The Retreat Read online

  The Retreat

  The Prepper Chronicles Book 2

  Gordon Ballantyne

  www.severedpress.com

  Copyright 2021 by Gordon Ballantyne

  Chapter 1

  “Buy fifty thousand shares at eighty-two!” huffed Mitch as he was pacing slowly towards the quadruple stacked flat screen monitors mounted on the wall in front of him. Mitch abruptly turned to face another quadruple stack on the opposite wall of the room and asked, “Where are we on the bonds, Maria?” Mitch Fleming was standing on a unidirectional treadmill used by virtual reality gamers and all four walls of his office were set up with video monitors: one for equities and stocks; one for bonds; a third for commodities and the fourth was his array of traders and assistants assigned to monitor their perpetual motion boss and make his orders a reality. Mitch was a wiry bespectacled man with a slim five-foot eleven frame and closely cropped hair; he was thin as a rail but his body was hard as a rock from constant workouts and movement. He believed he thought better on his feet and his whip-like mind liked his body to be in sync with it at all times; everything Mitch did was with intensity.

  “The bonds are holding steady, boss,” came the answer from one of the screens. “There is a nice tranche of preferred convertibles available, the coupon is a lousy 4% and the yield is 4.25% to maturity. They are rated BB but only have a five basis points spread from treasuries.”

  “What is the exercise price?” asked Mitch.

  “Ninety-five on the nose.”

  “How many can we get?” asked Mitch.

  “Two million face value.”

  “Buy them all.” With those two trades, in a little over three minutes Mitch had committed his hedge fund to purchase $4.1 million in stocks and bonds. Mitch was the President of Olympus Capital, a hedge fund with a market capitalization of over $500 million. It was a boutique firm catering to wealthy investors and had never failed to deliver double digit annual returns. They could also add bank leverage to the fund if needed, giving Mitch and his cohorts the ability to purchase ten-billion dollars-worth of investments. The CEO Devin Mathews was the face of Olympus doing vendor relations, general schmoozing and marketing the firm while Mitch was the financial market assassin. Mitch was one of those people that is so smart he just seems off to everyone else; add his fidgety physical intensity on top of his personality and an investor would not give him two wooden nickels to invest in the market. Devin raised the cash and Mitch made it grow.

  Mitch and his team were trading Federal Pharmaceutical stocks and bonds ahead of the earnings call to be held by the company the following day. Earnings calls were like the State of the Union addresses for companies on a quarterly basis where they reported on the company’s financial performance over the last quarter and their plans for the future. It was done in a conference call format where members of the trading community could ask questions of the chief executives regarding the company’s financials. It was, in Mitch’s opinion, a smartest guy in the room competition to see if the Wall Street analysts could find their “Gotcha Moment” and trip up the executives in front of everyone. Mitch believed that the smartest guys on the call were the ones who said nothing; Mitch knew what he knew and wasn’t about to offer that information to anyone else for free. Mitch understood the life truism that he learned nothing by talking but only by listening. Federal was a ho hum middle of the road manufacturer of stress relief and hypertension medication; Mitch simply called them his downer company. His crack research team had been poring over the company’s financials, press releases, patent applications and even had a doctor reviewing their clinical trial data. An offhand comment from one of his analysts an hour earlier had piqued Mitch’s interest.

  “Boss,” the analyst had said, “I don’t know what you see here. This might be the most boring set of financials I have ever seen. The company’s CFO actually has less than a single footnote per page in their financials. I am not seeing any hidden value gems here.”

