“Don’t get me wrong,” Cusack continued with Leeser. “Goldman is the Parris Island of finance. Great training.”
“Yeah, maybe.” Cy leaned back in his chair, hands behind his long black hair, unimpressed by the boot camp analogy. “What buried your fund?”
“Bank investments. I was down thirty percent, when my investors bailed.”
“Our shop is good at one thing.” Leeser’s bloodless smile would send competitors reaching for their necks. “That’s making money. I hire people who can’t afford to lose.”
Leaning forward, Cusack replied, “That’s why I’m here.”
“Why don’t you reboot?”
“What do you mean?”
“Start over. John Meriwether blew up at Long-Term Capital.”
“Now he’s managing three billion down the road from here,” Jimmy acknowledged.
“Where else can you lose four billion and stick the landing?” whooped Leeser.
“Deep pockets help.”
“How much did you lose, Jimmy?”
“About sixty million. That’s why I can’t afford to lose.”
Especially when my father-in-law was the lead investor.
* * *
It was Caleb Digby Phelps III. And it was Caleb, not Cal. In the tradition of Phelps men, Caleb attended Harvard and joined the Porcellian—an exclusive club of Y chromosomes where the members blackballed Franklin D. Roosevelt years earlier. It was there, knee deep among the elite and the effete, that Caleb honed the savage business instincts of a Grim Reaper-in-law.
According to urban legend, “Porkers” took up collections for club members who had not amassed one million dollars by age forty. Caleb never needed the help. And not because he inherited a dusty fortune dating back to the family’s rum-running days during the 1700s. He was a business animal.
Caleb multiplied his trust at least ten times. He bought a nothing-special insurance business and injected new life. Phelps Financial was New England’s largest insurance agency, a cash cow that funded real estate investments. The family owned properties throughout downtown Boston, including several harbor sites bordering the New England Aquarium. Caleb’s losses at Cusack Capital, while significant, were modest relative to the family’s holdings.
* * *
“Why should I hire you?” Cy peered at Jimmy and waited for an answer.
It was the movie scene where Hollywood cops scream, “Take the shot!” It was the moment Cusack had rehearsed a thousand times in front of a mirror and during other interviews.
“Because nobody like me will ever walk through your front door, Cy.”
Leeser cocked an eyebrow and stared at Cusack. He waited and said nothing, but his body language spoke volumes. “This better be good.”
Take the shot.
“Because this market is about to flush itself. There will be chaos, Cy. And while others are sucking their thumbs and hiding behind spreadsheets, I’ll already have a plan. Because my bank investments buried me. And that will never happen again. Never. I can see the warning signs now, and frankly, I don’t like what’s on the horizon. Because I’ll turn the lights on every morning and turn them off every night, and there’s only one thing on my mind while I’m breathing. That’s making money. Because the hedge funds that survive are coming out stronger and tougher on the other side, and they’re taking market share. Mark my words. There won’t be a bank big enough to hold all their cash. Because I want to get rich. And if I increase your net worth ten times, it’ll be the happiest day of my life, assuming a few shekels drop on my lap. Because I’ll do what it takes.”
“You mean that?”
“Every word.” Cusack projected the unwavering cool of an old pro. It was his turn to wait.
Cy gave no hint what he was thinking. His face was inscrutable: coal emotionless eyes, rutted brow, no smile and no frown. “What do you know about the way we invest?”
“Not much.”
“Good—”
“You focus,” Cusack continued, surprising Leeser, “on companies worth less than two billion. Public filings show you own a huge chunk in Bentwing Energy, where you sit on the board and are something of an activist.”
“What do you think about Bentwing?”
“Some estimates say the world will run out of oil in forty years,” replied Cusack. “What’s not to like about alternative energy?”
“Keep going.”
“I doubt you borrow much money.”
“Why’s that?” asked Leeser.
“Because it’s too risky, and your returns are too consistent.”
Leeser’s eyes glimmered for the first time. “You’ve done your homework for a guy we called two hours ago.”
“I keep my ear close to the ground.”
“What don’t you know about my firm?”
“How you hedge,” Cusack answered. “You must invest in some asset, some kind of insurance to protect against losses.”
“I could tell you, but I’d have to kill you.” Every trader in the business used that line at least once.
“Do you short?” Cusack pressed.
“You don’t give up,” Cy observed, not in an angry way but abrupt and factual.
“Force of habit from the old neighborhood.”
“I like that, Jimmy. Before we discuss my hedging model, two things need to happen.”
“Okay?”
“First, you sign a noncompete.”
Is this a job offer?
“I’d be surprised if you didn’t ask for one, Cy.”
“Good. Second, you need to apprentice for a while. I won’t disclose our secret sauce to just anybody.”
“Secret sauce—I like that.” Cusack repeated Leeser’s words by instinct, an old trick among finance pros.
Cy picked up the phone and instructed Nikki, “Cancel my appointments.” Then he turned and said, “Let me explain why you’re here, Jimmy.”
* * *
Back in New York City, a different kind of interview was taking place. “I require twenty-five thousand dollars to proceed.” The electronic voice changer turned Rachel’s honey Texan tones into something robotic over the phone, impossible to determine whether male or female.
