House of Trelawney

by Hannah Rothschild

  Looking at the downward market movements on her computer screen, Blaze saw that the value of her stocks was falling. Since Moonshot Capital’s inception in October, most of her investment decisions had gone the wrong way: her fund was losing money on crude oil, Apple and bank stocks. Their biggest position, £75 million in an Indian telecom business, had turned out to be the worst performer; Blaze had been correct in predicting that the Indian mobile-phone market would expand quickly but wrong in assuming that the providers would make money; that investment halved in value. She pushed back her chair and took a sharpened pencil and piece of paper from her desk, then went back over her calculations.

  Moonshot Capital had raised £500 million, but Blaze had made two mistakes: the first was to invest in the wrong companies, the second was to leave £200 million in cash. Her competitors, Sleet and Wolfe, had made big bets, mainly by shorting ailing companies, and were up 10 and 12 per cent respectively. Her self-confidence was wavering: had she lost her touch? Why was she, known for her steely, unemotional persona, suddenly so indecisive? She tried to attribute it to her father’s death but the real reason was that, since New Year’s Eve, Blaze had thought of little else but Wolfe, going over and over the events and coming to the same conclusion: she had thrown away her greatest, perhaps her only, chance of happiness.

  Looking through the glass window of her office to the trading floor, she saw six pinched, worried faces. She called TiLing on the intercom.

  “Do you have a minute?”

  TiLing tore her eyes away from the screen and came in, closing the door behind her.

  “Have you seen the latest results?”

  TiLing nodded.

  “Have I lost my touch?”

  TiLing leaned against the door and shook her head. “You’ve lost your concentration. You are physically present but mentally absent. In the past you thought deeply, you researched and interrogated decisions, ran the ideas and strategies through computer simulations, debated their worth and rehearsed outcomes. Recently you have been whimsical and illogical, making the craziest decisions against your colleagues’ advice. We’re sitting on £200 million of cash and our investors want to see some return. They could make more money by sticking it in a high-yield-interest bank account.”

  Blaze was silent; TiLing was right. “Who’s that?” she asked, pointing to a new face in a corner of the back office.

  TiLing looked over her shoulder. “An intern,” she said distractedly. “Joe Smith or Jones or something.”

  “Why do we need an intern?”

  “We took him on as a favour for a friend of a friend.” TiLing wished Blaze would focus on what really mattered.

  “What happens if he’s a spy?” Blaze said, looking at the young man.

  “If only we had something to hide.”

  Blaze picked up a pencil and began doodling on a piece of paper. This time she drew clouds hanging over a stick woman.

  “My mother’s carer walked out. I’ve been trying to find a replacement. You’ve no idea how difficult it is to persuade people to go to Cornwall.”

  Overcome by frustration, TiLing sprang across the room and smacked her hand on the desk. Blaze jumped.

  TiLing leaned towards her. “Please, can you concentrate on business during office hours? On Friday, during the investment committee, you wittered on about cream teas and burial sites. This morning you bought more Microsoft shares when it’s perfectly obvious that few will buy new computers during a recession. Last week, our analysts advised that the Indian government’s decision to issue licences to eight new mobile-phone providers would lead to a tariff war and margin pressure; you ignored the advice. Even though there’s an oil glut, you went out and bought more crude.”

  “Those investments will come good.” Blaze hoped the doubt in her mind wasn’t audible. “We have to play a long game.”

  “Spalding are thinking of switching back to Kerkyra,” TiLing replied. The insurance company’s decision to move to Moonshot had been their biggest triumph; if word got out that Spalding had lost confidence, others would be bound to follow.

  “It’s a few weeks into the new year. Why are they so skittish?” Blaze asked.

  “If you haven’t noticed, the markets are in free-fall.” TiLing couldn’t believe she was having to explain this to Blaze, of all people.

  She handed Blaze a letter.

  Blaze recognised the headed paper; it was another of their major investors. Your decision to stay underinvested and long in cash is lamentable; you’re looking like a one-trick pony, able to call a crash but unable to navigate a recession. I’m out. It was signed Jim Treherne, Kingsland Asset Management, who had put £25 million into Moonshot Capital.

