4

The Presentation

TUESDAY 1ST JULY 2008

Following her daily 55-minute workout, Blaze walked into Kerkyra Capital at 7:10 a.m. The offices were built around a thirty-floor glass atrium. There were full-sized palm trees, a waterfall and the piped sound of the jungle. When the building had been opened by a minor royal four years earlier, there had been real birds but this had proved unhygienic. Inside the reception area, ten elegantly dressed women sat behind a sixty-foot desk made from carved marble moulded into the shape of galloping horses. “Good morning, Blaze,” the receptionists cried out in unison.

Blaze nodded curtly. At the security barrier, her PA Donna waited with the day’s files, briefing her as the lift shot up to the nineteenth floor where her senior adviser, TiLing Tang, was checking through the morning’s presentation.

“Nothing to report from the Far East,” TiLing said, passing over printouts from the early-morning trades in the Japanese markets.

“How’s Joshua Wolfe doing?” Blaze asked, dreading the answer. Wolfe was the unofficial benchmark against whom she measured her performance. His daring calls, his split-second timing and audacious decisions were legendary. Five years earlier, she and Wolfe had been neck and neck, two great stars watched by all, but in recent times he had steadily and inexorably outperformed her.

“He called it right again. Up another 5 per cent this week.” TiLing, like Blaze, was obsessed by Wolfe and spent many hours checking and cross-checking his investments.

“How?”

“As far as I can tell, by the usual combination of market and stock-specific judgement calls.” TiLing shrugged. Without full access to Wolfe’s portfolio, it was impossible to find out what the maverick investor was up to.

Blaze groaned with irritation, wondering if Wolfe had some kind of insider information. He never seemed to put a foot wrong.

They spent the next couple of hours going over Blaze’s presentation, cross-referencing her notes and arguments. At two minutes to eleven, the receptionist buzzed upstairs to say that most of the clients had arrived. Blaze checked her make-up in a small compact mirror and applied another layer of cover-up over her scar. At 11 a.m. precisely she entered the auditorium, then, looking calm and strikingly beautiful, walked across the stage and smiled at the audience.

She had just begun her presentation when Thomlinson Sleet came into the room.

“Don’t mind me!” he shouted out, and brought her talk to a halt while he spent a few minutes greeting and shaking the hands of many guests. Making his way to the front of the auditorium, he stood directly in front of Blaze and made an announcement. “As most of you know, I just bought Kerkyra Capital, so its £30 billion under management is now part of the Sleet Empire and so are its pretty little slaves.” Looking at Blaze, he winked. She blushed deeply. Her discomfort made him laugh. “Kerkyra has done well, but it’s going to do a hell of a lot better. Year on year this hedge fund has outperformed its rivals, delivering Alpha to its clients. But what is a hedge fund? It doesn’t own anything. Its USP is built on two things—the quality of its employees and its track record. I intend to make it the best. We’ll blow Joshua Wolfe out of the market; the guy’s had a run of good luck but he’s dead meat. Kerkyra is going to be even bigger than BlackRock; I’m going to turn this business into the greatest money-management company in the world.”

His speech was greeted with applause. Sleet raised his hands and, smiling, turned to Blaze.

“Haven’t seen you for a few years. Glad you’ve kept your figure. Guess you’re still riding those horses.” Pleased by his own innuendo, Sleet laughed again, accompanied this time by the mostly male audience. Blaze flushed red from embarrassment. She couldn’t remember meeting the man before.

It took a few minutes to regain her composure and for the room to settle. Standing at the front of the stage, Blaze hoped the microphone couldn’t pick up her clattering heart. Clearing her throat and fixing her features in a smile, she started again.

“The City is full of brilliant people. Many are here today, but have we been too clever? Have we created the means to destroy ourselves?” She had got their attention. “Think of markets as an old-fashioned steam engine needing an endless supply of logs to make it run. Those logs can be made of wood, or stocks and shares, of gold or currency. These instruments are finite, so clever people thought: why not free the markets from antiquated metrics and create something synthetic and endlessly malleable?” Blaze spoke in a low voice, wanting her audience to strain to catch her words, to have to concentrate.

“The most audacious examples of these new creations are CDOs, or Collateralised Debt Obligations. What the hell does that mean? How many here can explain it?” She looked around the room at the many blank faces.

Sleet jumped to his feet. “Stop treating us like schoolchildren; get to the point, if you have one.” A smattering of laughter broke out. Blaze flushed with irritation. Just because the man had bought the company didn’t give him the right to heckle the staff.

