Scott didn’t find it strange. Tom was like that. “I’m listening,” he said.
“Codexco.” Long pause.
“Go on.”
“Codexco.” Gudukas said it again, the pause shorter this time. “That one word’s going to change your life.”
“Never heard of it.”
“Where are you going with that?” said Gudukas. “The world’s full of five-hundred-million-dollar companies no one’s heard of.”
“It’s a five-hundred-million-dollar company?”
“Been on the Nasdaq for ten years, actually started paying dividends last quarter,” said Gudukas. “I’m rolling the whole Symptomatica score into this one.”
“I thought you were rich already.”
“Not rich enough to buy an island in the Bahamas.”
“You’re buying an island in the Bahamas?”
“Part of one, anyway. After Codexco. It’s already got a tennis court for Kyla.”
“What do they do?”
“Who cares?” said Gudukas. “Happens to be software development for heavy engineering. You know that big thing in China where they flooded out all those peasants? Codexco was in on that.”
“What’s so good about them?”
“What’s bad is what’s good,” said Gudukas. “They had a hotshot Ph.D. from Cal Tech working on some algorithm shortcut that was going to cut costs by a third and wipe out the competition. Spent fifteen million on it so far, funded a new lab. The good news is it’s not going to work and no one knows but us chickens.”
“So this is a short sell?”
“Exactly. Lost our fear of those by now, I hope.”
“How do you know the shortcut won’t work?”
“You guys,” said Gudukas.
“What guys?”
“Like you and your brother, don’t believe anybody. You don’t see a pattern here? Have I ever steered you wrong? Stentech, Symptomatica, now this. Searching for patterns—that’s what investing’s all about.”
“Call it searching for patterns, then,” said Scott. “How do you know?”
“My source is confidential, but I’ve seen internal documents. Had them in my hands—a one hundred percent negative evaluation, backed up by a shitpile of math, charts, graphs, equations. The fifteen mil is gone and their VC backers are pulling out. As soon as that leaks out the stock’s in the toilet. Not down to zero, like Symptomatica—this one’s more diversified—but they should lose half their value in a day.”
“What’s it trading at?”
Click, click
on Gudukas’s end. “Nine and a quarter. Up twenty cents from yesterday, good for us.”
“So you think it might go down to five?”
“Four or five, something like that. Maybe even two or three.”
“When?”
“No one knows when. But it’s always sooner rather than later, plays like this.”
“Full-rate commission?”
“Preferred client rate, you go through me.”
Say it went down to five, to be conservative. Five from nine is four. Fifty thousand shares would be two hundred grand, a hundred thousand would be four hundred grand, a hundred and twenty five thousand would be half a million; restaurant money. And what did he have to put up? Nothing but collateral.
“Put you to sleep, Scotty?” said Gudukas.
“It’s Scott.”
“Shit. Why didn’t you say anything before? I can’t guess these things. Hell, I like that everybody calls me Mickey.”
“I’ll get back to you, Mickey.”
“You know best, Scott,” said Gudukas. “But the clock is ticking.”
23
“D
on’t you think Linda should know about this?” Tom said. They sat in Tom’s office, the day dark outside, lights on: Tom’s green-shaded banker’s lamp on the desk, the floor lamp at the end of the couch, next to Scott, and the little brass light over their father’s portrait on the wall. It hid the old man’s face behind a shiny glare, also shone on his gold watch, a watch Tom now wore.
That was fair: Scott had inherited the mother-of-pearl cufflink-and-stud set. But Tom’s question pissed Scott off. “Does Deborah know every little thing you do?” he said. That wasn’t the kind of comeback he’d have made before the last tennis match, certainly wouldn’t have said it so roughly. It reddened Tom’s face, and that was fine with Scott. He shouldn’t have had to beg for this, not after what happened with Symptomatica.
“There’s risk involved, that’s all,” Tom said, “and she’d be part of it.”
