Lenny touched down in the early morning hours. At least, his body clock said it was early morning. It looked like noon outside. He managed to get through customs with his briefcase and one piece of luggage. He was lucky enough to see a big display board with the hotels listed in separate squares. Each one had a three-digit number to dial on the special phone for the shuttle service. Thank God the person spoke English! Lenny thought as he heard them pick up. He said his name and the airline he had just arrived on. They told him to watch for the shuttle bus. It should be there inside of fifteen minutes.
Within the hour Lenny was checked into his room and was calling Vladimir via his disposable phone. Vladimir told him the meeting was in five hours. He should eat something and get to sleep. Keep the phone by the bed with the ringer on loud. Vladimir would call him one hour before the meeting. The meeting was to occur in his hotel suite. Vladimir would contact room service and arrange for meals to be delivered to the room. This would be a meeting where you ate and drank. Lenny agreed to everything, then went in search of some fast food. The hotel restaurant was still serving a breakfast buffet. Lenny really had a taste for a burger and fries, but after starving on the flight the “all you can eat” part was starting to sound good.
Lenny was later pulled out of a coma-like sleep by a bizarre noise. He fumbled around in the fog of his brain and searched with his bleary eyes around a room he did not recognize for the source of it, but then it stopped. Where the hell am I? He thought, rubbing his face and eyes trying to wake up. Then that noise came back. He saw it was coming from a cell phone on the night stand so he grabbed it and answered “Hello.”
“You must have really been out of it,” said the voice on the line.
“Still am,” responded Lenny.
“You have just under an hour to get ready for the meeting,” said the voice.
“Meeting?”
“Go take a shower. I will be there in half an hour.” “OK. Vlad?”
“Good. Your synapses are beginning to fire again. Glad I’m not there, as I think it would be a frightening sight.”
“At least I know where I am now. I’ll get a soda out of the vending machine to wake up, then take a shower.”
“Just be done with the shower before I get there. I haven’t seen you since we were kids and don’t want you answering the door in a towel like you were expecting some prostitute.”
Lenny laughed and hung up.
Vladimir’s comment struck home, at least partially. Lenny found some pants to put on before wandering the hall looking for a soda machine. He also managed to find his room key before walking out of the room. That would just be perfect, he thought. I know about three words of German and none of them would help me get the hotel staff to unlock my door.
Lenny finished his shower and got dressed. He was sitting at the table in the other room his suite came with going through the documents he had brought with him. The hotel had a business center downstairs so they would be able to write up some official-looking letter and print it out on the company letterhead he had brought with him. Then there was a knock at the door.
They had not seen each other since they were about nine or ten, but Lenny had not expected the sight of Vlad in a wheelchair.
“Greetings, Lenny.”
“Hello, Vlad. Please forgive me, but you said nothing about being in a wheelchair over the years.”
“Wasn’t much point. I am what I am and do what I do. I just get shot at less now. The food should be here inside of fifteen minutes. I checked downstairs before coming up in the elevator.”
“When do you expect the others?” “Knowing them, following the scent of food and Vodka up the elevator to this room.” Lenny laughed. “At least we will have something in common.” “So, you have been doing many of these plays?” “Never one this big. Well, that’s not true. Never one where I had this much cash to throw at it. I’ve had a lot of plays which returned far more, but never had half a billion to throw into them. Probably a good thing or I would be in jail and unable to visit you, cousin.” Now it was Vladimir’s turn to laugh. “In Russia I can help keep you out of prison. You should consider moving there.” “I couldn’t have run my company remotely before now.” “And now you can?”
“I have one guy working for me who is a natural at this. He isn’t far from being able to fill my shoes. In truth, he came up with the information which allowed for this play and designed much of the play. As long as he could reach me by phone from time to time I could reside anywhere.”
“Then why don’t you move?”
“My wife would divorce me in a heartbeat if I mentioned taking her away from her favorite American shopping malls for more than a month. Then I couldn’t afford to live in a cave.”
Both men laughed.
“Thankfully, my occupation kept me from engaging in the most dangerous of habits.”
“You don’t realize how dangerous it is until you are already married and starting to really make money. Then it is just too late to get out.”
Another knock on the door interrupted the conversation. The joke became a reality at that point. Standing behind the room service cart were four men. One of them was obviously a hotel worker and Lenny assumed the others were the ones he was to meet. “Gentlemen! Come in.” He stood aside and gestured them all through.
Lenny shook hands then removed his briefcase from the table as the hotel worker began setting up the table for the meal. Once the table was set and the hotel worker tipped with a twenty-dollar bill, Vladimir began the introductions.
“Gentlemen, this is my cousin Lenny from America. He is bringing some almost legitimate work to you.”
The other men chuckled at such an introduction.
“Lenny, this is Dimitri and his two assistants. I must apologize for not knowing their names.”
Lenny shook Dimitri’s hand and Dimitri took over. “On my left is Boris and my right is Gleb.” Once again the hand shaking continued.
“Let’s all sit and eat,” said Lenny. “I don’t know what Vladimir ordered for us, but I’m sure I paid for it, so eat heartily.”
More laughter filled the room. Things were relaxing between the men. During the meal Dimitri asked, “So tell me, Lenny, what is it your company actually does?”
