Hollywood New Century

Nancy Davis and Simon sit on the sofa chatting in the ballroom of 666 Fifth Avenue in Manhattan, New York.

"Simon, what do you think of this building?" Nancy Davis asked suddenly with a smile.

"How?" Simon didn't understand what she meant.

"Kushner Properties, a real estate group on the New Jersey side, paid $1.8 billion for this Midtown Manhattan tower," explained Nancy Davis.

"The Kushner Group, the Kushner Group that was imprisoned the year before last for undertaking the construction of the World Trade Center?" Simon asked.

"Yes, now his eldest son, Jared Kushner, manages the company, and it's a big deal as soon as he shoots," Nancy Davis said with some admiration.

While the Kushner Group only made a $50 million down payment, there was another $535 million in short-term high-interest loans and a $1.2 billion mortgage.

Simon smiled: "Yes, it's very bold!" It turned out to be the first waste son-in-law of the United States in the future. This building is being purchased at such a high price, but it will lose money for many years in the future.

"However, I seem to be more interested in the Manhattan regional weekly The New York Observer, which he acquired two years ago. He doesn't understand the media industry. The future of this weekly newspaper seems to be very obvious!" Simon smiled. The guy's business vision is too bad, donating money to Harvard University doesn't seem to be genuine.

"Oh, the New York Observer made a special report on you last year, Hollywood's upstart technology vision!" Nancy Davis smiled, and Simon Pike's reputation in New York also gained.

"Look over there, Steven Ross of Vonada Real Estate Group, there are a lot of real estate tycoons here today," Simon said.

Nancy Davis looked, but looked at another person and said, "That is John Paulson, the head of Paulson's hedge fund!"

"Not related to our Treasury Secretary Henry Paulson?" Simon laughed. Henry Paulson became the 74th U.S. Treasury Secretary last July and was the chairman and CEO of Goldman Sachs Group before.

"Okay, Simon," Nancy David shook her head, interrupted Simon's joke, and said seriously:

"The Paulson Fund began shorting ABX at the end of last year, and it also bought CDS this year. This is a precursor to bearish real estate, and it's basically the same idea as you!"

ABX, the composite index of subprime mortgage bond prices. When the subprime mortgage risk increases and the price of securitized subprime mortgage assets falls, the ABX index declines accordingly;

CDS stands for credit default swap, subprime bond insurance.

Moreover, both ABX and CDS are "over-the-counter" transactions that do not go through exchanges, and investors and traders negotiate prices in various ways.

"John Paulson, you are still quite courageous," Simon's eyes brightened. After all, the real estate is still strong, and shorting is a loss.

"Same as your analysis, short ABX directly, and keep buying CDS," Simon feels that it can really start now, after all, the price of CDS will get higher and higher as time goes on.

As credit insurance for subprime housing bonds, CDS serves as a hedge against subprime mortgage risks. Investors can get compensation from insurance companies after real estate prices fall.

However, there are many institutions who do not believe that many people will default at the same time and cannot pay their mortgages, so they do not buy CDS, and the house price does not fall. CDS is just a pile of waste paper, but once the house price falls, the price of CDS will skyrocket in an instant.

Various investment banks, real estate loan companies and real estate investment funds all hope to have this thing to offset losses.

"Apple's stock price is now $90 a share. We have more than 3 million shares with a market value of more than $270 million. Mortgage to the bank, at least $100 million loan first, we have to start entering the game!" Simon can't wait any longer. , I can't forgive myself for missing this time.

"Apple's stock price is rising very well now, and it can be mortgaged, but if we also acquire CDS, if the house price does not fall, we will lose a lot of money in vain. According to the current situation, we have to spend at least 6% of the subordinated bond price to buy Corresponding CDS, 100 million US dollars of bonds, when the house price does not fall, the loss of 6 million a year, plus bank interest, will exceed 10 million US dollars!" Nancy Davis hesitated.

Simon said solemnly: "But as long as the house price falls, there will be a large number of buyers who can't repay the loan and default, and the CDS in our hands will increase several times!"

"However, there must be millions of people who can't repay the loan. After all, the current real estate market, the government, banks, and credit institutions are all involved," Nancy Davis sighed.

"Okay, Nancy, let's go out for a walk at night, I will convince you to agree with my idea," Simon didn't want to argue, Nancy Davis, as the head of the Nine-headed Bird Fund, wanted to talk to herself It's good to work together.

Nancy Davis nodded and said, "Well, as your money manager, I have the responsibility to avoid risks for you!"

"Understood, drink a bar!" Simon said, raising his glass and touching her.

"That's Peter Peterson, one of the founders of the Blackstone Group. It's amazing that a private equity fund like Blackstone can go public!" Simon was stunned.

"Come on, we'll be going to the New York Stock Exchange next month to ring the bell," Nancy Davis said, then smiled,

"Last year, the KKR private equity fund in Europe was listed in Amsterdam, which gave a blueprint for Blackstone's operation!"

"As the first listed private equity fund in China, that's right," Simon has no interest in investing in Blackstone. "I heard that they are quoting Hilton Hotel Management Group?"

Nancy Davis nodded and said: "More than half of the more than 80 billion funds managed by Blackstone Group belong to real estate investment funds. Last year, they competed with Vonada Real Estate Company and won the acquisition battle of KOP, an office real estate company. The Hilton Hotel has been acquired, and the listing is mainly for this financing!"

"Hey," Simon sighed. Blackstone Group also raised 3 billion US dollars from CIC in this listing, which is really super expensive. Blackstone Group was actually valued by CIC at 30 billion US dollars, and spent 3 billion US dollars for 10% without voting shares.

I don't know how many times the CIC has been taken advantage of in Europe and America! Blackstone's $3 billion will shrink by at least half next year.

"Hi Simon, we meet again now!"

"Of course I should cherish being able to communicate with so many business elites,"

"Yes, this is a good opportunity for our young people to learn!"