I am Hollywood

[Chapter 1170: The Unexplained Resentment]

After Ian Gurney left, Eric didn't invite anyone else to Tasmania. Instead, he enjoyed the final holiday with the women and children. Virginia and the others expressed confusion over Eric's decision to buy land in Tasmania, but he kept his somewhat paranoid thoughts to himself.

Deep down, Eric also yearned to possess a piece of land that was solely his -- the kind where he could ride a horse without ever reaching an end. Ideally, it would be remote and undisturbed by outsiders, free from wolves. Thus, Tasmania, located in the southern part of the world, felt just right.

Before he knew it, the end of August had arrived. The summer vacation in the Northern Hemisphere was coming to a close. After spending over a week in Tasmania, Eric flew back to the United States with his family.

...

In New York, the Nasdaq index began to rebound following positive news about new tech companies like Yahoo and Microsoft after opening on Monday, August 16. Many financial institutions rushed to make various enticing market statements to lure investors back into the new tech sector, aiming to create an escape opportunity for previously trapped tech stock holders.

From August 16 to August 20, the Nasdaq surged from last week's low of 2,863 points up to 3,319 points, marking an overall increase of 15.9%. Companies like Microsoft, Yahoo, Cisco, and Amazon saw their stock prices rebound significantly after a steep decline.

However, at this point, any rational investor understood that the current situation for the Nasdaq was merely a dead cat bounce. Even though Microsoft escaped a breakup with the Federal Justice Department, and companies like Yahoo, Cisco, and Amazon had robust support from venture capital, most new tech companies on the Nasdaq lacked the luck and strength of those companies.

In recent months, despite some creative accounting efforts, most tech companies' quarterly financial reports fell far short of those of Microsoft and Yahoo. After a dramatic crash, finance and venture capital firms were certainly not as generous as they had been a few months earlier in injecting funds into the tech industry.

It was easy to imagine that in the coming months, once these new tech companies ran out of cash, the wave of bankruptcies predicted by Barron's would become a reality. By then, the Nasdaq index would plunge, and it might take years before any chance of recovery arose again.

...

At Long Island Airport, it was already August 26, and the East Coast was experiencing evening. As the Boeing 747 came to a stop on the runway, Joanna looked out at the waiting jet bridge with visible anxiety on her face.

Because of what had happened in May, she was still worried about the external reactions. Eric, holding Emma who was asleep in his arms, gently patted Joanna on the shoulder, saying, "Don't worry; no one will be tasteless enough to cause a scene now. If there's a real problem, you and Vickie can just take the kids and move somewhere else."

Virginia, pulling a little one along, also came over and added some comforting words. The cabin door opened, and the golden light of the setting sun flooded in, bringing the heat of a summer evening.

Everyone had returned ahead of schedule, with only Eric, the two women, and three little ones coming back this time. They all disembarked and hurried back to their seaside estate in East Hampton.

The trip went smoothly -- no reporters, no spectators. East Hampton during the summer remained as peaceful and serene as usual, leaving the two women at ease.

...

After being away for more than two weeks, Eric had a pile of matters to attend to. That evening, he needed to rush to Manhattan to attend a cocktail party hosted by David West, president of State Street Global Advisors. Firefly Group had already announced they wouldn't be issuing dividends this year.

Despite having the cover of Katzenberg, Eric knew he couldn't avoid going in person. After settling the women and kids, Eric hurriedly caught a ride to Long Island Airport, where he would transfer to a helicopter bound for Manhattan.

Upon arriving in Manhattan, the business event at the Gramercy Hotel on Lexington Avenue had already begun. Inside the banquet hall, David West, the president of State Street, was listening to a quick-talking young man in his thirties when his assistant whispered something in his ear. David promptly interrupted the young man, saying, "Philip, I need to greet a guest; let's discuss your family's matters later."

The young man wanted to say more, but David waved him off and headed toward the door. Upon exiting the hall, David smiled and lost the previous impatience in his tone as he greeted Eric, "Hey, Eric! Long time no see. How have you been?"

Eric and David exchanged a brief hug, and he replied, "Not bad, and you?"

David let go of Eric and said, "Couldn't be worse."

Despite his words, David's smile remained unchanged. The two men walked towards the banquet hall, sharing laughter when the young man who had just spoken with David approached again, saying, "Mr. West, I... you..."

The young man seemed to lose his words upon seeing Eric walking with David. Though displeased, David paused to introduce them, "Eric, this is Philip Scott, the son of Milos Scott, owner of Scott Natural Gas in Pennsylvania. A good young man."

Hearing the name "Scott Natural Gas," Eric couldn't help but smirk. A few months earlier, during a wiretapping incident, Eric got hold of some dirt on the hedge fund Tiger Fund, traced back to an overseas fund controlled by Scott Natural Gas. After relaying some documents to warn Julian Robertson, that matter was left unexplored. With Tiger Fund now undergoing liquidation due to massive losses from the tech bubble burst, Eric felt less inclined to dig deeper.

After sizing up the young man a bit, Eric remarked, "Scott Natural Gas? I'm aware of it."

Seeing that the young man still hadn't responded, Eric walked straight into the hall. David seemed surprised by Eric's comment and continued walking alongside him, mingling with other guests while explaining, "Scott Natural Gas isn't doing well right now, Eric. Do you have any ties to that company?"

"None," Eric replied while picking up a glass of red wine from a tray of waiters. "What's wrong with them?"

