Rebirth of the Financial Crisis Sweeping the World

July 4th, Friday.

Wang Guanxi got up very late and finished washing.

I'm a little hungry.

So I made a lunch at home, egg noodles.

Plus a pear.

Listen to music, watch the news.

[The stock price of Buffett's Berkshire Hathaway company rose sharply, and the stock price broke through 135,000 US dollars per share]

The $135,000 per share refers to the Class A shares of Berkshire Hathaway. The Class A shares here are of course not A shares.

The stock price is as high as US$135,000 a share, which is beyond the reach of ordinary retail investors.

Berkshire Hathaway owns A and B shares.

Because the company's stock price is getting higher and higher. In the U.S. stock market, in order to ensure the normal liquidity of a stock, when the price of the stock exceeds a certain level, the brokerage firm will generally persuade the company to split its shares, so as to ensure that its stock remains in the range of $10~$500, which is convenient for retail investors to buy.

For example: Baidu splits ten by one, Google splits two by one, and Apple splits seven by one.

After the stock split, the total number of shares issued by the company will increase, and the price of each share will decrease accordingly, which has no effect on the market value of the entire company, but it is more convenient for retail investors to enter.

The reason why Buffett does not dismantle is that he has always adhered to the value investment. If you want to invest, you should consider 10 years or more. You don't want speculators to come to Berkshire Hathaway to make quick money.

Of course, another aspect is that Buffett himself has a special personality, and he will not give up his principles because of the foolishness of brokers and other small shareholders. Buffett himself guarantees: IwouldBRKstock

As a result, Berkshire Hathaway's stock price is getting higher and higher. Two things later made Buffett and the company's board change their minds:

1. Some shareholders want to use gifts to give Berkshire Hathaway shares to their relatives and friends to legally avoid taxes. However, the gift tax-free limit is $10,000, and Berkshire Hathaway's single share has exceeded this limit.

2. Some mutual funds have developed a system to buy and trade small portions of Berkshire Hathaway stock. In other words, they can bypass Berkshire Hathaway's unit price to allow more small retail investors to speculate.

Based on the above two points and Laoba’s previous commitment not to split shares, the company’s solution: the original shares were renamed Class A shares, and new Class B shares were issued.

When Class B shares were issued in 1996, the price was 1/30 of that of Class A shares.

1 Berkshire Class A share can be converted into 30 Class B shares, but Class B shares cannot be converted into Class A shares.

When mentioning Berkshire Hathaway, Wang Guanxi thought of the insurance industry, which is a very profitable industry. Buffett started with the insurance business at first, and then turned into a diversified investment group.

If you have a huge insurance company, you can provide a steady stream of cash flow.

Wang Guanxi plans to acquire several insurance companies in the future to facilitate future layout.

At this time, his phone rang suddenly, and it was Zhang Dexi, the chairman of Catalan Auto Insurance Company.

connected.

Old Zhang, what's the matter? Wang Guanxi knew that Zhang Dexi lost a lot of money after he broke his positions twice, and was short of money. He mentioned before that he would set up a joint venture life insurance company with Zhang Dexi, but was rejected.

Zhang Dexi asked tentatively: Guanxi, are you interested in buying some American corporate bonds? How about I give you a 20% discount?

U.S. corporate bonds? Wang Guanxi smiled, and now he won't even ask for a 20% discount. Many bond portfolios are poisonous.

Zhang Dexi smiled and said, Yes, are you interested?

Wang Guanxi said bluntly: I am not interested in US corporate bonds, are you short of money?

Oh, yes, I have personally lost a lot of money recently. Zhang Dexi sighed: I still owe HSBC Securities Company a debt.

Are you interested in taking a stake in my Catalan insurance company?

Wang Guanxi thought for a while: I'm not interested in becoming a shareholder.

I want to buy your Catalan auto insurance directly.

This piece of Youde still has a way to engage in the insurance business. In the future, Jiatai Auto Insurance will also be successfully listed. In 2015, the market value of Jiatai Auto Insurance was the highest, reaching 4 billion Hong Kong dollars.

This shows that Zhang Youde is very capable in the insurance business.

Acquisition? Zhang Dexi took a deep breath. He didn't expect Wang Guanxi's appetite to be so big, but he is short of money now, and Catalyst Insurance's performance this year is also quite bad, because he holds a lot of stocks, and his assets are shrinking, so he can't make much money. pure profit.

Wang Guanxi: Yes, it is the acquisition

Old Zhang, are you interested in selling the company? Anyway, the insurance business is not easy to do this year, so you might as well sell it. As for the price, I will arrange a legal specialist to review the assets and give you a suitable price.

Let's think about it. Zhang Dexi thought for a long time on the phone, and he didn't really want to sell it. The insurance company was his golden egg, and he really didn't want to sell it. But now that HSBC Securities was demanding debts, he had no choice but to sell it.

You arrange for someone to come over to check the balance sheet tomorrow, and we will talk then

Today

I'm still in Macau, I'll go back tomorrow

That's good! After finishing the phone call, Wang Guanxi called his lawyers.

The following day, July 5th, Saturday.

Wang Guanxi took Xue Feng and Hamada Matsumoto to Hong Kong Queen's Road, New Era Plaza.

Zhang Dexi brought several senior executives here to wait for Wang Guanxi.

Mu Honglie, Chen Xuezhen, Wei Weicheng, and Huang Shaokai are all executives in the company. They are the veterans who started the Catalan auto insurance together with Zhang Youde, and they get a certain amount of dividends every year.

Guanxi, you're here. Zhang Dexi greeted warmly.

The other minority shareholders are also very polite.

Lao Zhang, let's go and check the financial situation. Wang Guanxi smiled and said, If it suits you, I will buy it today.

