Thomas Hoover - The samurai strategy

"Kenji Asano is apparently a close friend of Dr. Richardson's," I broke in, my tone unnecessarily sharp. "Unfortunately, he seems to be an even closer friend of his cronies at MITI."

Tam didn't respond, just sat there looking betrayed.

"Matt, let's be constructive here." Jack walked over and shook the coffee pot, then sloshed the last dregs into his cup. "We damn well ought to take some kind of action."

"That's why we wanted to talk to you." Tam came back to life. "Do you think you could leak something about this? Maybe to the Times?"

"And say what?" He laughed, a little sadly. "That I've happened across a set of secret MITI memos that bear a coincidental similarity to some stolen DNI printout? Don't think that's exactly 'Fit to Print.'" He frowned. "But I'm glad our Mr. Noda has finally let slip his true intentions. I never believed all that pious malarkey about propping up American industry." He snorted. "The man gets a few suckers like you to help him destabilize our bond markets, in the process of which he turns the high-tech sector of American industry into a bargain basement for MITI."

Tam sipped her coffee, maybe trying to act as if Jack's comment hadn't stung her the way I suspected it did. I decided to try and handle her defense.

"Jack, hold on a second. You've got to admit that a lot of these outfits Dai Nippon is buying are currently on pretty thin ice. If somebody doesn't come in here and help run them right, they're probably headed offshore anyway."

"We're not talking about first aid now, Walton. We're talking about Matsuo Noda taking over the most strategic segment of our economy after pulling the biggest scam in the history of world finance."

"That looks to be the story." I watched his cheeks redden with frustration. "So what do you propose we do? There's no law against foreign investment. Securities exist to be bought."

"Well, dammit, Matt, we've both seen enough by now to realize this Noda genius is up to no good. We've got to stop him."

"Couldn't agree more. So why don't you just arrange to have the SEC shut down trading in every stock DNI has in its gunsights."

"You know that's out of the question."

"Exactly. So what legal remedies are there? How do you squelch a takeover program that's not even against the law?"

"That's your specialty, counselor, or so I hear."

"Jack, be realistic. We can expose this thing, maybe even try and lean on Tokyo to back off, but aside from shutting down trading there's no legal way to actually stop Matsuo Noda from buying whatever he likes. You can't shut Japanese investors out of Wall Street. There'd be a riot downtown. We're talking about the open market here, not some inside deal."

"Forget legalities." He scowled. "Tell me how your damned corporate raiders go about shenanigans that don't quite match the letter of the law."

"Jack, I've officially quit the business. Retired. Guess you hadn't heard."

"That's what you think. You just got un-retired. As of this moment. Now give me one of those high-priced consultations you're so famous for."

"For you, Jack." I looked him over. "One last play. Trouble is, there's not much that's do-able, at least on short notice."

"You say 'not much.' Which means there's something."

"Well, one possibility might be to try and slow him down some, make him think twice, say, by punching up the prices of the stocks he's aiming at. Make them less of a bargain."

"That's a start."

"Not much of one."

"Well, how could it be done?"

"Since you're such a Boy Scout, Jack, you probably won't like what I have in mind. This one's not exactly in the rule book."

"Try me."

"Okay, it's a long shot, and we'll definitely need some help. If we're going to tinker with the market, then we have to have somebody Wall Street trusts. And also somebody who's got a lot of money to play with, short term."

"Sounds like our mutual friend from Georgia."

"Well, Henderson can play the Street like a symphony. What I'm thinking of involves tricking the smartest guys around, the 'risk arbs.' We'd need to suck them in. If anybody can do it, he's the man."

"Then I say let's give him a buzz."

"Fine. Why don't I get him on the squawk box so we can all listen in." There beside the couch was an old conference phone some client once gave me as a Hanukkah gift. At long last it might be good for something.

The risk arbs, by the way, are the risk arbitrageurs, those speculators who live with one ear to the ground. The minute they hear word, inside or otherwise, that a company is "in play," meaning it's a candidate for a possible takeover or merger, they immediately grab up and stockpile huge blocks of its publicly traded shares. Then they sit back and pray for a bidding war. Since company A has offered so much a share for company Z, maybe company B will step in and offer more. Or maybe company Z itself will outbid them both and offer even more in a stock buyback. They're the hyenas of the hunt, getting plenty of leftovers no matter who ends up buying Z. Besides, they don't really care anyway. They're not investing in American industry, they're laying side bets.

Tam and Jack settled back while I punched in Bill's number.

The doctor was in, and after a few profane formalities- tempered when we informed him of a female presence-he listened with uncharacteristic attentiveness. I gave him an update, concluding with the view that we ought to try heading off MITI's presumed play.

Henderson, despite his admiration for Noda's style, didn't take kindly to the possible buy-up of America's remaining R amp;D in semiconductors, a specter that coincided all too closely to his own fable about how MITI had already eaten one segment, memory chips. I decided to start by seeing if he and I were on the same wavelength concerning countermeasures. Without tipping him to my own idea, I asked what he thought could be done.

"Tell you, it won't be easy. One thing, though, we could maybe try and scare 'em off with a little brushfire."

"Try that in English, Bill," Jack interrupted.

"Don't know, maybe a few hot rumors could hit the Street… mergers, takeovers, your usual quick-buck action. Say a few of the CEOs of these outfits on Noda's Christmas list had a little powwow, a 'secret' meeting everybody manages to hear about, and supposedly talked about gettin' themselves bought out. Naturally they'd deny everything on the Evening News, which in itself will tell the Street we're talkin' wedding bells."

"Is that really going to do us any good?" Tam was talking to the box.

"Afternoon, ma'am. Liked that last book of yours a whole lot. Hope you're keeping them boys sober." I could almost see Henderson turn up the charm, sculpting a voluptuous, horny divorcee in his ardent imagination. Tam, to my surprise, was not totally immune to his Georgia sweet talk. She sort of smiled to herself as he continued, "But to answer your question, a takeover rumor can do marvels for your stock price. What happens is the 'arbs' come in, snapping up blocks of stock and holding them, just in case. It can take a lot of securities out of circulation, at least short term. So if we could get the arbs to chasing those companies on Noda's list, they'd give the Japs a little competition. At the very least it'd kite the market, hurt their pocketbook."

"Bill, that's why we wanted to call you. How about putting your finances where your flag-waving is? Be an arb yourself for a few weeks. Lead the herd. Start picking up some blocks of stock and shooting off your mouth a lot about your 'inside' information. I'll even kick in my modest retirement fund to help the action."

"What if somebody pulls the rug out from under us? Shoots the whole thing down? We'd be left holding all that stock we'd bid up. We could lose our shirt."

"Then protect the downside by buying puts. I have full faith you'll think of something. Come on, Henderson, be a market maker. You've got the credibility. All you have to do is set a spark to this, then we'll quietly head for the sidelines to make way for all those investment-house yuppies who love to shoot craps with their clients' money."