“Well, given that you are friends of Vladimir, I will tell you the truth. On the surface we are simply industry analysts. While we do invest some money for others, we are not a licensed investing firm. At least we don’t have the kind of license and regulation which would be required to open regular mutual funds. In truth, what we do is find information at least three days in advance, then act on it. We will not use information if it doesn’t have at least a three-day lead time.”
“And in your country this is not considered legal?” “Not even close. Nearly everybody does it, but when you get caught you tend to end up paying huge fines, or going to prison. You may have seen the news reports about Martha Stewart?” The men nodded.
“It is highly profitable, though,” chimed in Boris. “A three-day lead gives one time to spread trades across many accounts to avoid detection.”
“Exactly why we need the information at least three days in advance. In the matter of the current play I came to talk with you about we have had the information months in advance. We have already done several plays and more than doubled our assets. There are several big plays yet to be had with this information, but we cannot put all of the cash into it via our normal channels without getting caught. It is simply too much money. Like trying to hide an ocean liner in a bathtub.”
All of the men chuckled at that one.
Gleb finally entered the conversation saying, “We tend to be very good at taking people’s money.”
Now everybody laughed heartily.
“What is the nature of this play as you call it?” “We have known for many months that First Global Bank was in the process of offshoring all of their data centers. While the cost savings has helped their stock some, they are going to run afoul of banking regulations when they offshore the last two data centers. That time is approaching. At that point they will lose their FDIC insurance and most likely be taken over by the government to be liquidated or forced to bring operations back into the U.S. That play is a ways down the road, though.” The other men at the table weren’t that interested until the final sentence. Now they were all paying attention.
“You might have noticed some stock movement for Pytho Corporation lately.”
Dimitri nodded.
“We were a big part of that movement. We found out sometime last quarter that Pytho was about to roll out a new software product for a niche market. We made our buy while they were low, then sent out the leak about the new software product. I assume you have also heard that leak?”
Dimitri nodded again.
“Do you know what the niche is?” Dimitri shook his head.
“Banking.”
The other two gentlemen sat more forward now and began to pay closer attention.
“The first client they have signed is First Global. They have just completed or are about to complete the rollout of this software to all French banking operations. As Pytho delivers other countries it will be rolled out to them. We don’t have hard estimates yet, but they should complete rollout to everywhere inside of six months. At some point soon Pytho will announce the new software product and some time shortly after that First Global will announce how much money they intend to save using it.”
“Just how much money will they be saving?” “Using a third-party product allows them to terminate all IT staff in every country except for a token few kept around for whatever reason. It also lets them get rid of all the other computer systems. My own estimate is that they will reduce operational costs by at least $10 million per year. France alone will save them nearly $2 million per year.” There was silence and some glances. It was obvious to the men that Lenny was laying it all on the line. They could refuse to invest the money for him and use this knowledge for their own profit if they wanted.
“What would you have of us?”
“I need to set up some kind of investment arrangement with you, get some money in your hands as quickly as possible, then have you start buying an awful lot of First Global. I will tell you when to dump it. I will also tell you when to start selling short.”
“You have no interest in making more money from Pytho Corporation?” “I’ve already made over eight dollars per share from it in seventy-two hours. Yes, it will go up some more after the announcement, but not enough to warrant my attention at this time. First Global is currently trending down thanks to other financials and is now below where it was before I did the first play. That is where the money is to be made. Once they announce the use of Pytho software, the rest of the industry will find out about $10 million per year in cost savings. Coupled with the dramatic drop in data center costs, plus the profitable sale of a few data centers their stock will be up another twenty dollars per share after they announce this quarter’s numbers. I’ll be getting out once it crosses the eighteen-dollar bump threshold.” “And you wish to start shorting as soon as you are out?” “I’ll contact you and tell you when to start shorting, if I decide to make that play. We will be shorting Pytho Corporation and Big Four Consulting, but some other country may force me to walk away from the First Global shorting.” Even Vladimir was paying attention now.
“We haven’t finished our research yet with respect to the insurance requirements and restrictions put forth by other countries. In the U.S. There is a restriction that all workers with significant access to a bank’s computer system must go through government background and security checks. When the data center is in a different country and not owned by the bank, it is quite hard to enforce the background checks and/or do them well. There may be another country on the list with the same restriction. First Global is converting the foreign countries first because they have the highest cost of operation and least positive impact on the bottom line. I know for a fact the announcement will come soon and that the French migration isn’t going to cause this problem. I will get to make the first play. The others will happen if no other country gets in the way, and if that happens the others just won’t be as big of a play.”
There was silence in the room now. Dimitri was looking directly at Lenny contemplating. Finally Dimitri spoke. “You don’t mind us and our clients riding along on this big play?”
“They can ride along, but they cannot ride along big unless you can spread the trades across hundreds if not thousands of trading accounts held by individuals. Too much money being put into this will alert suspicion before it is time. Once you notify me that all of my money has been invested I will put out the rumor that First Global is the first client of Pytho’s software. After that they can ride with as much as they want. The rumor will spread like wildfire.”
“You have no objection to some of our clients taking a small gain with Pytho on its way up after the announcement?”
“That information is out there. Do with it what you will. I can only handle so many angles of this at once.”
Again Dimitri nodded. “And you are looking to put half a million in play?”
“Half a billion” responded Lenny. “That is why I need someone who can spread the trades around. If all of that hits from one place on one day it will attract too much attention. When it comes time to do the shorting there will probably be three quarters of a billion sitting in the account that will allow for a lot of shorting credit.”
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