“What’s all this worrying about Linda?” Scott said, and had the satisfaction of seeing Tom go a little redder; this new tone was satisfying too, just the sound of it. The tennis match had changed things. At the same time, he had no intention of exploiting it in a habitual way: they were brothers, after all. “She’s my responsibility,” he added in a softer tone. Tom’s blush or whatever it was didn’t disappear, intensified if anything. Maybe he was sick, like everybody else this week; the sun hadn’t been out once.
“And second, there’s no risk,” Scott said.
“How can you say that? The risk is open-ended. Short selling’s one of the riskiest things there is, everyone knows that.”
“Didn’t I just explain all this?” Scott said. “Gudukas has seen internal documents. That’s like tomorrow’s headlines today.”
“Why do you trust a guy like that?”
“It has nothing to do with him personally. It’s his record. Stentech. Symptomatica. Don’t you see the pattern? He gets good information. I told you that from the very beginning.”
“How come he gets such good information?”
“You’re a snob, you know that? Why shouldn’t he get good information? Because he wears loud clothes and plays lousy tennis? Gudukas has good contacts and he works his ass off. Isn’t that enough?”
“Who’s his contact on this?”
What a question; a question someone on the other side of a generation gap might ask. “You expect him to reveal that?” Scott said. “It’s better not to know, for our own protection.”
“That’s the kind of talk that scares me, right there.”
Tom scared too easily. “Reading between the lines, I got the impression his source is a VC guy,” Scott said.
“What’s that?”
Jesus. “Venture capital. That’s the trigger, when they start dumping their shares.”
They gazed at each other, their heads in separate pools of light. Scott felt the power of that expression, venture capital, hanging in the air.
“Is this us?” Tom said.
“What do you mean?”
“Are we guys who play in that game? Venture capital, selling short, putting money into companies like Codecto—”
“Codexco.”
“—that we can’t even understand what they do?”
The power of the expression was real, but their responses were different. Tom shrank from it; Scott embraced it. What had Julian said?
A little too much propinquity.
Julian was smart, not because he could throw around words like propinquity that Scott only half understood, but because he could get to the heart of things. A hundred and twenty-five thousand shares, half a million dollars, meant no more enforced propinquity, meant the freedom to make his own decisions. But it wasn’t just him: the whole family would benefit. Brandon could go to boarding school next year, or as a day kid to Loomis or Choate, maybe get into Harvard after all. Julian could still come in the summer and on vacations, ramping up that SAT score. He wondered if Ruby would want a horse.
“The fact is,” said Scott, “I guess we end up being different. One of us is a guy who does play in that game.”
“Then you’ll have to do it by yourself,” Tom said.
“Meaning?”
“Meaning I can’t involve the business.”
“That’s not entirely up to you,” said Scott. “Mom owns forty percent.”
“I talked to her.”
“About what?”
“This kind of thing, the Symptomatica deal specifically.”
“What did she say?”
“Nothing. But a week later she sent me a book.” Tom opened his desk drawer, took it out:
The Stock Market for Dummies
. He opened it to a bookmarked page. “She underlined this passage.” Tom held out the book, expecting Scott to get off the couch and fetch it. Scott stayed where he was. Tom walked around the desk and handed it to him.
Scott read the passage. Tom returned to his desk. His phone rang. He ignored it.
Short selling is not for the faint of heart. Big corporations and commodities traders use it to hedge their bets. If you’re not playing in that game, give it a miss.
“So?” Scott said.
“So you can talk to her,” Tom said, “but I think that’s her answer.”
“Sure you didn’t send her the book first, maybe with the underlining all in place?”
“What’s going on with you, Scott?”
“Nothing.”
“How can you ask me a question like that?”
“I take it back,” Scott said. “Didn’t mean to imply I don’t trust you. Of course I do.”
Tom went red again, which made no sense. He picked up a pencil: their hands were identical. “How many shares were you thinking of?”
