Chapter 147: Delayed Research
“A holding company?”
Seong-hwan blinked.
Executive Director Oh Seong-hak manipulated the screen, and information about the holding company appeared on the monitor.
[Trinity Holdings]
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Location: Malta
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Legal Form: Investment Holding Company
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Ownership Structure: 100% ownership of each hedge fund
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Main Function: Overall management and distribution of funds for each hedge fund
“If it’s Trinity Holdings, wasn’t that the company at the very bottom of the list we saw earlier? It said the investment assets were undetermined……”
“Right. Even if each hedge fund operates as an independent legal entity, there needs to be a place that ultimately controls them.”
If funds need to be pooled together at a specific point in time.
Trinity Holdings would receive dividends or investment returns from each hedge fund and integrate them.
Seong-hwan nodded as if he understood.
“So, is there a specific reason for establishing Trinity Holdings in Malta?”
“Malta is one of the countries within the European Union (EU) that offers the most favorable tax rates. Moreover, its financial regulations are relatively flexible, making it an ideal location for an investment holding company.”
Executive Director Oh Seong-hak continued his explanation.
“Through Trinity Holdings, the link between DJ Capital and each hedge fund can also be completely severed. Since Trinity Holdings owns the shares of each hedge fund, from an external perspective, it would be impossible to find any connection to the flow of funds with DJ Capital.”
“Still, if agencies like the U.S. intelligence services decided to dig deep, wouldn’t it be uncovered quickly?”
I patted Seong-hwan on the shoulder.
“That’s why we need to prepare even more thoroughly. We’ll design the hedge funds controlled by Trinity Holdings to employ completely different investment strategies and targets, so even if the U.S. suspects something, they won’t be able to trace the connections.”
Executive Director Oh Seong-hak continued.
“As the CEO said, if 50 hedge funds each operate with different investment portfolios independently, it would be nearly impossible for outsiders to track the flow of funds.”
“Hmm……”
Seong-hwan rubbed his chin, still looking puzzled.
“Even so, if agencies like the FBI, IRS, or SEC seriously pursued it, wouldn’t it be impossible to hide the flow of funds?”
Seong-hwan reasonably suspected that even if each hedge fund was established in a different tax haven,
if Trinity Holdings owned 100% of the shares, the flow of funds could still be traced through this connection.
“As you said, since Malta is an EU member state, it is subject to the Anti-Money Laundering Directive (AMLD), which requires reporting of fund flows.”
A Currency Transaction Report (CTR) is automatically submitted for any transfer over $100,000.
“However, I’m confident it will remain untraceable because the flow of funds will be designed to be extremely complex.”
For example, even if Trinity Holdings owns the shares of each hedge fund,
each hedge fund would be designed to invest through third-party dummy corporations (paper companies),
and the funds would flow through specific countries,
such as Malta → Hong Kong → Dubai → Cayman Islands → Singapore, allowing them to circumvent the financial regulations of each country.
“The materials Executive Director Oh Seong-hak presented are simplified to be easily understood, but if you look at the details, they’re so complex that even the person who designed them would struggle to understand without the key.”
“Wow.”
Just from the simple explanation I wrote on the whiteboard, Seong-hwan’s eyes were spinning.
Executive Director Oh Seong-hak also looked quite surprised.
“……Anyone would think you’re a top-tier structured finance specialist, sir. How on earth do you know all this? This isn’t something you can learn from books……”
Of course, I hadn’t learned it from books either.
It was knowledge gained from clashing directly with the so-called financial experts during my time at Ahsung.
Naturally, I couldn’t reveal this.
“……I just happened to learn it.”
“Anyway, if there are no further objections, I’ll proceed with transferring DJ Capital’s funds to the newly established hedge funds.”
“You mentioned earlier that the fees would be high. Should we expect around 20%?”
Executive Director Oh Seong-hak nodded.
“Correct. To eliminate any association with DJ Capital, it’s most efficient to entrust the task to professionals for a fee.”
Of course, during the process, the carefully dispersed structure must not be exposed.
Entrusting it to dummy corporations and multiple professionals to make the structure difficult to grasp is also a necessary step.
“After deducting the 20% fee from the remaining $267 billion, excluding the $200 billion transferred to Dojin Soft, the final assets will be around $213 billion.”