  “Is this a joke?” she asked, knowing that it wasn’t.

  “Three guesses where he’s moved his money?”

  “Kerkyra,” Blaze said.

  TiLing nodded.

  Blaze looked across at the intern who was talking into a phone with his hand cupped over the receiver.

  “I want that man’s CV. I don’t trust him.”

  TiLing’s desperation eviscerated any politeness. “Stop thinking about an intern, start thinking about where to put our money. Three other clients are threatening to switch to JW Inc.”

  At the mention of Wolfe’s company, Blaze flinched. She had left several apologetic messages on his voicemail, but he hadn’t returned any of her calls. Knowing TiLing’s eyes were on her, she turned away towards the window. The large office block on the opposite side of the road, once a hive of activity, full of traders and stock pickers, was now empty. Empty buildings were like ghost ships of former businesses. In their street there was only one whose lights were on: Barclays Bank. Blaze got up and, leaning her head against the cool glass, tried to think. She had to make a decision, any decision would be better than none; it was time to get back in the market and behave like a conviction investor.

  “What do you want to do?” TiLing asked.

  “We’re going to make a big investment. I’m going to raise £1 billion, using all of our assets as leverage,” Blaze said in a bright but unconvincing tone.

  “There is no liquidity in the market and, with our performance, who’s going to lend us more money?” TiLing replied, thinking about Sleet’s ongoing campaign to discredit Blaze.

  “Do you remember Helmut Myer of PNB?”

  “The Prussian bank?”

  Blaze nodded. “I saw him at Sleet’s party; he told me to come to him with any good ideas.”

  “I’m looking forward to hearing those.” TiLing sat down wearily on the small sofa in Blaze’s office.

  “We have to take a risk and be bold. Fortunes are never made on the back of timid decisions.” As she spoke, Blaze ran through a list of investment ideas. She didn’t like any of them in particular.

  “For months you’ve been saying there’s nowhere safe to put our money. How are you planning to rework the narrative?”

  Blaze looked at the building up the road, at the hum of activity in Barclays, wondering why she hadn’t considered it before. “We’re going to buy bank stocks.”

  “They’re riddled with problems.”

  “Governments learned their lesson by letting Lehman’s go down. Bush has pumped billions into the economy; Obama will follow suit. There’s no way they’ll let another big institution fail.” Blaze felt a bubble of excitement rise in her chest.

  “Look at their balance sheets. Banks are mired in debt after years of reckless decisions. Even if central banks prop up the rotten businesses, they can’t control the share prices. My strong recommendation is that we use our liquidity and diversify from our existing bank holdings.” Frustration propelled TiLing to her feet. It took all her resolve not to punch the wall.

  Although every word her colleague said made sense, Blaze couldn’t agree. “The G20 will create fiscal s
timuli and institute programmes of quantitative easing. They’ll slash interest rates and pour more money into the economy.”

  “What’s happened? Where’s this new strategy come from?” TiLing couldn’t understand why Blaze, so timid in recent weeks, had changed her mind.

  “I’ve been thinking about the macro situation—the U.S. government provided the Bank of America with another $20 billion and the British government put £500 billion into the economy in October and are considering doing more. The rest of Europe, bankrolled by the U.S, are bound to follow suit. We must buy as much as possible, markets are certain to rise.” Blaze turned around to face TiLing and spoke in a low, determined voice. “I am going to take a big position in Barclays.”

  “Barclays?” TiLing spat out the name. “It’s not worth the paper its shares are written on. If you remember, we bought £5 million worth at 150 pence per share at the end of last year. As of today, they are at 90 pence.”

  “It was worth over 500 pence a share; the government can’t let it go down.”

  “The share price can and will go a lot lower,” TiLing argued.

  “This is exactly the time to double our holdings; triple or maybe quadruple them. We can make up our early losses. We have to be bold, hold our nerve.”

  TiLing was exasperated. “You’re crazy. Where the hell did you get that idea from? Look at the balance sheets, listen to the rumours about their results. Barclays are bust, Blaze. They are overleveraged, have bought badly and are run by people who put their own bonuses before their shareholders’ interests.” This time she couldn’t contain her irritation and, slamming her hand on Blaze’s desk, sent a pot of pencils flying.

