Hedge

Hedge

By

S.M. Sarkissian

Published by Shaumt M. Sarkissian at Smashwords

Copyright 2010 Shaunt M. Sarkissian

Chapter 1

It was nearly 2:30AM when Jacob Lidell returned to his suite at the Drake Hotel in downtown Chicago. After drinking approximately his weight in vodka tonics, he felt he finally deserved some much needed rest. As the CEO of JLX Interactive, the hottest video game developer in the country, he rarely paid for his own drinks and tonight was no exception. Following his keynote speech earlier in the day at the annual Gaming Console Developers conference, he had what most average citizens would call a fairly hectic day. He drudged though meetings from 10:00AM – 1:00PM with Analysts from the majority of firms covering his companies stock, followed by a three martini lunch with the Investment Banking team at Merrill Lynch. Jacob however distained most people from the financial community. As he often stated, What do they know about creating the optimal GUI for a first person shooter, or the best plot line for the next fantasy role playing game? But after all, they were the ones who had helped make him rich and he usually just bit his lip and gave the required dog and pony show.

After lunch and a few breath mints, Jacob had a one hour interview with a young nerdy reporter for Gaming Review magazine, followed by a half hour break. Then the real fun began. He attended a lavish wine infused dinner at Rico’s steak house with his corporate business development team, followed by a night of cocktails and strippers at the Classy Lady gentlemen’s club, courtesy of the Merrill Bankers. They had been trying to pitch him on the latest acquisition de jour, Rockworld Games. Yet at the current price, he had no reason to take them seriously. But as always, he would let the Bankers give their pitch, in exchange for a night of perfectly shaped fake breasts and vodka.

At the age of 47, Jacob had amassed a net worth well worth of over 700 million dollars. His 34% stake in his brainchild JLX alone was worth over 600 million, in addition to his various personal positions in video gaming startups and real estate ventures. He had built JLX from a figment of his imagination, to the hottest video game developer in the world, on sheer will, and pure creativity. His latest successes, Empire of Lathos, and U Can Rock, had become the hottest PC and Gaming Console games in the world. And the pipelines of new games both in his mind, and already in development were stronger than ever. According to most analysts and the gamer world, Jacob Lidell is JLX, and JLX is Jacob Lidell.

As he closed the door to his suite, he took a deep breath. He was finally at peace, and could relax. After throwing his jacket and tie on the couch, he strolled over to the minibar area, and removed a small bottle of vodka from his courtesy basket provided by the hotel. Being a Platinum member of Interworld Hotels had its privileges. And Jacob as always had requested his three mini bottles of Kettle One vodka and two Oreo packages cookies in his basket. At $2400 a night, he figured it was the least they could do, and it helped ease the loneliness of monotonous business travel. After polishing off two quick Vodka tonics, and the obligatory call home to his wife, Jacob finally went to sleep, the wheels of creativity still turning.

When he quickly and violently awakened, sitting in his bed, the sweat running down his eyes blurred his vision. He could make out 4:12AM as he stared at the hotel clock by his bedside, yet it did seem to even register in his mind. The pains shooting down his legs and the hard impacting pressure on his chest were the first he had ever felt, yet he instinctively knew the end was near. As he stopped breathing, and his pulse quickened and slowed, primal fear rushed into his mind. But Jacob’s only thought was why now. He stayed fit, he ate right, but his hard working lifestyle may have caught up with him. His vision abruptly stopped, and his last sensation was his head hitting the goose down pillow at his back. He drifted out of consciousness, and his eyes remained open staring at the ceiling. And the wheels of creativity, came to a grinding halt.

Chapter 2

The silver non-descript helicopter broke the silence of the serene Connecticut skyline, as it raced to its final destination. Below, its passengers enjoyed a picturesque view of the Fairfield County countryside and large estates and lots below. Yet as always, this vehicle only carried two pilots and a single passenger.