"You know about Tiger Fund going under? The Scott family is a significant client of them. The fallout from Tiger's liquidation put them in a big hole. But that's not all -- during those months when the Nasdaq soared, the Scott family borrowed against their shares in Scott Natural Gas to invest in tech stocks, and they lost everything. The young man came to me hoping I could help delay their loan repayment," David said, shaking his head. "But honestly, it's a mess right now. There's no way anyone can help."

The relationship between State Street and State Street Global Advisors was similar to that of JPMorgan and Morgan Stanley. However, State Street had only recently spun off from State Street Bank to become an independent investment firm, making their relationship still more intimate than those of the already separated Morgan companies.

Eric glanced back toward where Philip Scott had been standing, discovering him staring in their direction, his expression flickering between irritation and anxiety. When Philip noticed Eric looking at him, he quickly averted his gaze.

...

Casually turning his attention back, Eric listened to the tone of grievance in David's voice and cut to the chase, stating, "David, regarding the dividends, there's no way we're doing that this year. Firefly is focusing on its next expansion, and we need the funds. However, there's room for negotiation. If State Street is willing to sell back its shares in Firefly Group, we can arrange dividends right away."

"Eric, you're really putting me in a tight spot here," David answered.

While Firefly was a private company, its expansion and profit margins had been exceptional in recent years. Eric had long considered a stock buyback, but the small shareholders of Firefly hadn't shown any intention to sell their shares.

"Think it over, David. You can relay my message to others. Firefly Group can repurchase shares at a 25x earnings ratio, along with settling this year's dividends."

Based on Firefly's operating profit scale this year, a 25x earnings ratio would put its market value around $100 billion. After the Internet bubble burst, the AOL-Time Warner Group, which just merged a few months ago, has a market value of only more than $160 billion. Hence, while Eric's offer might be slightly lower than the estimates by Forbes and others, it still demonstrated sincerity.

State Street had also suffered significant losses during the recent Nasdaq collapse. As an investment fund that managed client assets, State Street wouldn't face the same dilemmas as the Scott family, but if they wanted to prevent this year's financial reports from looking too grim and keep their investors' confidence, a substantial payout from Firefly or Clover Fund became crucial.

Currently, other than Eric, the shareholders of Firefly Group held a combined 26.3% stake. Berkshire Hathaway and the Tom Murphy family had the highest share, each holding 5%.

As a public company, Firefly had once attracted numerous small shareholders, and State Street's holding percentage didn't compare to Berkshire or Tom Murphy. However, due to the SEC's rule requiring public disclosure once partnerships exceeded 99 people, during the merger process, many small shareholders consolidated their shares to have State Street and some other funds hold those stocks, treating those funds as mere partners.

Thus, aside from Berkshire and Tom Murphy, another seven funds held 14% of Firefly Group, with State Street's stake at 3.3%, the third-largest after Berkshire and Murphy.

Given Firefly's impressive $40 billion net profit this year, a dividend would result in over $1.3 billion for State Street. This amount was equivalent to State Street's total profits from prior years. If received, it would immediately flip their financial status, which looked bleak until then.

As a sharp investor, David West definitely had long-term vision. Firefly's dominance in Hollywood was evident, and holding its shares long-term was undoubtedly worthwhile. However, as a professional manager, David also understood that to maintain his position or advance further, he often needed to sacrifice long-term interests.

Weighing his thoughts, David proposed, "Eric, how about this? Firefly can execute a partial dividend. For the next acquisition, State Street can provide low-interest debt financing equivalent to the dividend amount."

"While I could buy it for formality's sake, David, to be frank, it's still not feasible," Eric shook his head. "You, as a board member, should know Firefly's development plans. With our available funds, we can expand without having to exchange shares. As a result, everyone's interest will not only remain intact but also significantly increase at that point. Doesn't that sound good?"

"I certainly understand, Eric, but our situation is problematic."

"The Nasdaq has crashed, and many have lost money," Eric shrugged, "So, State Street's losses are only to be expected due to the poor overall economy. No one can be blamed for that."

Recognizing Eric's lack of any flexibility, David sighed internally but chose not to press the issue further. He quickly lightened the mood, saying, "Well then, Eric, let me introduce you to some guests. Many people came specifically to meet you tonight."

"It's my honor," Eric replied with a smile, accompanying David around the banquet hall.

It's worth noting that both State Street and State Street Global Advisors were headquartered in Boston. They formed part of one of the ten major business conglomerates in the U.S., the Boston Consortium. The major U.S. conglomerates controlled a myriad of companies nationwide through various mainstream banks, which in turn controlled the American economy.

While Firefly Group was making strides, its reliance on financial support still had a long way to go.

...

After socializing until after ten, Eric finally said his goodbyes to David West. Cindy had finished recording America's Next Top Model and, with her pregnancy becoming evident, had already moved to Martha's Vineyard on the northeast part of Long Island to await the child's arrival.

Once Eric settled in his car at the parking lot, he called Gisele and the others, confirming they were all in Manhattan and prepared to instruct the driver when a silver car approached from a nearby parking space.

The driver had no choice but to halt and wait for the silver vehicle to pass. Eric put away his phone and glanced outside, catching sight of Philip Scott in the silver car, staring in his direction through the window. In that moment, Eric noticed resentfulness in Philip's gaze.

Recalling how Philip had approached David during the cocktail party in an attempt to talk, only to be dismissed by David, it seemed clear that Philip's point this evening had not been met.

But if one were to judge by the looks, it appeared that Philip might be blaming his failures on Eric tonight, or perhaps he believed Eric was behind some obstacles against the Scott family stemming from that past incident.

Casually pondering this, Eric didn't feel particularly affected.

In life, no one could master everything flawlessly. While you might have many friends, you inevitably offended some people along the way, even if the reasons could sometimes seem trivial.

*****

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