So if you find my normal stuff bad...this is worse. This is my entry into the writing contest that I had to submit by 5PM local today. The prompt was: "All these weirdos, and me getting a little better every day right in the midst of them. I had never known, never even imagined for a heartbeat, that there might be a place for people like us."
My effort doesn't exactly hit all the points on it. But it is what it is.
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Goldman's Stock Market Challenge
Kenny Freidmann sat in front of his computer at his small
Brooklyn apartment looking at his spreadsheet of 25 stocks. He and his friend Jared Collier needed to
make a final decision on whether to make any changes in the portfolio before
the midnight EST deadline. The Goldman
Sachs’ annual Stock Market Challenge would end at the closing bell for the New
York Stock Exchange tomorrow afternoon.
Sitting in third place, Kenny and Jared knew that they needed a big day
tomorrow to leapfrog the two competitors in front of them.
Kenny had been with Goldman Sacks for just over five years in
various low-level positions. After
graduation from Directional University in Poughkeepsie in 2008, Kenny had
quickly learned that the value of his finance degree in post-crisis Wall Street
was near zero. A six-month job search
turned up nothing, and he had finally taken a bike-messenger job in Manhattan
with Rapid Delivery.
When the economy finally began showing signs of life in late
2009, Kenny parlayed a friendship he had developed with a building security
supervisor in Goldman’s headquarters building to a full-time courier spot for
Goldman’s mailroom. In another year, he
had found his way to a logistics position at a Goldman’s documents facility in
lower Manhattan. That’s where he met
Jared who was a hacker-hunting computer programmer.
Any and all of Goldman’s 35,000 worldwide employees were
eligible for the annual Stock Market Challenge.
The game was simple: everyone starts with $100,000 in Monopoly money on
January 1st, and whoever has grown that pot to the largest amount on
March 15th wins $100,000 in real money and two weeks for two,
all-expenses-paid, at the Ritz Carlton on Maui.
Kenny and Jared had participated in the contest each of the last three
years, but this was the first time that their strategies had, literally, paid
dividends.
The key to this year’s success had been a new program that
Jared had built to filter second-year IPO (initial public offering)
stocks. Several social media companies
that the program had selected had sputtered in their initial year, but had now seemingly
turned the corner and posted extremely good results in the first quarter. Kenny had also invested in a little-known
company called Flash Pan, Inc., based on a tip from an old friend at Rapid
Delivery. Flash Pan had a patent on a
new technology for electronic transfer of secure data.
Challenge balances were posted on a separate page of the
employee access portal of the company’s website at the end of each trading
day. Kenny and Jared (“Killer911” to the
reader) were sitting at $455,262 in third place going into the final day of
trading. Leading the pack was “Yalejock”
with a total of $472,378 and “Goldfarb2” with a balance of $466,523. Yalejock had been in first place since the
end of week three, and had been aggressive with buying small company stocks
while selling short some bigger-name technology and pharmaceutical companies.
“I think Yalejock is actually Gerald Logan from
the London office”, said Kenny to Jared.
“His profile on Linkedin says that he went to Yale and was captain of
the rowing squad. And he’s been promoted
each year to a higher position based on the profits raked in by his group. He’s sharp on the
calls.”
“Whatever”, said Jared.
“We need to do something to pick up another twenty-five thousand
tomorrow. I’m betting that Yalejock will
short some stocks based on those early results out of Tokyo. But he could also just go to cash, figuring
that it will be a tough day for anyone behind him to make up ground.”
Kenny and Jared both knew that they were outliers in the
Challenge contest. The internal culture
at Goldman had a distinct separation between the professional staff (bankers,
analysts and researchers) and those employees in support functions. They knew that few of their colleagues in the
support staff had any interest in the Challenge, regardless of the attractive
prizes. Given the education and training
of the Mergers and Acquisition specialists, most of the support staff saw the contest
as a Frat Row party for the already-rich.
“I think we dump Facebook now, that’s $50,000, and put that
on Flash Pan”, said Kenny. “The
screening program has Facebook at its highest projected price now. It’s been quiet over at Flash Pan for three
weeks. I think they have something big
in the works.”
“I don’t know,” said Jared.
“We need at least twenty-five thousand tomorrow. I don’t think that those two moves will be
enough.”
“I don’t think so either”, said Kenny. “But with the overall market likely to open
lower based on those Asian numbers, I’m scared to make any other bets
tonight. Remember, we can make one buy
and one sell trade while the market is open tomorrow."
“Okay,” said Jared. “I’m tired of looking at this stuff
anyway. See you in the morning.” Jared stood, picked up his jacket and left
for his own apartment a few blocks away.
Kenny entered the Facebook and Flash Pan trades. He continued to look through the portfolio
and at his notes that he maintained in the small diary that he carried in his
backpack. While Jared was a good friend
and valuable partner in this game, Kenny had a bigger ax to grind with the
power brokers who had relegated him to a delivery boy position in those dark
days following graduation. None of the
bigger companies would even give him an interview. The Human Resources representatives at each
of the three smaller consulting firms that did give him in-person time were all
visibly unimpressed with his Directional U degree. If he were to win the Challenge, he wanted
Goldman Sachs to know that the Ivy Leaguers were beaten by the blue-collar kid
from DU.