“Sir Thomlinson,” she said in a polite but icy tone, “perhaps you’d tell us what a CDO is? Or a sub-prime mortgage, given that you bought several million pounds’ worth only yesterday?” There was a sharp intake of breath from her colleagues, unable to believe that Blaze was challenging their new owner so brazenly and in public.

“I don’t give a damn what it is,” Sleet said, laughing. “All I care is that it keeps on going up in value.”

Blaze shook her head ruefully. “There are hundreds of billions’ worth of CDOs in the market and yet hardly anyone knows what they are or what they do. I am not—don’t worry—going to give you a boring lecture, but a CDO is a bundle of disparate loans which yield interest. All well and good until the underlying value collapses and you’re left with no income and no asset.” Out of the corner of her eye Blaze saw Sleet’s expression darken. She wondered if she should soften her stance—after all, the man had the power to fire her—but she had spent so long preparing her pitch, and was too keen to prove her point, to alter her course.

She cleared her throat. “One of the world’s oldest and most venerable invesment banks, Bear Stearns, bought two hedge funds specialising in CDOs. In 2007 its shares were valued at $172; just over a year later you could buy them for $2. That was the end of the Bear; nearly eighty-five years of history eviscerated. And yet the lesson wasn’t heeded; Lehman Brothers, the fourth-largest bank in the sector, has borrowed over thirty times its capital. Every single day it has to raise millions just to pay the interest. All their energies, their profits and, more worryingly, some of their assets have to go into restructuring their borrowings. Employees go home each night not knowing if there’ll be enough money to trade the following day.”

Looking around the room, Blaze saw concerned faces staring back at her. Even Sleet was momentarily lost for words.

Blaze swallowed. “The whole system is perilously close to collapse. I don’t think this is the eve of the dot-com crisis or the Tuesday before Black Wednesday: this is an abyss as dark as 1929.”

There was an outburst in the room.

“Hang on, hang on!” Sleet stood up slowly from his chair like an omnipotent Neptune rising above a sea of worried faces. “How do you explain that the stock market hit a seven-year high last year, followed by an all-time high on the Dow last fall?” He sat down heavily.

Blaze looked at him without blinking. “Everyone has puffed up their earnings and underplayed their losses.”

“Everyone?” Sleet sneered.

“I don’t think Lehman will last till Christmas. I’d put Goldman on the critical list.”

There was a gasp of horror at the mention of Goldman Sachs, long seen as the ultimate blue-chip safe bank managed by titans of the universe.

In two great bounds, Sleet left his seat and climbed onto the stage. He didn’t speak at first but shook his head in mock disbelief. As his chin moved side to side, the rolls of his stomach undulated. Taking a handkerchief from his pocket, he mopped his damp brow.

“My name, as you all know, is Thomlinson Sleet. I’m the adopted son of a Catholic vacuum salesman from Delaware. I was not born in a castle, like my colleague Lady Blaze Scott. My family were so poor that I didn’t own a pair of shoes until I was thirteen. Four of my seven brothers ended up in jail. Three of my nine sisters got knocked up before their fourteenth birthday. I didn’t get a double first in mathematics at Oxford like her but I did get to that venerable university on a Rhodes Scholarship to read physics. Do you remember the last time we met, Lady Blaze?”

Blaze shook her head, unable to recall anyone matching his description.

“Odd how a single shared event can transform one life and leave no trace on another’s.” Shrugging, Sleet returned to his main theme.

“I don’t want to do a colleague down, but let’s compare results. Last year my investment portfolio was up 32 per cent and Miss—sorry, Lady—Scott’s was a bit stagnant at 9 per cent. This year, and it’s only July and things have been a bit tricky; yeah, I am up 18 per cent and she is down 2 per cent. Apart from the fact that I own this company, these are my qualifications: my crenellations.”

The room roared its approval. Sleet held up his hand to quiet everyone. Blaze wanted to walk out of the auditorium but sat in her chair with a fixed smile.

“Lady Scott is a doom merchant. Last year she took her money off the table and missed out on the biggest rises in the market.” Sleet made a mock sympathetic smile towards Blaze. “Now, gentlemen—and let’s accept it, nearly all of you here are gentlemen—what our lovely friend doesn’t know is anything about team sports. Let’s talk about something we blokes have in common; let’s talk about soccer.”

