market would have fluctuated every time a major institutional investor managed their portfolio.

“Isn’t the trading volume too low?”

The trader posted additional shares in several other dark pools, but the execution volume fell far short of expectations.

“If I increase the amount any further, rumors will spread
”

There were over 40 dark pools, but listing shares on all of them was unwise.

Many traders closely monitored transactions within dark pools.

If shares of an unpopular stock suddenly appeared across multiple platforms, it could lead to speculation about a major shareholder’s sell-off.

Meanwhile, while the trader was mulling over these issues, the PM was walking away with a heavy heart.

The person he sought out was the Chief Investment Officer (CIO), the top investment manager responsible for overseeing all fund investments.

“It seems we need to pull out of Epicura.”

Upon hearing the report, the CIO’s expression immediately turned cold.

The PM had obtained approval to expand the position just a few weeks ago, confidently predicting the REIT spin-off.

And now, he was saying that judgment had been wrong?

“You assured us it was a sure thing.”

The CIO’s voice was filled with sharp warning tones. Depending on his response, the PM could face a significant reduction in his portfolio management funds, or even dismissal.

Desperately defending himself, the PM argued,

“Two activist funds are already involved, and 49% of major shareholders are in favor, with the general meeting just around the corner.”

The PM’s voice was tinged with frustration.

In a typical situation like this, the CEO would usually try everything to placate the shareholders.

Thus, his judgment that the real estate spin-off demand would be accepted wasn’t entirely unreasonable.

On the contrary, it was strange that Whitmer was holding out so firmly.

And that wasn’t all.

“Rather than a spin-off, it looks like he’s planning to sell Harbor Lobster before the general meeting.”

“Sell it? Before the general meeting?”

“Yes, that’s correct.”

A brief look of confusion flickered across the CIO’s face.

Selling Harbor Lobster was bound to provoke shareholders’ anger.

Yet, Whitmer chose to take this step right before the general meeting.

It was akin to putting a knife to his own throat.

“Do you have any idea why he might be doing this?”

“I don’t know. Unless he’s lost his mind, he wouldn’t be acting this way.”

The CIO nodded in agreement.

By now, his expression had softened.

“Unlucky, it seems.”

Wall Street is merciless toward failure, but it tends to be relatively lenient when the failure is unpredictable.

If investors were forced to bear unforeseeable risks, they would be too afraid to make future investments.

Whitmer’s actions as Epicura’s CEO were unpredictable.

Therefore, in this case, the PM couldn’t be held responsible.

What mattered now was not assigning blame, but mitigating the damage.

“If we withdraw at this point, the losses will be significant.”

“
That’s right.”

The CIO remained silent for a while.

After a long pause, he finally spoke.

“Let’s hold off for now.”

“Sorry, what?”

“Maybe we haven’t applied enough pressure yet.”

With that, the CIO immediately called someone.

The name appeared on the screen of the smartphone on his desk.

<Dex Slater>

The PM’s eyes widened at the sight of the name.

Dex Slater was notorious on Wall Street.

He was the CEO and CIO of Shark Capital.

Known by the nickname ‘Great White Shark,’ he had a fearsome reputation.

[What’s going on?]

Slater’s voice rang out through the speakerphone.

“Busy these days?”

[When have I ever not been busy?]

“If you’re that busy, I’ll hang up.”

[Well, I suppose I can look into one or two things.]

“Do you know anything about Epicura?”

The CIO got straight to the point.

He detailed Epicura’s poor performance, its excessive real estate holdings, and the background of their efforts to pressure the CEO.

There was a clear intent behind sharing such detailed information.

They wanted Slater to take the lead in pushing the REIT spin-off proposal.

Essentially, the major shareholders were voluntarily calling in the ‘Great White Shark.’

But this sort of thing wasn’t uncommon on Wall Street.

When there were disagreements with management, major shareholders often sought the help of activist funds.

Sharks had significant expertise in pressuring executives, making them valuable allies for major shareholders.

“If you’re interested, we’ll give you our full support.”

This meant they would unconditionally back Slater if he decided to join the fight.

If things escalated into a proxy battle, they would start with 15.43% of the shares in hand.

This was an appealing offer for Slater as well.

However, he was cautious.

[I’ll think about it and get back to you.]

***

Four days had passed since I returned from my business trip to Florida.

Things were progressing smoothly.

“Is the list of acquisition candidates ready?”

We were now officially pursuing the acquisition of a new brand.

This meant that Whitmer had chosen my strategy.

Against all odds, my plan had been accepted over the MD’s proposal, despite me being just a low-ranking employee.

In this situation, one might expect Pierce to be disgruntled, but his reaction was surprising.

He showed no hostility toward me at all.

Even now, he was smiling so broadly it seemed his mouth might split, as he said,

“Thanks to you, we’re about to earn double the commission.”

‘Is he being sarcastic?’

