June 6, 2000—LMI
The glass door to Alex’s office flew open, and Mark stormed in. He had a concerned look on his face.
“Hello, Mark.” Alex looked up from her documents. “What’s up?”
He closed the door behind him.
“Did you take a look at the price of PBA Steel today?”
“Yes, this morning.” She looked at her usually calm employee in surprise. “It was at seventeen and a half.”
“Two minutes ago it was twenty-six and three-quarters.”
“Pardon me?” She turned toward her monitors and pulled up the ticker. In disbelief, she stared at the quote for PBA Steel—which had already risen by another dollar.
“That’s impossible!”
She quickly ran this information through her mind. Her client Blue Steel, the largest independent steel company on the East Coast, had just offered last week to take over the ailing but long-established Pittsburgh steel mill for 21.8336 dollars per share on her advice. And all of this was still unknown by the public. PBA Steel’s management was hesitant and wanted to ask its shareholders whether they would agree to the takeover by Blue Steel. Even for market professionals, nothing indicated that such a takeover offer was imminent because PBA was far from bankrupt and still valued as a solid and stable company.
On the other hand, Blue Steel was sitting on above-average profits generated by its new management and looking for investment opportunities to avoid taxes from eating into those earnings. For this reason, Alex had scoured the market and come across PBA Steel. All in all, it was intended to be an unspectacular and rather average deal. The telephone rang, and she picked it up with an uneasy feeling. It was Marty Freeman, the president of Blue Steel.
“Alex, have you looked at PBA lately?” he yelled into the telephone. “Was what you suggested to us some kind of joke? We offer twenty-one dollars per share, and now it’s racing toward thirty! How can it be that a stock priced below twenty dollars for years suddenly takes off like this?”
“I don’t know either, Marty,” Alex said, trying to calm him. “I’ve been following PBA for weeks, and I looked back over the years. There were minimal price fluctuations of a few cents here and there. My calculations were perfectly in order.”
“Let me tell you something,” Freeman said, lowering his voice a few decibels, “someone got wind of this deal! We’re not interested in a takeover if we have to pay fifty dollars per share. You know as well as I do that this scrap heap isn’t worth that much!”
Their conversation went back and forth like this for a while as the stock price kept rising. It was already clear that PBA Steel was overvalued, and the SEC would invariably initiate an investigation—at the very latest after Blue Steel’s public announcement of its takeover bid.
“That son of a bitch!” Alex cursed after Freeman hung up. “Now he’s going too far!”
“Do you think that Zack is behind this?” Mark raised his eyebrows, and Alex nodded grimly. After keeping the Maxxam deal secret from Zack and demonstrating to him that she was in the know about him, she had continued to cooperate on trivial things. Neither of them had uttered a word about the incident at Luna Luna, but their relationship had been cool and purely professional since then.
“Mark,” Alex said, thinking rapidly, “if it was Zack, we need to find out right now. I don’t care how you do it, but I want to know. Preferably before the close of the market.”
“And what if it really is him? Then what?” Mark asked.
“Then I’ll teach him a lesson that he won’t soon forget,” Alex answered. Mark left, and she followed him across the trading floor. At this time of the day, the traders had their hands full. Phones were ringing; there were hollers, wild gestures, and waves. Some traders had a phone to each ear and another in hand. Alex threw a glance at the LED ticker at the front of the large trading floor, constantly updating the quoted values of NYSE-listed stocks. Marty Freeman must have taken her for a fool! Her thoughts were racing. On her way out the sliding glass door, which led from the trading floor to the hallway, she nearly collided with Zack.
“Oh, hello, Alex,” he said, grinning in an overly friendly way. “How’s business?”
“Excellent.” She forced an equally phony smile. She knew he hated her since her magnificent success with Maxxam. But was he really so dumb as to use confidential information in such a blatantly obvious way? Or was he trying to trip her up? Insider trading was a serious violation. She swore to herself she’d only give him information one last time. But this one would be unforgettable.
“Can I buy you lunch?” Zack asked.
“Sorry, I’m busy. Maybe some other time.”
“Well”—he casually threw his Armani jacket over his shoulder and turned away to leave—“good luck.”
She watched him disappear in to the elevator. It was about time for her to stop this cat-and-mouse game. Levy had to notice that she had become suspicious. Depending on his reaction, she could determine whether he was a part of this, or if Zack was working for himself.
Alex went back to her office. After a moment, she dialed Max Rudensky’s number and waited impatiently for him to pick up. Max had been a broker for many years in London and New York. After exchanging the usual courtesies, she cut straight to the point. She asked if he had heard anything about PBA Steel in the market. It wasn’t unusual for her to ask him for advice, and in the past he had pointed out one or another good deal to her. But since seeing him at Sergio’s party, she had realized that the deals he recommended were exclusively with companies in which the dubious SeViCo held shares. If she was really right about this, then Max would inform Zack about her call in no time. Or maybe even Sergio. This thought was far scarier. Up to now, she had still hoped that Sergio wasn’t involved in any of this.
Just as Alex expected, Rudensky pretended to be clueless, but she didn’t much care anyway. She was only interested in whether he would call Zack. While she waited for Mark to come back, she stared at her desk in a morbid mood. The PBA Steel deal had gone down the drain. An hour later, Mark returned and let himself sink into a chair, out of breath.
“Most of the stock purchases were made by a firm called Manhattan Portfolio Management,” he reported. “Rudensky has been buying like crazy. None of our traders knows where the other purchases are coming from.”
Alex nodded. She had expected Rudensky’s involvement in this buying spree, but who was Manhattan Portfolio Management? She had heard this name before, but where?
“What are we going to do now?” Mark wanted to know. At that moment, Alex remembered. Manhattan Portfolio Management. Jack Lang. Sergio’s birthday party! Zack had talked about offshore companies with him!
“We need to find out who’s behind this MPM,” she said with determination. “Zack knows this firm pretty well. I’m sure of it. But how can we find out?”
“We could try the commercial register,” Mark suggested.
“That’s a good idea.” Alex sat upright and smiled grimly. “I’ll let you take care of it, Mark. In the meantime I’ll prepare a nice little trap.”
She had a great idea to teach Zack a painful lesson.
When the market closed, PBA Steel had reached an all-time high at thirty-two dollars per share. Whoever had tried to push up the price acted exceptionally imprudently because PBA Steel was obviously the topic of the day. Alex dialed Zack’s extension, and he answered immediately.
“Did you see PBA?” she asked innocently. “Unbelievable what happened there, right?”
“Yes, indeed,” he answered, as slippery as an eel, “and all of this on the day after you told me that something could be in it for us with PBA.”