Jonathan Kellerman - Devil's Waltz

She was up and gone before my eyes cleared. A toasted English muffin and juice were at my place on the kitchen table. I finished them off while planning my day.

Afternoon at the Joneses’.

Morning on the phone.

But the phone rang before I could get to it.

“Alex,” said Lou Cestare, “all those interesting questions. Branching out into investment banking?”

“Not yet. How was the hike?”

“Long. I kept thinking my little guy would tire but he wanted to play Edmund Hillary. Why do you want to know about Chuck Jones?”

“He’s chairman of the board of the hospital where I used to work. He also manages the hospital’s portfolio. I’m still on staff there, feel some affection for the place. Things aren’t going well there financially, and there’s been talk of Jones running the place down so he can dissolve it and sell the land.”

“Doesn’t sound like his style.”

“You know him?”

“Met him a couple of times at parties. Quick hello-goodbye — he wouldn’t remember. But I do know his style.”

“Which is?”

“Building up, not tearing down. He’s one of the best money managers around, Alex. Pays no attention to what other people are doing and goes after solid companies at cut-rate prices. True bargains — the stock-buys everyone dreams about. But he finds them better than anyone else.”

“How?”

“He knows how to really figure out how a company’s doing. Which means going way beyond quarterly reports. Once he ferrets out an undervalued stock about to pop, he buys in, waits, sells, repeats the process. His timing’s impeccable.”

“Does he ferret using inside information?”

Pause. “This hour of the morning and you’re already talking dirty?”

“So he does.”

“Alex, the whole inside trading thing has been blown way out of proportion. As far as I’m concerned, no one’s even come up with a good definition.”

“Come on, Lou.”

“Do you have one?”

“Sure,” I said. “Using data unavailable to the average person in order to make buy-and-sell decisions.”

“Okay, then, what about an investor who wines and dines a key employee in order to find out if the company’s doing its job properly? Someone who takes the time to really get into the nuts and bolts of company operations? Is that corrupt or just being thorough?”

“If bribery’s involved, it’s corrupt.”

“What, the wining and dining? Why’s that different from a reporter buttering up a source? Or a cop encouraging a witness with a doughnut and a cup of coffee? I don’t know of any law that makes dinner between business people illegal. Theoretically, anyone could do it, if they were willing to put out the effort. But no one ever bothers, Alex . That’s the thing. Even professional researchers usually rely on graphs and charts and the numbers the company gives them. Lots of them never even bother to visit the company they’re analyzing.”

“I guess it depends on what the investor learns from the wining and dining.”

“Exactly. If the employee tells him someone’s going to make a serious takeover bid on such and such a date, that’s illegal. But if that same employee tells him the company’s in a financial position that makes it ripe for takeover, that’s valid data. It’s a thin line — see what I mean? Chuck Jones does his homework, that’s all. He’s a bulldog.”

“What’s his background?”

“I don’t think he even went to college. We’re talking rags to riches. I think he shod horses or something when he was a kid. Doesn’t that appeal to your sensibilities? The guy came out of Black Monday a hero because he dumped his stocks months before the crash and shifted to T-bills and metals. Even though his stocks were shooting up . If anyone had known, they would have thought he was going senile. But when the market crashed, he was able to bottom-fish, bought in again and made another fortune.”

“Why didn’t anyone know?”

“He’s got a thing for privacy — his kind of strategy depends upon it. He buys and sells constantly, avoids big block trades, stays away from computerized trading. It wasn’t until months later that I found out, myself.”

“How’d you find out?”

“The scuttlebutt — twenty-twenty hindsight, while the rest of us licked our wounds.”

“How was he able to predict the crash?”

“Prescience. The best players have it. It’s a combination of a great data base and a kind of ESP you get from being in the game a long time. I used to think I had it, but I got chastened — no big deal. Life was getting boring, and rebuilding’s more fun than just treading water. But Chuck Jones does have it. I’m not saying he never loses. Everyone does. But he wins a lot more than he loses.”

“What’s he into now?”

“I don’t know — like I said, close-to-the-cuff’s his style. Invests only for himself, so he’s got no shareholders to deal with. I doubt, though, that he’s high on real estate.”

“Why’s that?”

“Because real estate’s a turkey. I don’t mean for someone like you who bought in years ago and is just looking for some stable income. But for traders out for a quick profit, the party’s over, at least for now. I divested myself a while ago, moved back into stocks. Jones is smarter than me, so odds to evens he got there before I did.”

“His son owns a big block of land out in the Valley.”

“Who said wisdom is genetic?”

“His son’s a college professor. I don’t think he was able to buy fifty parcels for himself.”

“Probably his trust fund — I don’t know. You’ll still have to convince me Chuck’s getting into r.e. in a big way. The land the hospital’s on is Hollywood, right?”

“Several acres,” I said. “Purchased a long time ago — the hospital’s seventy years old — so it’s probably all paid for. Even in a slump, a sale would be pure profit.”

“Sure it would, Alex. But to the hospital itself. What’s Jones’s incentive?”

“Commission on the deal.”

“How many acres are we talking about and where exactly are they?”

“Five or so.” I told him Western Peds’s address.

“Okay, so that’s ten, fifteen million — let’s even say twenty because of contiguous lots. Which is liberal, because that big of a chunk would be hard to unload, so you might have to subdivide into smaller parcels. That could take time — there’d be zoning hassles, hearings, permits, environmental shenanigans. The biggest cut Chuck could take for himself without attracting a commotion would be twenty-five percent — ten’s more likely. Meaning two to five mil in his pocket... No, I can’t see Chuck messing around for that kind of money.”

“What if there’s more to it?” I said. “What if he not only plans to close down one hospital but is also figuring to open up a new one on his son’s land?”

“All of a sudden he’s in the hospital business? I doubt it, Alex. No offense, but health care’s a turkey too. Hospitals have been going belly-up almost as fast as savings and loans.”

“I know, but maybe Jones figures he can do a good job anyway, bucking the trend. You just said he doesn’t pay attention to what everyone else is doing.”

“Anything’s possible, Alex, but once again you’d have to prove it to me. Where’d you come up with all this theorizing, anyway?”

I told him about Plumb’s comments in the paper.

“Ah, the other name on your list. Him, I’d never heard of him, so I looked him up in every directory I’ve got. What emerges is your basic corporate drone: M.B.A., doctorate, a series of management jobs, climbing the ladder. His first job was at a national accounting firm named Smothers and Crimp. Then he moved into the head office at another place.”