  Company financials are often more footnotes than financial information as companies get ever more-clever in practicing financial alchemy to make their numbers look rosier than they truly are in order to make their company a better value for shareholders to invest in. Federal, over the last two quarters, had stopped playing hide the salami with their numbers and reduced the financial footnotes in their financials by over 80%. The company had explained the phenomenon away on their previous investor call as a move toward “more transparency” to the marketplace. Mitch felt they were undervaluing the company while hiding that fact in plain sight; it looked like the company was depressing its share price on purpose. Mitch had sent his analysts to scour through the last quarter’s trading and highlight the biggest 50 trades made in the company’s shares. The analyst found four trades that did not make sense to her as large blocks of shares had been bought by index funds. Index funds buy shares across multiple industries in a given sector and to see such a non-proportional purchase of Federal versus a company like Pfizer, while investing in the pharmaceutical sector, would be deemed odd.

  “Who is invested in these indexes?” Mitch asked. “Just look at the largest 100 investors and see what pops.”

  “Well, well, well, boss,” the analyst whistled, “it looks like you just bagged three US Senators and two House members.”

  “What committees are they on?” Mitch fired back at the screen.

  “You have two Republican Senators on the Armed Service Committee, one Democrat Senator on the Finance Committee and two House Members, one from each party, on the House Ways and Means Committee,” the analyst replied. “It looks like a mixed bag.”

  “I want a lid on this,” Mitch said to the analyst sharply. “We need to keep the cone of silence firmly in place and it is just between you and I. This is great work, Melinda.”

  “Are you going to double end this deal, Mitch?” Melinda asked, implying Mitch could ride the wave up on the stocks and bonds, leak his publicly available information and then short the company on the way down as a potential scandal erupts. Some traders only buy and sell on what they read in the Wall Street Journal.

  “No. We need to play this carefully. You can shear a sheep many times but you can only skin it once. Members of Congress started getting into trouble buying and selling individual stocks in their own portfolios based on privileged insider information so in a show of purity and piety they put their money into index funds where third party money managers invested their portfolios for them. The true believers put their money into blind trusts which is another tale of pure fiction since in the land of the blind, the one-eyed man is king. If we ride up the stock after what I assume is an earthshattering announcement tomorrow of some kind of miracle PTSD drug that the VA will be buying, or better yet, buying while paying for further studies, and then leak the Congressional member’s insider trading to sell and ride the price down in a scandal, then we will be killing the golden goose and could be charged with some form of stock manipulation. The government does not take kindly to outsiders punishing their own, they reserve that privilege to themselves. I have a different project for you; I want you to cross reference members of Congress to specific index funds based on their financial disclosure documents and keep a running tab on any non-proportional trades; we can quietly drift in the rear below their radar. Pigs get fat and hogs get slaughtered and meanwhile you can’t harpoon a whale that doesn’t surface.”

  “Are we done with the metaphors, sensei?” Melinda laughed.

  “A watched pot doesn’t boil, Melinda,” Mitch laughed; he always had the ability to laugh at himself. “Keep an eye on this one tomorrow. If I think what’s going to happen happens then the stock should go up twenty-five to thirty percent. We will exercise the convertibles then slowly reduce our exposure by h
alf. Take a look at the market open tomorrow for what the credit default swaps look like as it rides up. If they are cheap then we’ll cover with some of our winnings in case someone has stumbled onto your information and blows a whistle. Federal’s breakup value doesn’t cover our bond exposure since we are low on the priority repayment scale so I want to be outside the theater with marshmallows if someone yells “Fire” inside.”

  “Sounds good, boss, I’ll see you tomorrow, and remember if you’re going to crawl around in the woods later you should avoid leaves of three,” Melinda laughed.

  “Thanks, Melinda,” Mitch laughed back. “Just because you got lost up here last time doesn’t mean we can’t teach you not to.”

  “Hell to the no, boss, although I must say getting rescued by your search and rescue crew and that tall handsome tracker was kind of a damsel in distress meets Prince Charming type of moment but this city girl likes to show off her non-sensible shoe collection and cammo is sooo unflattering,” Melinda replied.

  “OK then, stay frosty tomorrow, Melinda and make them squeal in the trading pits.” Mitch said.

  “Night, boss,” Melinda replied while signing out.