“No problem,” the man countered in a diplomat’s voice worthy of UN peace negotiations. “When do you need the money?”
Rachel sensed trouble. The prospect was too easy. Nobody said yes just like that. “I need fives and tens,” she said, testing him. “Nothing bigger.”
“That will take a while,” he ventured cautiously. “Two, maybe three days.”
Not a good sign, she decided. Only the Feds knew how long it took to amass five thousand five-dollar bills. “You sound serious.”
As though reading her qualms, the man asked, “How do I know you won’t run off with my money?”
“You don’t.” The voice changer felt awkward in her hand.
“Others work for less,” he insisted.
“You want a bargain,” she snapped, “go to Walmart.”
“I’ll get the money,” he retreated, but still cool. “My wife is a problem.”
“You don’t understand what I do,” Rachel interrupted. He was moving too fast. Something was wrong. She clicked off the phone. She had always followed her instincts in the past. This guy smelled like a cop, too much, too soon.
Rachel hated the voice changer. She used sex to control men, which was impossible when you sounded like R2D2. Too electronic. Even worse, there was no face-to-face. She relied on visual cues, always a problem over the phone. Now the guy was gone. Fed or whatever, he had been a miserable waste of time.
On the way back to the clinic, Rachel tossed her disposable cell phone into a garbage can at the corner of Eightieth and Park. Her March financial statement had been less than inspiring. She muttered, “I’m lucky to have one steady employer.”
CHAPTER NINE
REYKJAVIK …
“Trading desks are waging World War Three. Which means, sir, there’s only one wa
y to make money. We fight back. We crush Cyrus Leeser and humiliate his people. Doing nothing is worse than grabbing our ankles and hoping for the best.”
A little hyperbolic, Ólafur knew. But absolute conviction was necessary. Otherwise, the old man would take forever to make a decision. It was five hours ahead in Reykjavik. Ólafur’s speech was still reverberating through his thoughts as he stewed at Gaukur á Stöng.
Ólafur nursed a vodka martini, his second round since leaving the office. He needed a third and maybe a fourth to soothe his nerves. The alcohol would bring calm and the clarity to dissect his one-on-one meeting with Chairman Guðjohnsen of Hafnarbanki.
Their discussion had exceeded his wildest expectations. Guðjohnsen bought the whole program. The last twenty seconds were the problem.
* * *
“It’s time to demonstrate what happens to our enemies.”
“What do you mean?” asked the chairman.
“Hafnarbanki is trading at eight hundred and fifty kronur. We’re down twenty-nine percent since December, because of LeeWell and its lies. We can’t hide and close our eyes. Those bastards won’t go away. Nor will their cronies.”
It was risky speaking to the chairman like that. But Ólafur, ever hawkish, took the chance. Guðjohnsen owned more shares of Hafnarbanki than anyone else in Iceland. He stood to lose or recover the most as the stock price roller-coastered.
“Are you recommending legal action?” asked the venerable old man, his brow wrinkling under a shock of silver-white hair.
Ólafur spotted the puzzled expression. He had waited for this moment, rehearsed his lines for hours. “Courts take forever. There’s only one solution: shore up our defenses and fight.”
“Exactly what do you mean?”
“We get our Qatari friends to buy shares of Hafnarbanki.”
“What makes you think they’ll invest, Ólafur?”
“We’ll lend them the money.”
The chairman said nothing.
“On a nonrecourse basis,” the younger banker added. If the Qataris defaulted, in other words, Hafnarbanki could not sue for losses. It could only repossess its shares.
Guðjohnsen’s eyes narrowed into slits. “They have all upside and no downside.”
“Exactly.”
“You think this risk is acceptable?”
“I have absolute faith,” replied Ólafur, “in your vision and our bank’s future.” What would Guðjohnsen say—that he lacked confidence in his own leadership?
Again, the chairman’s eyes narrowed, as though he were calculating the impact on his portfolio. “I like the idea of helping our stock price.”
“That’s step one.”
“What else?”
“We attack the single biggest position in LeeWell Capital’s portfolio the same way they attacked Hafnarbanki.”
Ólafur had studied the hedge fund since February. From public filings, he estimated its stake in one company equaled 15 percent of total assets. Maybe more. Bentwing Energy Group traded under the ticker symbol BEG, and Cyrus Leeser sat on the board. It was the core position in Leeser’s portfolio.
“What’s the purpose?” objected Guðjohnsen. “We’re not in the revenge business.”
“We’ll make money on the trade and send a message to the enemy.”
“Which is what?” the chairman asked.
“Fuck with our stock, and we’ll bury you.”
“You think this message is important, Ólafur?”
“Like I said, we’re at war. Unless we strike, every hedge fund in Greenwich will short our stock until it falls another thirty percent.”
Guðjohnsen said nothing for a moment. He was known for manipulating subordinates with awkward pauses. “What can go wrong?”
“My sources say LeeWell Capital hedges risk with a secret, no-fail technique.”
“But you’re not convinced?”