For that, his face was far too cheerful.

“Not only consulting fees but also acquisition commissions—it’s a win-win, isn’t it?”

“It seems real estate is quite important.”

Jeff, standing beside Pierce, added a comment.

He intended to emphasize once again that this was not because my strategy was exceptional, but because Whitmer was excessively obsessed with real estate.

‘Yeah, that reaction seems normal.’

Even if Pierce had decided to use me, it would have been sensible for Jeff to display at least some level of wariness toward me.

Yet Pierce showed no such signs.

“Come to my office in 10 minutes. We’ll be speaking with the CEO.”

When Pierce mentioned that he would involve me in the call with the CEO,

Jeff couldn’t hide his shock.

“Sean too
 together with us?”

“Whitmer would probably prefer it that way. It’ll save time explaining the situation.”

He wasn’t wrong, but still


Why was he being so accommodating, despite the fact that my strategy had been chosen over his?

Pierce’s suspicious behavior didn’t end there.

During the call with the CEO, he even asked me this question:

“Which brand among these do you think would be the most suitable?”

He was asking which brand from our shortlisted candidates would be best for acquisition.

And he asked this during a direct call with the CEO.

“I recommend the seafood brand Double Crab House. It would be easier to attract existing Harbor Lobster customers than with a completely unrelated brand.”

Selling off Harbor Lobster and acquiring an unrelated brand would mean starting from scratch.

On the other hand, acquiring a seafood chain might entice regular Harbor Lobster customers to think, ‘Why not give it a try?’

That was the crux of my argument.

“I agree with that opinion.”

Pierce immediately expressed his support for my view.

[Then proceed with Double Crab House.]

Since both Pierce and I had recommended it, Whitmer approved without hesitation, and the direction was ultimately decided based on my suggestion.



.

It’s not bad that things are going smoothly, but


This is an acquisition worth a whopping $500 million.

And yet, they’re proceeding according to the opinion of a mere analyst?

Honestly, this reeks of suspicion.

“Are you coming on the next business trip too?”

After the call ended, Pierce even asked me this question.

This
 wasn’t an order but a suggestion.

It was as if he was giving me a choice.

“No, I think I’ll stay. There’s a lot of work to handle here at the office.”

“Alright. Then Chris will go this time.”

He readily accepted my decision to stay behind.

Something still feels off.

‘What’s his real motive?’

It can’t be that he genuinely acknowledges my abilities or holds goodwill toward me.

That cunning MD must have some hidden agenda, but not knowing what it is leaves me feeling uneasy.

“Why aren’t you going on the trip?”

As soon as I returned to my seat, Dobby asked.

Meetings with the CEO were great opportunities to build connections, so analysts and associates usually pounced on them eagerly.

It must have seemed odd that I voluntarily turned it down.

But I had my reasons.

“I have something else to investigate.”

The new chain acquisition was merely a procedural necessity.

Right now, I had something more important to focus on.

I immediately accessed the SEC’s EDGAR database and searched for any 13D filings.

A 13D filing is a mandatory disclosure required when someone acquires more than 5% of a company’s shares.

I checked for any 13D filings related to Epicura, but there were none.

‘Not yet?’

On Wall Street, a 13D filing carries significant implications.

Shareholders with more than 5% ownership gain various rights, such as calling special meetings, proposing CEO dismissals, and nominating board candidates.

All of these are threatening actions from the management’s perspective.

Therefore, when an activist fund acquires more than 5% and files a 13D, it is perceived as a declaration of war.

It’s essentially a signal that they plan to make a move.

“Why? Worried another shark might show up?”

Dobby, who had crept up beside me and was peering at my screen, asked.

That was exactly it.

I was watching for any signs of the Great White Shark’s move.

But so far, there was no indication of any activity.

‘Are they planning a surprise attack?’

Sharks typically accumulate just shy of 5%—around 4.8% or 4.9%—before swiftly buying up more shares and filing a surprise 13D.

The Great White Shark might be employing the same strategy.

As I was deep in thought, a Bloomberg alert sounded.

<Epicura: High likelihood of Harbor Lobster sale
>

It was a speculative report about the sale of Harbor Lobster.

Since we were working with Goldman on the sale, we had known about it for months, but this was the first public announcement.

The news caused Epicura’s stock price to plummet by 20%.

Selling off a flagship brand was seen as negative news.

However, the stock recovered to its original price within half a day.

“The recovery is too fast. Isn’t this better than expected? It seems the market is reacting positively after all.”

Dobby interpreted the rebound as a sign of investors’ confidence in Epicura.

But I saw it differently.

‘He’s here.’

The Great White Shark.

They probably leaked the news on purpose to drive the price down and took the opportunity to buy in bulk.

My intuition was spot on.

Two days later, breaking news confirmed my suspicion.

<Shark Capital acquires 5% stake in Epicura
 13D filed>

The Great White Shark had made its move.