Just before investing in Abenomics and the end of U.S. quantitative easing, DJ Capital’s assets were $215 billion.
In terms of asset size, there was almost no change.
However, with the funds for data center construction secured
and multiple hedge funds established for the future, it wasn’t a bad outcome.
New York, DJ Capital.
“I’ve reviewed the materials on hedge fund establishment and fund distribution through Executive Director Oh Seong-hak.”
“I didn’t come here for that. I’m here to discuss future investment directions.”
Grant nodded at my words.
“Do you have any advice to offer?”
“Before that, I’d like to hear your thoughts first.”
I alternated my gaze between Grant and Lisa.
I could offer advice based on the macro situation I was aware of,
but I was curious what strategies these experts in the field had in mind.
Grant spoke first.
“Looking at the current market trends, the U.S. is likely to continue its rate hike phase following the end of the Fed’s quantitative easing. Therefore, additional short positions on rising U.S. Treasury yields will be effective.”
He meant betting on a drop in U.S. Treasury prices.
Lisa nodded and continued.
“Many tech stocks are also vulnerable to rate hikes, so a tech-focused short position, like last time, remains a valid strategy. Especially companies that have supported their stock prices through share buybacks are likely to turn bearish as funding becomes difficult during the rate hike period.”
Grant opened his materials and listed specific company names and data.
“With the 50 hedge funds established this time, the U.S.-related portfolio alone should generate significant profits. However, there’s also a possibility of financial stocks strengthening due to rate hikes, so adding long positions in bank stocks could be a good idea.”
“It would be even better to combine this with investments in further yen weakness driven by Japan’s Abenomics policy.”
I nodded.
Both seemed to understand the macro situation better than I expected.
But……
“The investment strategies for the U.S. and Japan will undoubtedly yield decent results. Especially if Japan’s large-scale fiscal spending ramps up, construction and infrastructure-related companies could benefit.”
I spread out the map and pointed to Europe.
“But on top of that, pay attention to this region.”
“Europe?”
Lisa tilted her head.
Grant also looked puzzled.
“Since the Greek financial crisis, Europe hasn’t introduced any major stimulus measures, but it’s common knowledge that economic growth is slowing.”
I swept my hand across Europe and said,
“If my prediction is correct, the European Central Bank (ECB) will soon announce a large-scale quantitative easing policy.”
If Europe shifts to easing while the U.S. tightens,
the euro would weaken, and government bond yields would rise—a natural progression.
“Are you suggesting taking short positions on European government bonds and betting on euro weakness?”
“Exactly. Short positions on infrastructure-related companies within the Eurozone, especially large construction firms in Germany and France, would also be effective.”
Lisa muttered as she took diligent notes.
“Tightening in the U.S., easing in Europe. They’re going in completely opposite directions.”
I turned the map again to point to the Middle East and Asia.
“And this region needs attention too.”
“The Middle East?”
Lisa looked at me with a puzzled expression.
“With the U.S. tightening, the dollar will remain strong for the time being. In this situation, Middle Eastern countries are earning massive amounts of dollars from oil exports.”
“Could it be…… that the liquidity secured from selling oil will be invested by Middle Eastern sovereign wealth funds into emerging Asian markets?”
I smiled.
“Exactly. Asia, including India, remains a high-potential market. By setting up separate hedge funds to invest in this market, we can prepare for the influx of Middle Eastern capital and achieve significant results.”
Lisa stopped writing and looked at me.
“So, to summarize, short positions in the U.S. and Japan, short positions on European government bonds and euro weakness, assets related to Middle Eastern oil revenue reinvestment, and betting on emerging market growth in Asia…… These four axes will form the basis for each hedge fund’s independent investment strategy, right?”
“Precisely. Doing so will ensure not only avoiding losses but also achieving considerable success. However……”
I paused for a moment before continuing.
“All hedge fund investments must operate independently. If any two funds take the same position, the flow of funds could be exposed.”
“Understood.”
With their responses, I returned to Korea.
The goal of this trip—securing the funds for data center construction—had already been achieved,
and with the fund distribution I’d been planning also completed,
there was no reason to stay here any longer.
After landing at Incheon Airport, I headed straight to Dojin Industries’ underground research facility.
It was time to proceed with the research that had been delayed due to lack of funds.