A Wall Street Genius's Final Investment Playbook-Chapter 164

New York, Manhattan, Maverick Investment Office.

Ackman was engrossed in an emergency strategy meeting with the Allergan team.

It was to respond to Ha Si-heon’s unexpected 13D disclosure.

"I intend to participate in management to promote M&A…?"

A 13D disclosure requires the filer to specify their future plans.

Unexpectedly, Ha Si-heon declared the same strategy as Ackman.

"Not only did he reject our proposal, but he also made the first move…"

Ackman had recently proposed an alliance to Ha Si-heon for the same course of action.

However, instead of a consideration, Ha Si-heon’s response was a declaration of war through the 13D disclosure.

It was an aggressive and provocative response.

"Rather than cooperation, he intends to create a competitive landscape."

Ha Si-heon’s strategy was clear.

He aimed to present two M&A candidates to Allergan’s shareholders, forcing them to choose.

Between Ackman’s candidate and Ha Si-heon’s candidate, they had to pick one.

Realizing this, Maverick’s PM and analysts shook their heads in disbelief.

"He’s out of his mind. He has no experience in this field…"

Activist funds must navigate a complex maze of laws and regulations, requiring significantly more expertise than typical funds.

Yet, while Ha Si-heon was a newcomer in this field, Ackman was a giant.

It was an irrational provocation.

"This is like… challenging the champion without even knowing the rules of the game."

From any perspective, Ha Si-heon seemed to have no chance of winning.

However, Ackman remained cautious.

"That doesn’t mean we should take this lightly."

From their two prior meetings, Ackman had already sensed that Ha Si-heon was no ordinary opponent.

Moreover…

"He saw through our plan. He even asked me whether the ‘Trojan Horse’ strategy was controversial."

"What? How did he…?"

"Well, according to him, it’s because of his algorithm."

Even Ackman found it hard to believe what he was saying, but Ha Si-heon had accurately identified a highly classified operation.

Therefore, they couldn’t simply dismiss his so-called algorithm.

"Regardless of how he did it, we must assume that our ambush and intentions have been exposed."

The Trojan Horse isn’t a strategy to break down walls.

Its real purpose lies elsewhere.

It aims to confuse the enemy through a surprise attack and, amidst the chaos, force them to open the gates.

"He’s likely anticipating the poison pill as well."

The poison pill.

A defensive strategy adopted by companies to prevent hostile takeovers, where they issue discounted shares to shareholders—excluding the acquirer.

For example, if Ackman accumulated 10% of Allergan’s shares to target them, Allergan could issue new shares and sell them to all shareholders except Ackman.

This would dilute Ackman’s stake from 10% to 9%, then to 8%, gradually reducing his influence.

However, the poison pill had a fatal flaw.

‘All shareholders suffer dilution.’

That’s why it was named a poison pill.

If a city spreads poison to fend off invaders, it wouldn’t only harm the enemy.

And that was Ackman’s real goal.

‘We must make Allergan swallow the poison itself.’

By making the management panic due to the Trojan Horse, they would trigger the poison pill themselves. freewebnσvel.cѳm

As a result, the affected major shareholders would become restless, and eventually, one of them would open the gates.

"If Ha Si-heon knows all of this… shouldn’t we revise our strategy?"

They had already invested a massive amount of capital to complete the Trojan Horse.

But if Ha Si-heon gained Allergan’s trust and blocked the poison pill, the entire strategy could become useless.

Should they persist with a strategy that had been exposed, or scrap it and start anew?

After a moment of deep thought, Ackman made his decision.

"We proceed as planned."

"What? But…"

Ackman spoke with conviction.

"That fund just opened its doors. It lacks credibility. Besides, at this stage, all Ha Si-heon has is speculation, not evidence."

The contract between Ackman and Valeant had been executed in complete secrecy.

Even if Ha Si-heon tried to gain trust by revealing the information, he had no way to prove the existence of the Trojan Horse.

Moreover, Ackman knew Allergan’s CEO Beckett well.

Would that stubborn man really take the words of a young Asian man in his twenties at face value?

"But if—just in case…"

The PM’s voice carried a hint of unease, but Ackman remained unwavering.

"Even if they listen to Ha Si-heon, our ambush will still succeed."

"What? How…?"

"We’ll turn Ha Si-heon into the boy who cried wolf."

At that, the PM seemed to realize something and smiled.

The fable of the boy who cried wolf.

That boy repeatedly shouted ‘Wolf!’ for fun, and after too many false alarms, the villagers stopped listening.