Blaze could hardly believe what she was hearing. Was Sleet intent on presenting a serious financial meltdown in footballing terms? Casting a glance around the audience, she saw many leaning forward with a look of delighted anticipation.

“We men like to back teams, through thick and thin, and that’s why the U.S. Treasury will never let their side go down. The boys from Goldman Sachs run the world. Guess where Bush’s Treasury Secretary Hank Paulson and his Chief of Staff Joshua Bolten were trained? And John Thain at Merrill? And the Governor of New Jersey? And Robert Zoellick, head of the World Bank? And Mario Draghi, head of the Bank of Italy? Tito Mboweni, Governor of the South African Reserve Bank? And Mark Carney, Governor of the Bank of Canada? Yes, Team bloody Goldman. Guess where I was trained and where I made my first million? Same place. We are the best and we are not going to let our own kind go down.”

The crowd bellowed with laughter and the atmosphere in the room changed. Blaze saw that the worried faces had gone; Sleet had reassured them.

Sleet paused. “There are a few little issues but, as my friend Hank said the other day, ‘I do believe that the worst is likely to be behind us.’ In the meantime, what do we do?”

He paused again for dramatic effect. He walked around the stage. His audience were mesmerised.

“I’ll tell you what we do—we’ll go out there and make loads of money.”

The room burst into spontaneous applause. One or two got to their feet.

“What is the Chinese definition of the word crisis? It is opportunity and, fuck me, there is a whole load of opportunity begging to be taken. I love a bit of volatility; that’s how, as you Brits like to say, we make dosh.”

The audience stood as one and stamped their feet. Blaze’s colleagues, with whom she had worked and built the company for the last fifteen years, turned their backs on her. Unable to stand it a moment longer, Blaze left the auditorium with as much dignity as she could muster. Her face burned red and she traced her fingers along the wall to steady herself. Pushing open the door, she made it through and, out of sight, waited to see if any of her clients would follow. Only TiLing came. They walked in silence back to her office.

“I am—” TiLing said.

Blaze raised her hand. “Please don’t say anything.”

TiLing nodded.

They sat in Blaze’s office, waiting for the phone to ring or for another colleague to put their head around the door to offer words of consolation. At 12 p.m., a client emailed to say that they were moving their portfolio, valued at £50 million, from Blaze’s account to another senior partner recommended by Sleet. Throughout the afternoon, others confirmed their decision to look for alternative management within the firm. By 5 p.m., all but one of Blaze’s eighteen clients, worth a total of £270 million, had moved. Without any portfolios to look after, her income would cease.

With little else to do but wait, she googled Thomlinson Sleet and was confronted by walls of images of Sleet with beautiful women, larger and larger boats; or with captains of industry and political leaders. She put in the name Tommy B. Sleet and a smudged image from a college yearbook came up. She leaned in close to study the man’s features, to find the grown-up in the pudgy, ginger-haired, spotty youth wearing an ill-fitting suit, a shirt whose collar was a size too small and a tie the shape of a Dover sole. In a flash, the incident came back to her: Oxford, June 1988—Kitto had been visiting his sister and her friends Jane and Anastasia, and the four of them were drinking in Anastasia’s third-floor room. There was a frantic tapping and rustling at the open window. A young man, bulbous in shape, dressed in synthetic trousers and a brown shirt with a rose clamped between his teeth, slithered through the narrow gap and landed on the floor at their feet. Apparently unperturbed by his inelegant arrival or the presence of three other people in the room, the would-be suitor heaved himself up on to one knee and, swishing his rose to the left and right, declared undying love to Anastasia. He held out his token of admiration but the rose, exhausted by its journey, drooped and its petals fell off into a desultory little heap at her feet. Twenty years later, Blaze couldn’t remember which of them laughed first but, once they started, it had been impossible to stop. The suitor got slowly and painfully to his feet, brushed the dust off his trousers and tried to cajole his hair back into some kind of order. He went to the door and, before leaving, very solemnly told Anastasia, “The name is Tommy B. Sleet. Don’t forget it.”

Blaze pushed her chair back. No wonder the man disliked her.

At that moment, Sleet walked into her office. He didn’t say hello or even wave a hand in greeting. Instead he looked around as if he owned the place; which, of course, he did.

“Interesting that you have no mementos, no pictures of loved ones or personal effects,” he said, glancing at the empty shelves and surfaces.