  But Blaze had made up her mind. “I’m going to put another £1.4 billion into the market.”

  “If you do this, I’m leaving,” TiLing said.

  “That’s your decision.” Blaze’s tone was icy.

  TiLing shook her head sadly and left the room, closing the door hard behind her. Through the glass panel, Blaze saw her address her team. There was a brief discussion and then all six employees packed up their possessions and made their way out of the office, one or two throwing their erstwhile CEO a reproachful glance. Before he departed, the intern made a call, all the while his eyes on Blaze. TiLing was the last to leave. Turning to Blaze for the final time, she shrugged and didn’t smile.

  Blaze put in a call to Helmut Myer and outlined her plan; she’d provide security of all of Moonshot’s remaining assets in return for a loan of £1 billion. One hour later the banker got back to her: PNB would lend her £600 million at LIBOR plus 1.3 per cent. They were expensive terms but Blaze had no alternative. The credit line was opened and at 4 p.m. she bought £400 million worth of Barclays shares at 82 pence per share. It was an audacious move but she felt confident. The markets closed with Barclays down a fraction at 81.29. She ran off any misgivings in the gym, pounding on the treadmill for an hour and a half. Later she ate a pizza and drank half a bottle of wine in the local trattoria, watched a suitably vacuous romantic comedy on her PC, curled up on the sofa opposite her desk and went to sleep. She felt wretched for TiLing and her team, who had given up other jobs to join Moonshot Capital; but this was the nature of a business that valued money over security and excitement over ease.

  * * *

  Sleet and Ayesha were having lunch on his boat, moored near Antibes. The young woman had accepted his invitation to join him in the South of France on condition that he provided a suite at the nearby Eden Roc hotel and agreed that this trip, like all their other meetings, was chaste. Sleet had to concede Ayesha was playing an enticing game. The week before he had bought her the entire new Prada collection; her thanks was a short message. Three days later he followed up by sending her an exquisite Monet sketch of the River Thames, which she acknowledged briefly. Now she sat opposite him, refusing the glass of vintage champagne, caviar and truffles, toying instead with a small green salad, her beautiful face composed in a perfect study of boredom. Sleet was amused by her game: he knew he’d win in the end. His intention had been to seduce and then abandon the girl; as the daughter of Kitto and Anastasia, it was what she deserved. For now, he was enjoying her spirited defence but knew she wouldn’t hold out for long: penniless little nobodies never could.

  Sleet had come a long way from Delaware. All the scars of his early childhood had been expunged. He had, through hard work, self-belief and achievement, changed his circumstances and risen like a phoenix from the ashes of impoverishment and the paucity of opportunity. Scholarships had carried him from an undistinguished one-room school to Yale, Oxford and Harvard Business School. Acumen landed him a job first at Goldman Sachs, and determination and complete lack of any personal scruples led to his success as an activist, stripping company after company of their fat and positioning them as slimmed-down, money-making machines.

  He used the profits to build a spectacular collection of Impressionist paintings. He had a yacht, a plane and seven houses scattered across the most desirable parts of the world. His suits were cut by the best tailors, his food prepared by the greatest private chef. But something was missing: however hard he tried, however much money he made, he seemed to lack that elusive, desirable and unquantifiable accolade—class; and however low the Trelawneys sank, they exuded and oozed insouciant, effortless style and utter certainty about their place in the world. He slavishly copied their idiosyncrasies, employing a man just to wear out the elbows of his cashmere jumpers; he wore a watch, like Kitto and his father, on the outside of his shirt cuffs; he bought a pair of engraved Purdey shotguns and took enough lessons to pass as an excellent shot. There were certain mores he couldn’t adopt: the aristocracy’s apparent disdain for cleanliness, and an unwavering affinity with Labradors and Scotland.