Okay, please!

Everyone chatted while walking, Wang Guanxi's four veterans only received dividends and no equity, that is to say, Zhang Youde held 100% of the shares.

Catalan Auto Insurance is mainly engaged in auto insurance underwriting business.

Including third-party auto insurance and comprehensive insurance, the main customers are taxi and public light bus owners in Hong Kong.

The company currently operates its business in three business segments: Taxi, Public Light Bus and Other Motor Vehicles.

In 2007, the company's net profit was 12 million Hong Kong dollars, which is hard to say this year.

At present, the company's debt is 500 million. Of course, this debt does not only refer to bank loans in terms of assets and liabilities. For example, bank deposits are bank debts. For example, bank deposits are 100 billion. Then it The debt to depositors is 100 billion, and the liability of insurance companies is also for insurance customers. If a customer who bought insurance suddenly dies, the insurance company will have to pay for it.

The total assets of Catalan Auto Insurance is now HK$550 million.

Net assets are HK$50 million.

Catalyst Auto Insurance holds many stocks of listed companies, as well as some corporate bonds, and is now losing money. The total assets have been reduced from the original 700 million Hong Kong dollars to the current 550 million Hong Kong dollars.

Usually the market value of a listed company is higher than its net assets. Usually, the market value of a listed company is twice its net assets, and of course there are more.

It is usually related to the company's future prospects, dividends... in short, many factors are related.

For example, in 2020, Tesla Motors' net assets will be US$21.679 billion, but its market value will be US$643.7 billion, which is 30 times its net assets!

Of course, this Catalan auto insurance cannot be compared with Tesla.

Wang Guanxi said: Old Zhang, your company is not listed, and many of the stocks you hold are losing money, and your assets are shrinking. I can only value you at 80 million Hong Kong dollars.

Once the acquisition is successful, Wang Guanxi will immediately sell these assets and exchange them for cash. As for the debt of 500 million, that is the total amount of insurance policies purchased by insurance customers. As long as the customers do not die unexpectedly or have a car accident in a small area, there is no need to worry. of.

Zhang Dexi was dumbfounded, Wang Guanxi's price was too low, he said, It's too low, you have to give me at least 100 million.

According to 2.5 times the valuation

Wang Guanxi refused: 2.5 times the valuation? How is this possible?

No, it's definitely not worth that much money. When the stock price falls, your assets will shrink, and your assets will become negative after a while.

It's very suitable and reasonable for me to give you 80 million. Old Zhang, don't be a lion.

Zhang Dexi said firmly: No, you have to give me 100 million

Wang Guanxi immediately opened the stock charts, these BYD Electronics, and the stock charts of BYD Auto.

You bought the shares of BYD Electronics and BYD Auto Insurance in Catalan Auto Insurance. The stock has been falling recently, and you don't know how it will fall. When the assets continue to shrink, the net assets of Catalan Auto Insurance may become negative.

I'll give you 90 million

Old Zhang, I'll give you 2 minutes to think about it

Zhang Dexi glanced at the stock charts of BYD Electronics and BYD Auto, his expression changed slightly, and he said, Okay, then 90 million!

If the stock prices of BYD Electronics and BYD Auto continue to fall, the assets of Catalan Auto Insurance will continue to shrink, and by then the net assets of Catalan Auto Insurance may truly become negative.

Okay, deal! Then Wang Guanxi asked Xue Feng and Hamada Matsumoto to draw up the contract and then sign the agreement.

Wang Guanxi's Blackshirt Group bought Catalan Auto Insurance from Zhang Youde for HK$90 million.

I finally have an insurance company. Although it is only car insurance, it will rise in the future.

Old Zhang, happy cooperation

Pleasant cooperation

The two shook hands.

Then Wang Guanxi reorganized the board of directors, and Zhang Youde's wife and younger sister all left the board of directors.

Mu Honglie, Chen Xuezhen, Wei Weicheng, and Huang Shaokai all joined the board of directors and became executive directors.

The original business manager Huang Shaokai was promoted to the general manager of Catalan Auto Insurance.

The original chairman and general manager Zhang Youde stepped down.

Wang Guanxi thought for a while and said to Zhang Youde: Old Zhang, I usually don't have time to manage the company. You should continue to serve as the executive director of Catalan Auto Insurance. I will also give you an extra salary. Help me manage the company. Just fine.

Zhang Youde was taken aback, You still let me be the executive director? That's no problem, okay, anyway, I have nothing to do now, no problem

Then Wang Guanxi faced Yujiatai Auto Insurance's board of directors, which has five members and no chairman.

The next day, July 6th, Sunday.

Wang Guanxi also arranged for a financial officer to transfer half of the financial staff of Catalan Auto Insurance to Jiyuan Model Company, and then transferred some financial staff from Jiyuan Model Company, and the senior financial officer served as the financial director of Catalan Auto Insurance.

Then he told the general manager Huang Shaokai: Mr. Huang, when the market opens on Monday, slowly clear the stocks of Catalan auto insurance, and slowly sell those corporate bonds. The selling price should not be too low. Auto insurance net worth is positive, understand?

Now that stocks have not plummeted, and corporate bonds have not defaulted on a large number of contracts, quickly take advantage of the high position to sell stocks and bonds, and then get cash, and then you can buy bottoms again.

For example, BYD Auto, China Resources Beer, Penguin Group... the stocks of many, many listed companies will fall to historical lows.

You can even use the funds from Catalan Auto Insurance to short the stocks of other insurance companies, and then launch a takeover war.

Let the insurance company become stronger and bigger, which will facilitate its own layout in the future.

Yes, boss. Huang Shaokai nodded seriously.