“A hundred thousand, maybe more.”
“At nine?”
“It’s up to nine thirty-five this morning.”
“What if it keeps going up?”
“That’s why I need collateral—to cover any little blips like that. But in the end it’s going down.”
“What if it blips up to eighteen?”
“That’s not happening. There isn’t time, for one thing.”
“But if it did, you’d owe the broker nine hundred grand, is that right?”
Hands identical, but inside they were different, all right, maybe growing more so. Scott recalled Julian’s tennis advice: hit right at him and use your power only when he tries to overpower you. And there’d even been a third suggestion, which Julian had held in reserve. Scott smiled.
“What’s so funny?”
“I just realized I’m the one who’s like Dad. I always thought it was you.” Hitting right at him.
“Dad never bought a single share of stock in his life.”
“But he built this business.”
Power for power. There was a long silence. Then Tom leaned back in his chair, nodded. The battle was over; what worked on the tennis court worked in the office.
“Can I just ask you one more thing?” Tom said. “Does your share of the business plus the equity in your house and all your other investments come close to nine hundred grand?”
“Where are you getting that number? It’s a fantasy, Tom, a ghost. I’m not afraid of ghosts.”
Something hard, hail or sleet, clattered against the windows. The lights dimmed for a moment, went back to full power. “Tell you what,” Tom said. “I’ll buy out your share of the business.”
Scott didn’t get it. “You mean after?”
“After what?”
“The Codexco payout.”
Tom shook his head. “Now. But temporarily, just so you’ll have the collateral. After you cash out, you can buy back in.”
“That’s very nice of you, Tom. Buy back in with interest, goes without saying.”
“Goes without saying.”
Yes! It was going to happen, not in the way he’d expected, but did that matter?
“No reason we can’t draw up an agreement right here, the two of us,” Tom said. “We’ll have to put some value on the business. They used two and a half times revenue last time, as I recall. That acceptable?”
“Sure.” Although then they’d been after a conservative value, for tax reasons. Still, somewhere between two and three times revenue was standard.
Tom was busy on his calculator. “Revenue last year was eight hundred grand plus, we’ll plug in the exact figure later. Two point five times eight hundred thousand is two million, times your share, point two five, makes five hundred grand.”
“Wait a minute,” Scott said, maybe a little late in the game. “Where are you going to get the five hundred grand?” This was a real five hundred grand—
real
was the wrong word, more like in the present, Scott corrected himself—as opposed to the equally real but future five hundred grand estimate of the Codexco score.
“I can raise it,” Tom said.
“How?”
“There’s the home equity line, for starters.” That made sense: housing values in Old Mill kept rising, and Tom had owned his place for years. “I could also mortgage the ski place if necessary.”
Scott realized that Tom was already where he himself wanted to be. Didn’t seem to be enjoying it, didn’t seem to be stretching out, but he was there.
“We’ll get the agreement drawn up and cut the check by end of business tomorrow.”
“Thanks, Tom.”
“Hope like hell it works out,” Tom said.
“Relax.”
T
om was quicker than that: the agreement—Tom bought Scott’s share of the business, Scott retaining the option to buy it back at the same price, with interest at prime plus one—was signed, witnessed and notarized at eleven the next day and Scott deposited the check at Gudukas’s brokerage in an interest-bearing account an hour later. Five hundred seventeen thousand, two hundred and sixty-three dollars, seventy cents.
Gudukas took him into the conference room, closed the door. “How big do you want to go?”
“I was thinking a hundred thousand shares.”
“You can go a lot higher with this behind you.” Gudukas waved a photocopy of the check. “I’m in for three myself.”
“Three hundred thousand shares?”
“No blue-light specials in the private island market,” Gudukas said.
“What’s it at?”
Gudukas checked a monitor on the conference table. “Eight eighty-five, down twenty cents from the opening.”
Scott moved around to look at the screen, saw Codexco, the price, the volume: all real. “Where was it when you got in?” Scott said.