  Since that moment of utter humiliation at Anastasia’s feet, Sleet had been determined to eradicate the Trelawneys’ sense of superiority and his own feeling of inferiority. Bit by bit he bought land and had amassed as much as the Trelawneys owned at their zenith, including parcels of their former estates. He had shorted Acorn’s stock, partly to make money but mainly to ensure that Kitto was forever unemployable. He hired the dunderhead Ambrose just to belittle him. Through his spy Joe Smith, posing as an intern at Moonshot Capital, he kept tabs on Blaze: it turned out that she was good at prophesying loss, incapable of capturing any upsides. It wouldn’t be long before he bankrupted her and took over Moonshot; it was all a question of waiting and he had become good at waiting.

  Looking across the lunch table, he saw that Ayesha was texting on her mobile phone.

  “Who is more important than me?” he asked, unable to keep the irritation from his voice.

  Ayesha put the phone down. “No one is more important than you,” she said and then, to his surprise, leaned over the table, took his head in her hands and kissed him on the mouth for the first time. Sleet grinned broadly and tried to grab her by the wrist.

  “Let’s go to my cabin.”

  Ayesha shook her head. “I’m not that kind of woman.”

  “What kind are you?” Sleet failed to hide his disappointment. The prize was so near and yet so damnably elusive.

  “I am a virgin and will stay one until my wedding night.”

  Sleet’s mouth fell open. This was the last thing he’d expected. “You’re nineteen. Even my fifteen-year-old daughter has—”

  Ayesha held up a hand to silence him. “I don’t need to know.”

  Sleet sat back and laughed. He had to admire her gall. Marriage was absolutely not happening; it was far too expensive and he had enough heirs; no way was he wasting more than a few days on this girl.

  Ayesha stretched slowly, unfurling each of her long fingers and limbs, all the while looking Sleet directly in the eye. She knew exactly what he was thinking but, unlike him, she knew the outcome.

  “I’m going back to the hotel now. For a little nap in my room. Why don�
�t we go dancing tonight?”

  “I have to return to London, to work,” Sleet said.

  “What a pity. I don’t need to be home until tomorrow. Be a poppet and send the plane back to get me.” Without waiting for an answer, she blew him a kiss and walked off towards the yacht’s tender for a ride back to shore. Ayesha knew she was playing a high-risk strategy; she could only keep Sleet at bay and interested for a finite amount of time. Climbing down the steps into the waiting speedboat, she offered a silent prayer. Let’s hope you trained me well enough, Mummy darling.

  * * *

  Blaze woke early the following morning in her office and took a hand shower in the bathroom. She wiped her face clean of yesterday’s make-up and put on a coat of bright red lipstick. She made a cup of coffee and, opening her desk drawer, took out a bottle of vodka. Pouring a tot into the steaming black liquid, she offered herself a toast in the glowing computer screen. “Here’s to success,” she said with little enthusiasm.

  She played a game of solitaire on her PC until the markets opened at 9 a.m. Barclays’ shares had started at 82.21 pence. She punched the air; she’d made a couple of million overnight. The tide had turned. Barclays was coming back—and so was she. Tapping codes into her computer, she spent the remaining £600 million of borrowed money on more Barclays stock and sat back to watch. For the first hour, the market reacted to her investment and Barclays rose to 113 pence as others followed her lead. In less than sixty minutes, her stock rose further; on paper she made several more million. Her spirits soared further. But shortly after 11 a.m., the picture changed and the price started to slip. Sitting with eyes fixed on her computer screen, Blaze watched in horror as her money evaporated before her eyes. Within an hour, Barclays had fallen to 72 pence; over the next two hours, she lost £43 million. The shares closed at 67.34.

  She left the office in a daze. Drunk on fear and adrenalin, she wandered aimlessly along unknown streets. It was nearly midnight when she got back to her apartment. A bottle of wine and two sleeping pills later, she fell into a fitful sleep. As dawn broke, she got up and went to the gym. Two hours of running and weights failed to calm her nerves. At 9 a.m., when the markets opened, she received the first of many calls from Helmut Myer—what did she think was happening? The telephone rang incessantly: worried clients seeking reassurance; reporters, tipped off by someone, circling like vultures. By Wednesday night, Barclays shares had dipped to 61 pence. By Thursday they had fallen to just under 55 pence. Helmut Myer rang every thirty minutes: PNB needed urgent additional security or they would require her to sell shares to limit their losses.