  Mitch shut down his primary work office, stepped into an adjoining closet and quickly shed his business attire to put on his second work outfit for the day. He thought of it as his Clark Kent entering a phone booth moment but less dramatic. He donned his 5.11 tan tactical pants and put on a black long sleeved polo shirt before stepping out of his closet and onto a loft balcony looking down at the clerestory open space of the Welcoming Center of the complex known as the Retreat. Olympus Capital was located in downtown San Francisco but Mitch has unplugged from his virtual world into his real world. The Retreat was located in the Idaho National Forest twenty miles north of Bovill, Idaho. Mitch stepped back in time remembering his transition that brought him to this place.

  Chapter 2

  The Welcoming Center was part of a twenty-acre complex with a 50,000 square foot two story building in the middle of it. The Center was ringed with six foot deep by twenty-foot-wide reflecting pools and there was a ring of townhouse style homes around the outer perimeter. The entire complex looked like a chalet style ski resort with a lodge in the center. It was a nice sunny Spring day and sunlight streamed through the tall windows and abundant skylights in the ceiling. The ski resort style vibe of the complex hid its true purpose, for under the reinforced four-foot suspended concrete slab that the lodge sat on, were the labs.

  The center was originally built in a public/private partnership between a “local” research conglomerate and the Federal Government which really means it was completely funded by the government so a large national construction conglomerate could build the project to government specifications as a research facility that the private firm would then use for government research. The Gulf War was started based on “clear undeniable proof” that the Iraqi government was developing weapons of mass destruction, including both nuclear dirty bombs and biological agents to be used against the citizens of the United States. The post 9/11 period and the subsequent War on Terror was an existential threat to freedom and the continental United States had been attacked by hijacked jumbo jets. The Twin Towers came down. The government will never let a good crisis go to waste and an open wallet orgy of spending spewed from Washington D.C. in the aftermath. Idaho has not elected a, gasp, Democrat Senator since they kicked the last one out in 1981. The trouble with Idaho is it only has a single military base on it and one of the smallest populations in the United States. There are no National Parks in Idaho and a whopping 61.6% of the total land in Idaho is owned by the Federal Government. The 1.8 million residents of Idaho, however, are represented by two United States Senators while the almost 40 million residents of California have just the same two Senator count. Idaho wanted its pork for the War on Terror so the two Senators and two Congressmen from Idaho decided a two-hundred-million-dollar state of the art bioweapon research facility to study the soon to be captured Iraqi bioweapons was in order. A bioweapon research facility had to be located in a remote area away from any population centers so an entire township of land in the National Forest was deeded to the public/private partnership. A township of land is comprised of 36 sections of land, each a square mile in size. A square mile of land is 640 acres in size. This is the basis of land division used in most of the United States. The government kept writing the checks to build the facility along with generous change orders because an original government budget is a broad starting point; the final tally for the project was $350 million. The bioresearch private partner took possession of the facility and staffed it with crack research teams waiting for the troops to send home the weapons of mass destruction. They waited, and waited, and waited. The Senators were livid; they had a state-of-the-art facility fully staffed with high paying jobs with nothing to do. Meanwhile the site was fully protected by private security contractors. The best pork, after no bid contracts, was a recurring annual income stream. The research conglomerate kept the facility staffed for a year but seeing the same people day and night for a year on a twenty-acre site with the nearest outsider being twenty miles away was considered a hardship tour. Biomedical researchers and the local population of Bovill, Idaho did not have a lot to converse about and the researchers could not say a word about their work and the facility anyway. The research conglomerate could read political polls too and slowly removed their scientists from the site and just kept a skeleton crew to keep an eye on the facility; the new boss coming to the White House looked nothing like the old boss. They made their obligatory donation to the Idaho Congressional cadre and quietly bowed out. The Federal Government, at the bequest of the Idaho contingent, put the facility up for sale but a state-of-the-art research facility outside of Bovill, Idaho was not on anyone’s wish list and the Idaho Senators were now firmly in the minority in Congress, so they were short on pork to deliver.