“Nine-oh-five,” Gudukas said.
“So you could buy back right now and make—”
“Sixty grand,” Gudukas said. He didn’t even have to think. The screen flickered and the price fell to eight eighty.
“Jesus Christ,” Scott said. “Is it happening already?”
“Could be,” said Gudukas. “So what’s the number?”
“Maybe a hundred and ten,” Scott said.
Gudukas clucked like a chicken.
“All right, one twenty-five.”
“One twenty-five’s better,” Gudukas said. “But one fifty multiplies a lot easier.”
On the screen in front of him, Codexco dropped another nickel, down to eight seventy-five. Fifteen grand for Gudukas, twice what Scott had forgone by not getting in two minutes ago, at the one fifty level.
“One fifty it is,” Scott said.
“My man,” said Gudukas.
Scott sold one hundred and fifty thousand shares of Codexco he didn’t own, borrowing them from Gudukas’s brokerage in the standard way. The trade went through at eight seventy-five—one hundred and fifty thousand times eight seventy-five equaling one million, three hundred twelve thousand five hundred. By the time he left Gudukas’s office Codexco was at eight sixty-five. He’d made fifteen grand already.
Sleet, wind, all the streetlights on: even darker than yesterday, the bellies of the clouds dragging through the treetops. But Scott was lit up inside. Fifteen grand already! He was on his way. He had to force himself to go back to work, to stay at his desk, to write insurance—life, disability, medical, homeowner, automobile, umbrella; everyone paying a premium just to try to hang onto what they already had. He was moving to another level, getting more, so much more that the hanging-on part would never be relevant again.
Codexco ended the day at eight and a half, down twenty-five cents: $37,500 to the good. It wasn’t about paying premiums; it was about multiplying. What if Codexco didn’t stop at four or five, but fell all the way to three, even two? Scott played with the numbers. They were beautiful. On the way home he stopped at the travel agent, gave himself the pleasure of dropping four plane tickets on the kitchen table that night.
“What’s this?” Linda said.
“Atlantis.”
“Hey!” Ruby said.
“What’s going on?” said Linda.
“We’re going to Atlantis?” said Brandon.
“When?” said Ruby.
“Tomorrow morning,” said Scott. “Nine forty-five, nonstop from Bradley. Be there in time for a nice swim before lunch.”
“What’s Atlantis?” said Linda.
“You can’t be serious,” Brandon said.
“Paradise Island, Lin,” Scott said. “The resort with that underwater park where you walk through a glass tunnel.”
Ruby danced around the table.
“But tomorrow’s Friday,” Linda said.
“Back Sunday night,” Scott said. “With fresh tans and salt in our hair.”
“Friday’s a school day.”
“Mom!”
“And a work day.”
“I’ve already called in sick,” Scott said. The kids laughed, because he could take off work whenever he wanted, although he never did. “You can catch whatever I’ve got tonight.”
The kids laughed again, but Linda’s brow furrowed the way it did, that vertical line digging deep. “What are you up to, Scott? We can’t afford this.”
“Sure we can.”
“What did you pay? Is it refundable?”
“We’re locked in,” Scott said. “Locked and loaded.”
“Have you been drinking?” Linda said.
“Not yet.” He wished he’d picked up a bottle of champagne, maybe two.
She stared at him, then opened one of the folders, leafed through the ticket pages. “First class?” she said. “Have you gone crazy?”
“First class!” said Brandon.
“I’m ordering everything,” said Ruby.
“Scott, I want an explanation this minute.”
He went over, pulled her close. “You know you love the sun,” he said. “Brings out those beautiful Mediterranean skin tones.”
“I hope I don’t have them,” Ruby said.
Linda backed out of his grasp.
“I had a good day today, that’s all,” Scott said. “It’s a poor heart that never rejoices.”
“Did you make that up?” Ruby said.
“What kind of good day?” said Linda.