like science fiction,” Jerry said.
“Apparently not anymore. The future is now, as they say. Or it might be,” Russell said.
“How many people know about this?” Max Higgins asked.
“Not many,” Russell said. “Outside Columbia and the stem cell field, very few is my guess.”
“How did you hear about it?”
There was a pause. This was where it was going to get a lot trickier.
“Gloria Croft told us,” Edmund said.
Max Higgins quickly figured out the implications and, way ahead of Trotter, asked Russell the main question.
“Is she taking any action?”
“Yes.”
“And knowing Gloria, she’s shorting LifeDeals, am I right?”
“Yes.”
“Hold on, hold on, wait a second,” Jerry said. “LifeDeals is being shorted because of some work being done in a lab at Columbia?”
“I’m afraid so, Jerry.”
Higgins went on, “Am I to assume that some numbers have been run looking at cash projections based on a potential breakthrough in diabetes treatment? And that the projections don’t look so good?”
“Is he right?” Trotter asked. Higgins had got right to the heart of the matter in seconds.
“Broadly, but look-”
“So he is?” Trotter questioned.
“As I said, it’s early in the-”
“Would you mind telling me how this . . . this fucking
“The science may fail eventually, but with Gloria Croft taking a position, investors are going to be alarmed when they find out. Then it becomes as much about Gloria as about the science. She’s a barometer. So from that perspective, they’re right, Jerry, it’s a PR problem first.”
“And if the science succeeds?” Jerry said.
“Then we have a bigger problem,” said Edmund.
Jerry put down his soup spoon and took a large drag on his $30-a-glass Barolo.
“You guys didn’t see this coming?”
“Obviously not,” Edmund said. “It’s a once-in-a-century breakthrough if it happens. You can’t do projections for being hit by an asteroid.”
No one was eating now. The waiter, coming by for a second time, asked if anyone was still working on their soup and no one was. Yes, the soup was fine, but everyone was preoccupied. The uneaten soup disappeared.
At Jerry’s insistence, Russell walked him through what they knew of the research. He made a point of saying that there was no guarantee it would succeed; the odds had to be that it wouldn’t because in the vast majority of research projects there was always some major unanticipated obstacle that would arise to thwart the hoped-for result.
“So what are the chances it will succeed?” Trotter questioned.
Edmund said there was no way to know. He then had Russell talk about the effects such an eventuality would have on LifeDeals’ cash flow. As Edmund and Russell had agreed before meeting with Trotter, Russell erred on the conservative side.
“What’s our position vis-a-vis the public offering?” Jerry directed his question at Max, his partner. He didn’t care that he might offend his lunch hosts.
“The lockup period expires May thirty-first,” Max said.
When an investor takes part in an initial public offering, they can’t sell their shares for a certain amount of time, in this case 180 days. Trotter Holdings was halfway through the mandated blackout period, meaning that Jerry Trotter and his fund were stuck with his shares for another three months.
“Shit. What are the chances of Gloria Croft keeping her mouth shut for three months?”
“Listen, Jerry, life insurance is still a twenty-six-trillion-dollar business,” Edmund said. “There’s plenty of money to be made. These diabetes policies are basically a drop in the bucket. It’s not a question of dumping LifeDeals shares, it’s a problem that needs a solution. That’s why we came to you, you’re the man who deals with problems, everyone knows that.” Edmund was being purposefully flattering and Trotter wasn’t unhappy about it. It’s true, he was a guy who could solve a problem, but this was a big problem and a new problem.
“Gloria Croft is so full of it you wouldn’t believe,” Edmund continued. “She was carrying on, telling us that our life settlement bonds were a bad product. Blah, blah, blah. She even told us that we should have been prosecuted over subprime.”
“She is one sanctimonious bitch, I know that for sure,” Jerry agreed.
“She was enjoying telling us about the research, twisting the knife.”
The pasta was set at each man’s place. There was slightly less tension around the table now-the problem had been identified, there was a common enemy, and the four of them were on the same side. Soup could be resisted, but the pasta was a different proposition, and each of the four men ate.
“Of course, there is a medical angle here, Jerry, that we think you can help us with. And Statistical Solutions is drawing up projections of the effect on revenue if we have to pull the diabetics’ policies. We’re going to need more capital. We can see if we can fill in these capital shortfalls with different initiatives. We’ve already directed our sales teams to go back and beat the bushes for metastatic cancer patients with big policies. It costs more money to buy those policies, but it’s completely risk-free.”
“More money, how so?” Higgins said.
“We’ve authorized the salesmen to offer more than the standard fifteen percent. Metastatic cancer patients are not going to cause us any problem about dying on time. It’s just that we have to be more aggressive to find them.”
“Okay, Edmund, I’m hearing you. Needless to say, Max and I will have to put our heads together and talk about this research issue. We want to see that Statistical Solutions data as soon as you have it, of course. And we have a bunch of meetings this afternoon, so I’m sorry but we have to eat and run.”
Jerry downed another forkful of his lunch and chased it with the remnants of his third glass of wine. The leave-takings were quick and less effusive than the greetings had been when the four men met. Trotter and Higgins left Edmund and Russell behind, picked up their coats and got into their waiting town car on Fifty-fourth Street.
So?” Trotter asked when he was settled in his seat. They were heading south on Park Avenue.
“Gloria Croft,” Higgins said. “She’s a pit bull.”
“I sense there’s history there with Edmund-perhaps it’s more about that than about the product.”
“Maybe it’s both. She’s found a flaw in the model, and it just happens to be Edmund Mathews, so it’s a bonus.”
“Be that as it may, we have to do something,” Jerry said. “And we can’t leave it to those two. They’re floundering, you can tell. There’s too much time till we can sell the stock.”
“I agree. But Edmund has a point: it’s still a good business even if there is a bump in the road with the current model. It will just take some juggling and deep breaths on our part. It’s not a time to panic. Besides, since we can’t sell the LifeDeals stock, we can’t panic even if we wanted to. I also agree that in an ideal world, he should have seen this coming. But our due diligence didn’t pick it up either. It’s a function of the times. Technology’s changing too fast just like markets are changing too fast. It’s getting harder and harder to factor this kind of thing in.”
“Well, I think we need to do some of our own research. A little more street-level. We can’t rely on Edmund et al. for that, clearly. Let’s get an investigator up to Columbia, sniff around a little. And someone can do some digging on Gloria Croft. A woman like that doesn’t get where she is without pissing a lot of people off. And maybe cutting some corners. We need to get some angles to work with, get some leverage.”