James Richard Chistensen stared at two black flat panel TV’s mounted on the wall of the spacious helicopter’s cabin. The latest feeds from Bloomberg TV and CNBC were split screened on the left panel, while the right panel was chaotically illuminated by red and green characters, blinking and changing like a schizophrenic Christmas display. However these were not random letters and numbers. These were the ticker symbols for the various sizeable positions of equities, bonds, options, and derivative securities held by his empire. As he laid back in his leather mounted swivel chair, the value of his Hedge Fund empire, Omega Capital Management, changed by the second. For a few brief seconds up, and some seconds down. Yet at the end of the day, most knew where it would finish. For Christensen and he industry leading fund, almost always it was up.

At 62, James Richard Christensen was still an imposing figure. At 6’ 2", with slicked back salt and pepper hair, and a wide and strong physique, he looked like spitting image of Mafia lieutenant or hitman from the Sopranos. And unlike those he competed with in the financial world, James, or JR as he was normally called, took a different path to success than most. JR, was born to a lower class family in Youngstown, PA. His father, a Danish immigrant, worked in the local iron mill to provide for his family, while his Italian mother struggled to keep the family nurtured and intact. Unlike most Danish immigrants, his father immediately embraced the American lifestyle, and unfortunately most of its worst habits. He was a heavy drinker, and beat his mother often with little to no warning. His older brother and sister left home at 16 and 17 respectively, leaving JR to take most of the brunt of the family chaos. JR was always the smartest one in his class, receiving awards and accolades from the teachers he had. These however at home, fell on deaf ears. When he was 16, JR dropped out of school and began working in the mill with his father, taking odd shifts to help supplement the family income. Then at age 19, he received a letter which most would regret, yet he rejoiced. He was drafted into the Army, and sent almost immediately to Vietnam.

Following 4 successful tours in country, JR returned a decorated yet penniless soldier, and moved in with a friend and fellow soldier in Brooklyn. They worked odd jobs to keep the lights on for several months when JR struck up a conversation with a neighbor who worked at Goldman Sachs. He was low level brokers assistant, and saw the intelligence and drive of the former solider. JR started as a ticket runner, and general gopher a Goldman, but was a rapid study. Immediately, he learned the intricacies of the market, and the nature of the beast. Something spoke to JR, and he seemed to absorb knowledge and concepts like a sponge. Some call is a killer instinct, but to JR reading the market was like reading a book.

After only 9 months, he was given a job as a broker assistant, in the wealth management group, handling calls and assisting client activities. Within 2 years, JR had all the clients of the broker he assisted transferred to his management. And at the age of 36, JR was the top producing Wealth Management broker in the United States. High Net worth individuals transferred their money to JR with dizzying speed, and he accumulated assets under management which dwarfed his colleagues. Yet for JR, it was never enough. In the 1980’s, the Hedge Fund industry was beginning to take shape. And for JR, this provided the ultimate vehicle for his drive and ambition.

Most Mutual Funds, and Asset management companies are heavily regulated by the SEC, and subject to the strict securities laws of the 1933, and 1934 acts by congress. The Hedge Fund industry however was different, and structured as entities outside the SEC’s sphere of control. Created initially to offer non-traditional, return driven strategies for High Net worth individuals, Hedge Funds often required large investments north of 3-5 million. They slowly became the hired guns of the investment industry. The term Hedge was used because most funds often hedged their stock positions with options or related instruments to lock in profits, and limit their downside losses. Some also employed complex trading strategies and algorithms difficult to impossible for traditional money managers to employ. Operated usually on a fee basis which consisted of a small percentage, plus a portion of the profits ranging form 10 – 30%, they operated on the motto that you eat what you kill. They thus when for large sizeable kills, taking advantage of the inefficiencies they saw in the market, and the weakness and lack of flexibility of many of the larger mutual funds in the industry.

JR founded Omega Capital Management with two hot shot Goldman Sachs traders in the late 80’s, and the money immediately flowed in. They initially capped the initial fund, Omega Total Return, at 400 million. Yet when demand pent up, they let the money flow in. With sharp traders, and a unleashed Total Return driven strategy, Omega traders could take almost any trade they wanted in any sector, as long as it made money. Traders who made mistakes didn’t last long. But those who were