“I like to concentrate on work,” Blaze replied. Once or twice she’d been tempted to bring in a framed photograph of a handsome stranger for appearance’s sake.

“Do you live up to your nickname? A Blaze Runner? Are you like Ridley Scott’s automatons, a person with no feelings or emotions?”

Blaze winced; if only it were true.

Sleet sat down on the edge of her desk, his corpulent behind spreading over her paperwork. Idly, he picked up a pencil and snapped it in half. “By keeping your portfolio liquid, you’ve missed out on a great rise in the market. If I’d put £100 million in your fund a year ago, I’d have lost a fortune.”

“I don’t count fantasy numbers,” Blaze said. “You’re referring to a lost opportunity. If those games were real, we’d all be multibillionaires.”

“I am a multibillionaire,” he replied. “And, for the record, I don’t play games.” He leaned in towards her, apparently smiling, but although his mouth stretched to reveal white, even teeth, his eyes were hard and unblinking.

“I presume you’re firing me,” Blaze said, making a huge effort to keep her voice steadier than her spirits.

“Making money is not about calling it right, it’s about calling it at the right time.” He grinned. Picking up a second pencil, he broke it into three pieces and lined them up in a neat row in front of Blaze.

“I’m busy, why don’t you get to the point?” She rearranged the broken pencils into a triangle.

“I’m cutting your bonus to ten basis points.”

Blaze grimaced. With her fund down to less than £30 million, her bonus would be reduced to £30,000 a year. Less than she spent on personal trainers, shrinks and Madame Alvira.

“That’s insulting. My colleagues are on a hundred basis points.”

“Take it or leave it.”

“I’ll leave it.”

Sleet paused for the first time. When he did speak, he leaned forward, his breath smelling of hamburger. “Getting flouncy doesn’t suit you.”

“Is this about the Anastasia incident?” Blaze asked. “It was a long time ago.”

“You finally remembered.”

“There were so many men…” Blaze said.

Sleet threw back his head and roared with laughter. “For you and your ilk, it was an amusing little incident; for me, it was life-defining: it made me who I am today. Walking away from those college rooms, I promised myself never, ever to let anyone belittle me again. You should rethink my offer, Blaze; you won’t get a better one.” He got up and walked out of the room.

Blaze didn’t have time to reflect. Seconds later, TiLing put her head around the door and, hardly able to contain her excitement, said, “I’ve got Joshua Wolfe on the line.”

“Are you sure?” Blaze asked. Wolfe was a recluse who lived, as far as anyone knew, in a guarded estate near Aylesbury. The only definite information was that he was in his fifties and had come to the UK as a young man. There was one smudgy photograph of him on the internet, and all his staff had to sign privacy notices agreeing not to disclose any information about their employer or his practices. Rumours abounded that he was a hunchback or a cripple, that he suffered an allergy to light and lived like a troglodyte in the cellar of his stately home.

“It could be a prank,” TiLing admitted.

“Put him through.” What was one more humiliation, to add to all the others? She picked up the receiver on her desk.

“Blaze Scott?” the voice asked. “This is Joshua Wolfe.”

“How can I help you?” she said curtly.

“I didn’t like the way Sleet spoke to you earlier,” Wolfe continued, dispensing with any further introduction.

“Were you in the audience?” Blaze hadn’t seen his name on the list of attendees.

“That’s irrelevant,” Wolfe said. “There are two types of investor: the market chasers, and those who take a longer and more considered view. I like the second type and I liked your analysis.” He paused. “The winds are changing. I think your predictions are correct. Would you be interested in teaming up on some joint investments?”

Blaze inhaled slowly. It was a tempting offer. “I have a non-compete clause with this company and would automatically forfeit my bonus and options if I leave.”

“Those golden handcuffs will be worthless if your colleagues maintain their present course and, from what I hear, your sails have been trimmed.”

“You’re startlingly well-informed, Mr. Wolfe.” Where, she wondered, was he getting this information? She looked enquiringly at TiLing who shrugged her shoulders.

For the first time in the conversation, Wolfe hesitated. “Come have lunch with me and we’ll discuss it further.”

“That would be a pleasure,” Blaze replied, intrigued.

“I’m busy with the harvest at the moment but I’ll be in touch when I have most of the wheat in.”

Blaze wondered if he was teasing her. What would a man like Wolfe know about cereal crops?

“Agreed?” he asked.

“I look forward to it,” Blaze said. Meeting the reclusive investor would make a good story, even if nothing else came of it.