Chapter 949 Buffett’s plan

Author: Khurav

Chapter 949 Buffett’s plan

Generous, quite generous!

When Carter walked from Fidelity Investments to the street, he felt like he was a little floating!

Even in a large investment bank like Fidelity Investments, this is the first time I have seen someone borrowing such a large amount of stocks at once! Unfortunately, this person meets all standards in terms of margin and credit qualifications!

Even if you give up some interest, this vote is still a big profit for Fidelity!

In half a year, 3.6% interest. In other words, this is a stable income of more than 300 million based on current value. The moment the contract was signed, Peter Lynch's pain disappeared!

The moment the stock is lent, it means that, if nothing unexpected happens, in the next six months, he only needs to pay attention to the rise and fall of the stock, promptly notify Carter of the margin call, and handle the situation according to the instructions given by Carter.

This batch of stocks is enough!

Work suddenly became easier!

He no longer needs to go to the market laboriously, like buying lottery tickets, to look for companies whose value may be relatively stable, and then conduct strenuous research and so on.

Relaxed, Peter Lynch sent Carter out the door all the way. Similarly, this is also a good value hedging model for Fidelity Investments, and it is even possible for Carter to lend such a large amount of securities at one time.

Customer ratings have also been repeatedly raised to the point where they are comparable to "dad"

If it weren't for the fact that Carter and Lynch were familiar with each other, it wouldn't have been Lynch who came out to see him off. At the very least, he would have been a vice president.

Of course, put aside these vanities. In terms of the margin rate and interest rate given by Fidelity, Carter felt the other party's attention. When he went to other companies, the situation was no longer so smooth.

Even at this relatively special time, it is a good choice to lend stocks to Carter for value hedging and earn stable income. But the discussion at Goldman Sachs took two days! This is still because Richard

The former Goldman Sachs executive in The Saint helped to make the connection, and Carter directly bypassed the managers who had cooperated with him in the HT business and directly talked to the Goldman Sachs executives.

It took four days to get to JP Morgan.

It wasn't until around July 10th that even Fidelity's margin payment had been repaid. Only then did Carter officially borrow enough stocks from these major investment banks.

The total value exceeded 40 billion US dollars! At the same time, the money in Carter's account also plummeted like water from the Three Gorges Dam opening!

However, this is far from over, and it has not met Carter's psychological expectations!

One institution after another, talking one after another

There is no need to go into details about the similar situations. But it is worth mentioning that on July 16, Carter met a somewhat special guy: Warren Buffett!

When you need to borrow a large amount of stocks, when choosing a suitable securities lending provider, the best choice is undoubtedly those long-term institutions. Among the long-term institutions, the most famous, or the one who impressed Carter the most, is undoubtedly Buffett.

Got it!

After all, it seems that this guy is the only one who has made it clear that he will never go short because it is meaningless!

But the same problem was that Buffett, who was at his peak, was not so easy to make appointments with. This led to it not until July 16 that Carter made an appointment with Buffett for lunch.

This is pure bad taste! Buffett has not auctioned his lunch yet, but the 57-year-old Buffett did not refuse Carter's choice of the meeting place in the restaurant.

The meeting was a friendly one!

After all, Carter and Buffett’s Berkshire.

Hathaway has no direct business conflicts. Today’s Berkshire﹒

Hathaway's main business is insurance, followed by investment!

In addition to short-term investments, Hathaway currently holds more shares in companies.

Buffalo News, Colby Vacuum Cleaners, See's Candy, Nebraska Furniture, World Encyclopedia, Wesco Financial Corporation, etc.

Almost from head to toe, their business fields are completely different. Carter has not touched the insurance industry, and Buffett has not been involved in the banking industry. In the companies they invest or control, their business lines are also thousands of miles apart.

inside!

No conflict, but cooperation!

For bull institutions, or for Buffett, the most classic saying is "Be greedy when others are fearful, and fearful when others are greedy."

At this moment, Buffett was also worried about the overheated market. He did not hide this from Carter!

In the past, what he had to do was to try his best to select those companies that in his opinion had stable value and large future development potential, and kept holding them. Now, after hearing Carter's idea of ​​borrowing stocks, he decided to hold them for the long term.

For investors, this is no less than pie in the sky. It is almost equivalent to being able to obtain more shares out of thin air!

The room for agreement between the two parties is quite huge, but differences still exist, and they only exist in one place!

"I hope that when you return the stocks in 1988, when our agreement expires, you will repay me the stocks of Coca-Cola Company! As far as I know, you have a lot of Coca-Cola shares. In this way, maybe the pressure will be on you.

It will be much smaller!”

"I can understand that your next step is to invest in Coca-Cola?"

Putting down the knife, Carter suddenly thought.

1988 was indeed the year when Buffett started investing in Coca-Cola. It is impossible for him to invest heavily in Coca-Cola without investigation and research in advance.

In this case, it is not unreasonable for him to propose that when he returns the shares, he would exchange them for Coca-Cola shares of equivalent value. But in this way, the variables will be huge!

"How to calculate the price?"

"Simple, take the stock of Nebraska Furniture held by Hathaway as an example! Using it as the target, the price of a single share compared to Coca-Cola's current stock price is about 2.1 to 1. That is, 2.1 shares of Nebraska

Add furniture stock equal to 1 Coca-Cola stock, and then multiply this amount by the interest rate we agreed plus 1. This is the total principal and interest you need to repay."

"This is causing a problem for me!"

Carter has a headache

It seems that the costs paid are the same, but in fact, the interest on securities lending is often paid in the form of stocks. This means that, for example, Carter is shorting the company called Nebraska Furniture and selling himself at a high price.

For all the 100,000 shares borrowed, at a ratio of 2.1 to 1, the principal amount is 47,620 shares of Coca-Cola. Multiplied by the agreed interest rate, assuming it is still 3.6%, you need to repay 49,334 shares.

It seems reasonable. But the stock price fluctuations of the two companies are not necessarily consistent! Now perhaps, Coca-Cola's stock price divided by 2.1 is equal to the stock price of Nebraska Furniture. But when it comes to repurchasing it, maybe Coca-Cola

Divide the share price by 3 or 4 to equal the share price of Nebraska Furniture!

Nebraska's stock price fell more than Coca-Cola's!

This means that it will cost more to buy Coca-Cola shares to repay.

Although he is not shorting a certain company this time, and this slight variable has little impact on the overall situation, Carter still instinctively wants to refuse. This is a completely uncontrollable risk for himself!

But the same problem is that Hathaway, which now controls stocks worth no less than 2 billion US dollars, is still a pure long-term institution. If it is negotiated, it can directly achieve 1/40 of its goal. It is impossible not to pay attention to this!

There are only so many large institutions in total, and almost all of the things that should be talked about and that are good to talk about have been discussed! Carter is not so confident to find institutions that he has never cooperated with at all, or has little understanding of. In contrast, Hathaway, in

Carter's original plan was a part of his plan that he couldn't give up.

As a result, this link posed a problem for myself!

I have to say, Buffett is very calculating!
Chapter completed!