"Every time Ha Si-heon sounds the alarm, we’ll just wait beneath the surface."

If Ackman didn’t react whenever Ha Si-heon warned of danger…

Eventually, the villagers would start treating him as the boy who cried wolf.

And when that day came, when they finally let their guard down—

That would be the moment the wolf would strike.

"The plan remains unchanged."

***

Allergan Headquarters.

From the entrance, someone was there to greet us.

"I’m Gail, in charge of IR."

The fact that an investor relations officer, not a secretary, came to greet us was a sign of respect.

Following Gail’s lead, we entered the conference room, where two men were waiting.

A middle-aged white man, about my height, extended his hand first.

"I’m Beckett, CEO."

Just as the rumors said, he had a stiff, expressionless demeanor.

It was as if stubbornness had been carved into his face.

"I’m Ha Si-heon. You can call me Sean."

"This is CFO Thompson. Have a seat."

That was the end of the introductions.

There was no turn for Dobby or Laurent.

Well, that was expected.

In meetings like this, only C-suite executives—like the CEO and CFO—were introduced by name.

‘Somehow, this feels oddly new.’

Just a year ago, I was in Dobby’s position, meeting Whitmer.

Thinking about that made me feel different.

As I took my seat, Beckett was the first to speak.

"First, I’ll be honest with you. We are only holding this meeting out of respect for our shareholders’ opinions, but we have no interest in the M&A that Pareto is proposing."

His words were polite but firm, drawing a clear line.

I responded with a smile.

"You’ve closed your ears before even listening."

"I say this because I can predict what you’re going to say.

Wouldn’t it be better if we didn’t waste each other’s time and effort?"

"You can predict it, huh…"

It wasn’t something I heard often, so it felt fresh.

I chuckled lightly and continued.

"Then let’s hear this prediction of yours."

Without hesitation, Beckett began.

"The pharmaceutical industry is facing a patent cliff.

Because of this, major pharmaceutical companies are engaging in large-scale M&A to secure multiple product lines.

If we sit back and watch, other companies will claim the best products first… That’s probably what you were going to say."

He was right.

Over the past year and a half, the pharmaceutical industry had seen a surge in M&A activity.

With blockbuster drug patents nearing expiration, all pharmaceutical companies were on a buying spree.

Beckett firmly concluded.

"Allergan is different. Instead of indiscriminately collecting product lines, we focus on niche market strategies—enhancing our brand value through cosmetic and ophthalmic pharmaceuticals."

With that context, he must have assumed I was here to encourage shopping.

But I answered with a relaxed smile.

"You’re wrong."

"Wrong?"

"I believe M&A is necessary not for aggressive expansion, but for strategic defense."

Not an M&A to expand territory, but to protect my own land.

At that, Beckett immediately grasped my point and responded.

"Defense… You mean someone might attempt to acquire Allergan."

"Exactly. To prevent a takeover attempt, the company needs to grow larger."

Allergan was a fairly large company, but in terms of size, it was somewhere between medium and large.

It was still a company that could be targeted if someone set their mind to it.

So my argument was that Allergan needed to merge with another company to increase its size to a point where no one would dare attack.

However, even at this, Beckett remained firm.

"We have considered that possibility, but there is currently no pharmaceutical company with the financial capability to acquire us."

Allergan was like a small but strong city.

Attacking it required enormous capital, and according to Beckett’s analysis, no company currently had the resources for that.

I smiled and countered.

"Capital can be solved by partnering with private equity or hedge funds."

If they allied with financially powerful entities, the capital problem would be resolved.

However, Beckett still shook his head.

"We’ve analyzed that as well, but from a fund’s perspective, the risk-to-return ratio is not favorable."

The cost of war was high, and even if they won, the profit wouldn’t be significant.

For hedge funds focused on returns, there was no reason to engage in such a battle.

But I didn’t stop persuading.

"Hedge funds don’t pursue profit through just one method.

They can benefit in other ways as well. For example, by securing shares in the hostile company targeting Allergan."

In reality, Ackman had already struck a deal to purchase Valeant’s shares at a discount as part of this war.

Essentially, he was securing part of the enemy’s territory as an advance payment for funding the war.

With this approach, even if direct profits from the Trojan War were modest, the overall portfolio would still yield significant gains.

However, Beckett remained unconvinced.

"I’ve never heard of such a cooperation model. But… even if I concede that it exists, a hostile takeover would not succeed.

Our shareholders do not want a merger."