The next morning, Kenny headed out shortly after six to
catch an early L train to Manhattan. The
barista at his favorite Starbuck’s on Broadway had his grande Americano already
prepared for him by the time he had paid the cashier. “Hey, Kenny!” she said with a smile. “Any stock tips today?”
“Sure, Elena. Buy
low, sell high. That’s always a good
move,” Kenny said with his own smile as he left the coffee shop.
His job at the documents storage facility in
lower Manhattan was mainly one of cataloging, supervising the scanning to
electronic format, and then systematically destroying the thousands of paper documents that Goldman generated each year. It was very methodical work, and not overly
stressful. His boss was happy to have a
reliable person who always made it to work and who obviously had more skills
than the job demanded. This combination
of facts had also enabled Kenny to regularly read many of the internally
prepared market analyses in the Goldman research library. So when the likes of Yalejock/Gerald Logan
made investment moves for the firm in the public, Kenny usually had knowledge
in advance by way of this reading list.
By the time that Kenny had taken his seat at his cubicle
desk he had already reviewed the open work-orders for the day. None were complex at all, and his foreman on
the floor, Jimmie Ramón, had his crew fully involved in sorting through the
boxes of files that had been delivered over night. Work was not going to interfere with any time
he needed to decide on those final two trades in the Challenge.
Jared arrived shortly after eight with his own coffee and an
extra blueberry muffin for Kenny. “Here
you go, Bud”, said Jared. “May the Force
be with you on Challenge Day! Any news
to know from Asia or Europe?”
“No, not really”, said Kenny. “Asia finished lower, but Europe is
mixed. Gerald Logan sent out an alert
from the London office a couple hours ago about TMobile buying some band width
from Vodafone. That was Yalejock’s last
trade yesterday. He made a little, but really
not all that much on shorting TMobile.
That stock did go down for a while, but it reversed after the terms of
the deal came out. Yalejock had to close
the short sale when the stock started back up.
And that took away one of his trades for the day.”
“What about us?” asked Jared.
“We actually got a nice lift on the New Zealand Fiber OPS
play. We made seven grand when that new contract was announced around midnight
our time”, said Kenny. “And we had another
three come home on China Propane. So we
actually have ten of the twenty-five that we think we will need. If Flash Pan makes some news, who knows?”
Kenny and Jared spent the rest of the morning watching the
markets and considering any final moves to their portfolio. They saw Yalejock make his final trade, a
purchase in the last hour of London trading of Dryships, Inc., a multinational
carrier of liquefied natural gas (LNG).
There had been all kinds of rumors about a big shortage of LNG
transportation vehicles which would benefit Dryships’ rates. But the trade actually had gone against
Yalejock and Dryships was down for the day.
At noon Eastern, the standings in the Challenge had stayed
the same, but both Yalejock and Goldfarb2 had lost value while Killer911 had
maintained the New Zealand and China gains.
The spread was less than $10,000. But time was running out. If Kenny and Jared were to pass Yalejock,
their current holdings were not going to get the job done.
With less than three hours of trading remaining, Kenny
walked over to Jared’s desk and said, “We’ve got this far mostly on that
screening program. But I think we’re out
of time. They don’t pay anything for
second place in the Challenge. We need
to make a big move”
“I agree that we
can’t win with our current position”, said Jared. “Do you have an idea?”
“I do,” said Kenny.
“But it absolutely goes against everything we’ve done to this
point. I think we sell short all of our
Flash Pan and buy their primary rival in the secure data business, Phoenix
Partners. Gerald Logan actually wrote a very
favorable white paper on Phoenix Partners a couple of weeks ago. His position was that Flash Plan’s
infrastructure couldn’t handle big jobs.
Phoenix, by contrast, has the horse power to do so. I know Flash Pan has been good to us, but the
lights are about to go out on us, and I think that it’s time to roll the dice!”
“Well”, said Jared, “If we don’t win, we lose, right? Let’s roll ‘em!”
Kenny made the trades.
All out of Flash Pan. All in for
Phoenix Partners. Their die was cast.
At a 2 PM Eastern news conference Flash Pan announced the
loss of their bid for a major Department of Defense contract for military data
centers. They simultaneously announced
that they had also furloughed 30% of their work force pending the results of
other contracts.
The reaction on Wall Street to Flash Pan was immediate. Shares plunged 30% in frenzied trading. Phoenix Partners enjoyed a small boost, but
it was obvious that the concern was mainly with Flash Pan’s news.
Just before the 4 PM Eastern market close, Kenny covered his
Flash Pan short sale for a net gain of over $35,000!! With a $5,000 dollar gain
in Phoenix partners as well, Killer911 had a net increase in value for the day
of $50,000. The account value had grown
to over $505,000. And was the easy winner of the Stock Market Challenge.
Epilog
Kenny and Jared were finally identified on the Goldman
employee access portal. Eyebrows were
raised, but no promotions were offered to Kenny. After the two weeks in Maui, Kenny did
receive a call from Gerald Logan. He proved
to be a decent guy after all. Kenny let
him know that his recommendation on Phoenix Partners was the reason behind that
final, risky trade. Logan’s
response? “Well played!”