  Mitch stood on his loft balcony and remembered fondly his introduction to the Retreat over a decade ago. Mitch was doing a lot of commodity trading in the early Olympus days, seeing opportunity in the geopolitical global tectonic shifts in the marketplace but Mitch, being neither a buyer nor producer of the actual commodities traded, was at a disadvantage. Commodities are traded at the Chicago Mercantile Exchange for such things as wheat, corn, soybeans, pork bellies and lumber. A buyer or seller of these commodities can fix the future sales or purchase price of these commodities in the future via contracts with each other. Farmers in the field eagerly watch these prices daily as they get closer to harvest to hedge their bets based on what they see the yields in the fields to be while bakers watch the price to see what their cost of goods will look like. Mitch even went so far as to hire a long-term weather forecaster to help make better investments in commodities, and while he made steady gains, it was the worst performing sector of his hedge fund. Mitch wasn’t ready to give up and started looking at physical commodity assets instead of trading on price levels. He could buy some farms but who would grow the crops? He looked at buying a goldmine but who would dig the gold out of the earth? Finally, he zeroed in on lumber. Mitch could buy forest land and sent his team scouring the Pacific Northwest until he struck paydirt; a biomedical research facility sitting on an entire township of old growth National Forest trees for the rock bottom price of $120 million. He remembered doing the math in his head. 640 acres per section times 36 sections times 10,000 board feet of lumber per acre equals 230,400,000 board feet at a spot price today of $875 per 1,000 board feet equals $201,600,000. The United States government was giving away $80 million to take some research lab in Idaho off its hands. Mitch jumped on it and placed a full price offer for the property. Olympus was a prime broker in US treasury bonds so he was prequalified to be allowed to purchase the property directly from the US Government versus a timber company which wasn’t. The government did not have any proprietary top-secret technology on the site so further security clearances were not required. The government took Mitch and Devin
, the CEO, on a due diligence tour of the property. Devin kept looking at Mitch like he was nuts as the project manager showed the two all the bells, whistles and special government upgrades done to the property. The operations manual for the facility came in six fully stacked three ring binders. The project manager asked when the company’s due diligence physical asset engineering team would like to schedule their groups to inspect the facility. Mitch just shrugged and said, “Looks good to me.” The pair left the government team speechless as they walked over to the waiting helicopter to return them to the private airstrip where the company plane was waiting to take them back to San Francisco. The pilot and copilot gave the passengers the nod and took off. The pilot flew in a grid pattern over the entire property while the copilot made notes on his kneepad and gave the pilot navigational cues. Devin turned to Mitch and asked if they were paying by the hour for the helicopter since the pilot seemed to be flying in circles. Mitch just smiled a shit eating grin back. The helicopter landed and the copilot whispered in Mitch’s ear and the grin on his face just got wider. The two executives boarded the private plane as Devin tossed himself in one of the leather reclining seats and looked out the window eagerly as Bovill, Idaho started to fade in the rearview mirror. Devin felt that the best thing to come out of Bovill was transportation to somewhere else.

  “Do you mind telling me what in the name of Jesus, Mary and Joseph you are thinking for even contemplating buying that white elephant monstrosity back there?” Devin demanded.

  “Devin, the government is paying us $90 million dollars to take that monstrosity off their hands,” Mitch replied slyly.

  “The price tag, last time I checked, says $120 million,” Devin insisted indignantly.

  “That is for the worthless building we just toured. The copilot on our helicopter was not there to help fly it, he was there to do a timber cruise to figure out how many board feet of each species of trees we have on the property; he is a logging and timber specialist. There will be a report on my desk before we get back. His initial estimate is we have a minimum of 10,000 board feet of lumber per acre down there. The timber alone is worth more than their building,” Mitch said, explaining the math.