This was like saying that Troy’s walls were strong, its citizens were united, and therefore, they were confident in winning any war.

However…

"This isn’t a typical hostile takeover of a pharmaceutical company.

When an activist fund intervenes, shareholders’ attitudes change."

No matter how much Valeant shouted, ‘Our acquisition will benefit Allergan,’ Allergan’s shareholders wouldn’t listen.

But what if someone with a reputation comparable to Buffett in this field—Ackman—said it instead?

Imagine this.

One day, Buffett acquires 10% of the shares of a company you’ve invested in and declares, "A merger with Valeant is the best path for the company’s future."

Some investors would surely be persuaded.

"This is a kind of Trojan Horse strategy. By inciting shareholders from within, we make them open the gates."

For the first time, Beckett didn’t immediately refute my words.

At the very least, he acknowledged that it was a possibility.

After a moment of contemplation, he asked,

"Do you have any proof?"

I smiled bitterly and shook my head.

"There can’t be any proof in matters like this."

The contract with Valeant was strictly confidential.

No one outside the parties involved could know about it.

I only knew because of my knowledge of the future.

At this, Beckett spoke firmly.

"We cannot abandon our independence and strategy out of fear of something that has never happened, without concrete evidence."

‘As expected…’

The Trojan Horse is difficult to warn against in advance.

Especially when the horse has not yet appeared.

No one grips a fire extinguisher tightly just because an invisible spark might exist.

That left only one option.

"What if I am the Trojan Horse?"

I needed to drop the spark right at their feet.

I didn’t know when the real fire would start…

But there was no need to wait for the real one.

‘Because I can become the spark myself.'

With a quiet smile, I dropped the bomb.

"I have already secured 5.3% of the shares. What if I am secretly cooperating with a hostile acquisition force? In other words… what if I am working with a pharmaceutical company like Valeant?"

Beckett’s face instantly hardened.

The memory of Valeant’s merger proposal from earlier this year must have flashed through his mind.

Not many people knew about that, yet here I was, not only mentioning the exact hostile force that had approached them but also confessing to a secret alliance.

He couldn’t help but feel threatened.

Beckett’s eyes narrowed.

"You claim to be the Trojan Horse… Then why are you issuing this warning in advance?"

I shrugged and replied with ease.

"I am already inside the fortress. There may be enemies within me, but that doesn’t mean I have to let them out."

"….."

"I don’t want to resort to coercion. I simply want to find the most compatible partner through dialogue. But if you keep up this stubborn stance, I’ll have no choice but to open my belly and throw open the gates."

The air in the conference room grew even colder.

"That sounds… quite like a threat."

"I am giving you a choice."

If they cooperated with me, Allergan could merge with a partner of their choosing.

But if they refused, they would be forcibly merged with Valeant instead.

At first glance, the first option seemed favorable.

However, from Allergan’s perspective—who wanted no merger at all—this was merely choosing between the lesser of two evils.

As the tension thickened, I slowly rose from my seat.

"I’ll give you a week. I expect your decision by then."

With an icy atmosphere lingering, the meeting came to an end.

On the way back, Dobby and Laurent voiced their concerns.

"Wasn’t that too aggressive?"

"If you were going to be hostile, you shouldn’t have given them time… Now they’ll have the chance to prepare countermeasures."

A natural smile formed on my lips.

"I gave them time so they could prepare alternatives."

I wasn’t the real Trojan Horse—I was a fake.

There was only one reason I staged this entire performance.

To force Allergan to start preparing for the Trojan Horse right now.

‘They wouldn’t actually resort to the poison pill, would they?'

I wasn’t such a dire threat to them, and I had even given them ample time to prepare.

So rather than taking an extreme measure like deploying the poison pill, they would likely seek a more cautious and secure solution.

"But… if they do find an alternative, won’t that put us at a disadvantage?"

"Not necessarily. Once the real Trojan Horse appears, everything will change."

The moment Ackman launches his ambush— Allergan will realize too late that my warning was true.

And they will come to understand that my actions were actually a clever strategy to protect them.

"By then, they will trust our words without question."

The moment Ackman reveals his true intentions, Allergan will naturally take my side.

I had already set the stage.

Now, there was only one thing left to do.

Wait for the real Trojan Horse to appear.

To read ahead 👇

CH 161-167 (Declaration of War) $4CH 168-174 (Hero Vs Villain) $4CH 175-181 (Sean Vs Ackman) $4CH 182-188 (1% Vs 99%) $4

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