Page 46 of The Oligarch's Daughter

“I’ve done a little research, and I’m going to make a few calls. The thumbnail goes like this: the farmers sell their beans, cured black vanilla beans, to ‘collectors,’ who sell to exporters, who in turn sell to big flavor companies, who make vanilla extract out of the beans and sell that to Mars and Nestlé and Unilever.”

“But you want our boys to buy directly from the farmers?”

“No, from thecollectors. The middlemen. Fifty million is going to buy a sizable chunk of the market.”

“Know what? Throw in another fifty from the firm.”

“Terrific.”

“Maybe bring in some other investors. You’re probably going to be able to corner the market.”

“Yeah? Great.” Paul hadn’t expected Bernie to invest in this gambit, but that was a good sign. It showed his confidence in its working. “With a hundred million bucks, we’ll corner the market for sure.”

“I like the sound of it,” Bernie said. “But once you buy a hundred million bucks’ worth of beans, what do you do with it all? I mean, that’s an awfully big pile of vanilla beans.”

“That’s the tricky part. They have to put the beans in containers and store them somewhere safe. That means they need refrigerated containers. Climate-controlled, to protect the beans. Dehumidifiers and air conditioners and such.”

“That gonna be a problem?”

“Nah,” Paul said. “That part of the world, climate-controlled containers are everywhere. Our guys will be able to lease them. Or outfit them, if they have to. Load ’em up, then move ’em out of Madagascar and away from the path of the storm. Maybe a few thousand miles north, into warehouses in Mombasa.”

Bernie placed his hands flat on the glass top of his desk to signify that he was done and it was time for Paul to leave. “This is going to be fun, Paul. I like it.”

29

The two twenty-something employees of Aquinnah Capital, Chris Langley and John Kapinos, flew out of Kennedy Airport directly to Antananarivo, Madagascar.

Chris Langley called Paul early the next day from his room at a boutique hotel in the capital city. Between him and John and the two security officers, they had bought out the entire small hotel. The weather was warm and humid. In Madagascar, it was the wet season.

*

The next few weeks were anxious ones as Paul watched the satellite weather service get the weather in Madagascar just about right. The cyclone hit the country, causing landslides and flooding and wiping out the entire new crop of vanilla. The price of vanilla beans shot up to nearly $700 a kilo. As expected, the share price of Nestlé dropped suddenly, from $118 to $95. Those October puts were now each worth over $25 per share. That $5 million was suddenly worth $55 million.

Paul sold the vanilla beans a few weeks later for $680 per kilo.

Within three weeks, he had turned $100 million into just over $500 million. He knew of bigger trades before. Much bigger. A hedge fund manager named Bill Ackman had once turned $27 million into $2.6 billion in a little over a month, the single best trade of all time.

But this one wasn’t too shabby.

So why wasn’t everybody doing this? Maybe not everyone wanted to take a chance on the vicissitudes of weather on the other side of the planet. Also, not everyone knew how thinly traded vanilla beans really were, how small the market. It was all a black box to most people.

It was a bet, but a bet he had won.

*

Arkady Galkin’s office was located on the fortieth floor of a modern skyscraper on Fifth Avenue, at the southeast corner of Central Park. The interior had the look of a private equity firm, or a hedge fund, or any other kind of mahogany-wainscoted long-established financial office.

Paul waited for ten minutes on a couch behind a glass coffee table on which theFinancial Timesand theWall Street Journalhad been arranged, a folded statement for Arkady Galkin’s account in his breast pocket. Finally, a pretty black-haired woman with brown eyes—Galkin seemed to surround himself with attractive women—emerged to escort him to Galkin’s office. She asked if he wanted coffee or tea or water, and Paul said no.

Galkin’s office was, no surprise, enormous and grandiose. Glass walls on two sides, a long walk to a long glass desk that was bare except for a landline phone and a three-array monitor.

Galkin was wearing an expensive-looking gray pinstriped suit with a blue open-collar shirt. He embraced Paul and said, “Why do I owe pleasure to see you this morning?”

Paul handed him the statement.

For once, Galkin was stunned into silence. He finally said, “Paul Brightman. Appearances can be deceiving. Tell me how you do this.”

Paul laughed. “I don’t know that I could do this again,” he said. “There was a lot of luck.”

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