“It’s impossible to eliminate all risk. ‘Risk-free’ sounds too good to be true.”
“And what else?” the chairman asked. “I hear something in your voice.”
The younger banker hesitated. “I think LeeWell Capital is borrowing way too much money.”
“But?”
“I can’t prove it. And if I’m wrong, we’ll lose money betting against Bentwing.”
“You think we should take this risk?”
“Yes, because the Qataris are on our side.”
The chairman raised his eyebrows, both surprised and pleased by his subordinate’s homework. He said nothing.
“If we both dump shares of Bentwing,” Ólafur continued, “we’re more likely to win. The stock will fall from all the selling, and we’ll make money on our short. That’s my quid pro quo with the Qataris for making a nonrecourse loan.”
Chairman Guðjohnsen looked at Ólafur with an undecipherable expression, something between shock and awe. The older man’s brow creased, and he didn’t speak at first. He finally broke the silence and said, “Now I understand why your nickname is ‘Mr. Ice.’”
The chairman’s words sounded like a compliment. But that’s when their conversation soured.
* * *
Halfway through his third martini, Ólafur didn’t feel like “Mr. Ice.” Cerebral and rational at the office, he soothed his colleagues when they groaned about the bank’s share price.
“Don’t worry. It’s just the markets at work.”
The words sounded good. But deep inside, Mr. Ice hated risk. He owned way too much of the bank’s stock on margin. Every 3 percent decline rattled him, and the rebounds turned him silently euphoric. Of course, there had been few celebrations with Hafnarbanki down 29 percent since December.
Ólafur’s daily regimen of hangovers masked his inner angst. It was easy to appear calm when you felt like shit. The banker wondered, however, whether this technique would continue to work. That afternoon he had doused himself with a brand-new risk. His career was on the line.
Guðjohnsen said, “Make the loan to the Qataris and start trading.”
“It’s the right thing to do, sir. The Qataris will buy Hafnarbanki shares right away. And we’ll take our time shorting Bentwing. We’ll do it right.”
The chairman’s approval should have been cause to rejoice. But as he left, his hand on the doorknob, he destroyed the feel-good moment. “There’s just one thing, Ólafur.”
“Yes, sir.”
The white-haired chairman, wizened and cool during the storm, stated with the coldness of a shark, “You’ve done great work.”
“Thank you.”
“But if our war goes bad, you’re fired.” The chairman paused and added, “And your job may be the least of your problems.”
“Meaning what, sir?”
“If anybody learns about our loan to the Qataris, you’re going to jail.”
“But—”
“I’m not taking the fall, Ólafur.”
Mr. Ice ordered martini number four. Finding courage in the vodka, he considered the Romans. They destroyed Hannibal, raped the women of Carthage, and poured salt onto the city’s ruins. He could use their help with LeeWell Capital.
CHAPTER TEN
THE INTERVIEW …
Cusack had hated interviews ever since college. The talk was boring, two people united by a common desire to be anywhere else except a dental chair. The interviewer was digging. He was selling. And the job hinged on whether the interviewer was digging what he was selling.
Interviews usually ended flat. “We’ll get back to you” meant a letter two weeks later that started, “Thank you for your interest.” After the decency of a paragraph break, the sender continued, “We are sorry.” The words sounded nice, but they translated, “You’re joking, right?”
The alternative was just as bad. Callbacks equaled another round of digging and sniveling as necessary. The whole process struck Cusack as an assault on the brain, possibly exceeded by reality television. But even there, it was debatable which was worse.
This interview was different. Cy
dispensed with the artifice. “I need help growing my business.” He leaned across the desk, and his manner changed. He was no longer the interviewer. He was the decision maker, the star quarterback urging a teammate to join his huddle. “You can take us to the next level, Jimmy.”
“How much money do you manage?”
“Eight hundred million, give or take.”
“With your track record,” Cusack observed, “it should be double.”
“Agreed. But I need a pro to handle our investors.”
“I’m hungry.”
“Have you ever considered sales?” asked Leeser.
It’s a career graveyard for fuckups.
“I manage money,” replied Cusack, avoiding the urge to say, “No way.”
“Don’t kid yourself. We all sell. Besides, you know how to listen. I bet people whisper shit in your ear all the time.”
“Tell me what you have in mind, Cy.”
“You raised two hundred million right out of the gates.”
“Some of that was performance. We made money the first year.”
“Doesn’t matter. You’re a born salesman, Jimmy.”
“I was building a company.”
“Which is why I want you on the team at LeeWell Capital.”
You’re good.
“You’ll be involved in most portfolio decisions,” added Leeser. “We’re a small shop, and everybody wears different hats.”
“How many people work here?”
“Sixteen in all. We have a kick-ass trader named Victor Lee. There’s Nikki, my assistant, Amanda, our receptionist, and several other people in accounting and finance.”
“Why the bodyguard?” asked Cusack, referring to the big man with the gap between his front teeth.
“Shannon is a key player.”
“Do you have security problems, Cy?”
“We all make stupid money,” Leeser explained. “My receptionist drives a sixty-thousand-dollar car. It’s just inviting trouble.”
“But—”
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