Thomas Hoover - The samurai strategy

A quick doorbell punch and the man from Georgia greeted us, Scotch in hand. His little pied-a-terre was about three thousand square feet of knee-deep carpets, Old Masters (I loved the Cezanne and the Braque), and masculine leather furniture. A padded wet bar, complete with mirror and a bank of computer monitors-for convenient stock action-stretched across one side of the living room, while the sliding glass doors opposite faced onto a balcony that seemed suspended in midair over Central Park. While Tam, with her designer's eye, was complimenting him politely on the understated elegance of his Italian wallpaper, French art, and English furniture, I tried not to remember all those early years back in New Haven when his idea of decor was a feed-store calendar featuring a bluetick hound.

Although the balcony doors were open, the living room still had the acrid ambience of a three-day-old ashtray. He poured us a drink from a half-gallon of Glenfiddich on the bar, gestured us toward the couch, and offered Havana cigars from a humidifier. I took him up on it, out of olfactory self-defense.

"So tell me, ladies and gents, what's the latest?" He settled himself in the leather armchair and plopped his boots onto an antique ottoman. "How're the Jap assault forces doing these days? They gonna take over the Pentagon next?"

"Not that we've heard." I was twisting my Havana against the match. "Though it might reduce procurement costs on toilet seats and ashtrays if they did."

Henderson sipped at his drink, then his tone heavied up. "Who are we kidding, friends. My considered reading of the situation is your boys on Third Avenue are unstoppable. They can do whatever they damn well please from here on out."

"That's not necessarily in everybody's best interest, Bill." I strolled over to look down at the park. "Got any new thoughts?"

"Can't say as I do. Our IBM play didn't get to first base; Noda saw us coming a mile away. Thank God I didn't get in deep enough to get hurt." He leaned back. "What makes it so damned frustrating is the market's tickled as a pig in shit. Ain't nobody too interested in dissuading your friends from buying up everything in sight. Street's never seen anything like this kind of bucks before. It's a whole new ball game downtown."

"That's right, Bill," I mused aloud. "The question is, whose ball game is it?" Tam still hadn't said anything.

"Damned good question. What happens when foreigners start owning your tangible assets? The answer, friend, is they end up owning you."

"Henderson, all that could be about to change."

"Says who?" He leaned back. "Looks to me like Noda's going all the way."

"Bill, let's talk one of those hypothetical scenarios you like so much. What if Dai Nippon suddenly had a change of plans? Switched totally? And instead of buying, they started selling?"

That pulled him up short. He even set down his glass. "Come again?"

"Call it a hypothetical proposition. I'm asking what would happen on the Street if Dai Nippon decided, unannounced, to make a significant alteration in its portfolio? All of a sudden started divesting? Massively."

"When'd this happen!" He squinted. "How much action we looking at?"

I didn't want to say it for fear he might need CPR for his heart. Finally Tam set down her drink and answered him. "All of it."

"Christ." He went pale. "What's that add up to, total?"

"We figure it'd run to several hundred billion," I answered.

He sat there in confusion. "Over what kind of time period?"

"That's part of the reason we wanted to see you. If, strictly as a hypothesis, they were to do something like that, as fast as possible, how long would it take? Just throw your hat at the number, wild guess."

"Time, you mean?"

"Exactly."

"Well, let's look at it a second here. I'd guesstimate that all the exchanges together-Big Board, American, Merc, CBOT, NASDAQ, Pacific, the rest-probably have a dollar volume upwards of… how many billions a day? Say twenty billion, easy, maybe more, the way volume's climbing. But that figure's purely hypothetical. If Dai Nippon dumped all those securities on the table at once, the value of their portfolio would go to hell."

I glanced at Tam.

"That's how we see it too," she said. And nothing more.

"What are you two suggesting?" He was visibly rattled. "Noda'd never pull anything that crazy."

"Bill, with all due respect, let's proceed one step at a time here with this hypothesis," I went on. "Assuming, just for purposes of discussion, he did decide to do something like that, unload everything, what's the fastest way?"

"Hell, I'd have to think."

"Come on, man. Financial derring-do is your special trade," I pressed him. "What if DNI's mainframe was used to set up a global trading network? Began dumping worldwide?"

"Well, that'd probably be the quickest approach." He was slowly coming awake. "Jesus Christ! It's not Noda we're talking about." He looked at me, then at Tam. "It's you. You're going to try and…"

"Possibly."

"Then we sure as hell are talking theory, 'cause you'd never be able to do anything like that without Noda's gettin' wind of it."

"Henderson, as usual you're not listening. Plausibility is not the topic under discussion. Right now we're looking at the impact."

"Well, you'd damned well better start with some plausibility." He settled back. "Say you could get around Noda. The next problem is, the minute word hits the Street DNI's dumping, all hell's liable to break loose. It'd be front page. And first thing you know, the market's going to be headed the wrong way. If you've got a heavy block of shares you want to divest, you damn well do it on the QT, 'cause its price can start to nosedive. Folks tend to figure you know something they don't. The Street's about ninety percent psychology and ten percent reality… if that much."

"Just concentrate on the technical part, Henderson."

"Well, friends, any way you cut it, we're talking what I'd call a very dubious proposition. Those Jap institutions would lose their shirt if DNI dumped all at once." He exhaled quietly. "You start rolling billions and billions in Japanese money, how you plan on keeping the thing from blowing sky-high? You'd have Nips climbing all over your ass in ten minutes flat, you tried something like that."

"Henderson, relax. What if we did it anonymously? Like I said. Used the DNI mainframe, funneled orders through accounts everywhere, dummy accounts in banks all over the place? Wouldn't that give us some elbow room?"

"Maybe, maybe. If you played it right. I'd guess a few wise guy analysts would probably sniff something in the wind, but nobody'd have a handle on the real action, at least not for a while. Things might stay cool temporarily."

"Are you saying that, in theory, the market side is doable, at least initially?" Tam pressed him.

"I'm just guessing it's vaguely conceivable." He got up to freshen his drink. "Be that as it may, though, the real problem is the Japanese end. I'd guess the shit's going to be all over the fan in Tokyo the minute you start selling. Those pension funds are not going to roll over and let you wreck their portfolio."

"Bill"-I spoke up-"they're not going to be able to stop us. Count on it. DNI holds the stock as trustee. Noda's rules. Ironclad power of attorney."

"So?"

"So," I said very carefully, "we are going to take over Dai Nippon."

"What the hell are you talking about!"

We told him. The Rambo part.

"Jeezus!" He stared at the two of us. "What you're proposing is a major felony. I could get accessory and five years for just listening to this."

"Who's going to file charges?"

"How about Mr. Matsuo Noda for starters?"

"Bill, we just happen to have a little leverage with Mr. Noda-san at the moment. The minute he finds out we're still alive-"