Rebirth 79: I opened a bank in the United States

Chapter 949 Buffett's calculation
Rich, quite rich!

When he walked from Fidelity Investment to the street, Carter only felt that he was a little floating!
Even in a large investment bank like Fidelity Investments, it is the first time I have seen such a large amount of stocks borrowed at one time!However, this person is up to the standard regardless of the deposit or credit qualification!

Even if some interest is waived, this ticket is a big profit for Fidelity!
Half a year, 3.6% interest.In other words, this is a stable income of more than 3 million based on the current value.The moment the contract was signed, Peter Lynch's pain was gone!

The moment the stock was lent, it meant that, if nothing unexpected happened, in the next six months, he only needed to pay attention to the rise and fall of the stock, notify Carter in time to call for margin, and deal with the stock 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, buy a lottery ticket to find companies whose value may be relatively stable, and then do a lot of research on Bara.
The relaxed Peter Lynch sent Carter out the door all the way.Similarly, this is also a good model for value hedging for Fidelity Investments. Even, being able to lend such a large amount of securities at one time, Carter's customer rating has been repeatedly raised to the point of being comparable to "father"
If it weren't for the fact that Carter and Lynch were relatively familiar, it wouldn't be Lynch who came out to see him off, and he would have to be a vice president at the end.
Of course, all these vanities aside.In terms of the margin rate and interest rate given by Fidelity, Carter felt the other party's attention.When it's time to go elsewhere, it doesn't go so well anymore
Even at such a special time like now, it is a good choice to lend stocks to Carter as a value hedge to earn a safe income.But the discussion at Goldman Sachs took two days!This is still the result of Richard Saint, a former Goldman Sachs executive who helped make the bridge. Carter directly bypassed the manager who had cooperated with him in the HT business and directly talked with Goldman Sachs executives.

It took four days to get to JP Morgan.
Until around July [-]th, even Fidelity's security deposit has been paid for a round.Carter officially borrowed enough stocks from these big investment banks.

The total value exceeded 400 billion US dollars!At the same time, the money in Carter's account also plummeted like the opening of the Three Gorges Dam!
However, this is not far from over, and it has not met Carter's psychological expectations!

One institution after another, talking one by one
There is no need to repeat the similarities with minor differences.But it is worth mentioning that on July 16, Carter met a somewhat special guy: Warren Buffett!

When it is necessary to borrow a large amount of stocks, when selecting a suitable securities lending provider, the best choice is undoubtedly those long-term institutions.Among the long-term institutions, the most famous one, or the one that impressed Carter the most, is Buffett!

After all, it seems that there is only this product, and he has clearly stated to himself: Never be short, because it is meaningless!
But with the same problem, Buffett, who is at his peak, is not so good.This led until July 7, when Carter met Buffett for lunch.
This is pure bad fun!Today's Buffett has not yet auctioned off his own lunch, but the 57-year-old Buffett did not refuse Carter's choice of meeting place in a restaurant.

The meeting process can be called friendly!

After all, Carter and Buffett's Berkshire.Hathaway has no direct business conflicts.Berkshire today.Hathaway's main business is insurance, followed by investment!
In addition to short-term investment, the companies that Hathaway currently holds more shares
Buffalo Newspapers, Kirby Vacuums, See's Candy, Nebraska Furniture, World Encyclopedia, Wesco Financial Company, and more
Almost from head to toe, the business fields of the two do not match.Carter did not touch the insurance industry, and Buffett did not set foot in the banking industry; in the companies invested or controlled, the business lines of the two are also thousands of miles apart!
There is no conflict, but cooperation!
For long-term institutions, or for Buffett, the most classic saying of this product is "Be greedy when others are fearful, and be fearful when others are greedy".
At this moment, Buffett is also worried about the overheated market.He didn't hide this from Carter!

In the past, what he had to do was to select as much as possible those companies with stable value and large room for future development in his opinion, and keep holding them.Now, after hearing Carter's idea of ​​wanting to borrow shares, it's pie in the sky for long-term holders.It is almost equivalent to being able to obtain more shares out of thin air!
There is a huge room for the two sides to reach an agreement, but differences still exist, and they only exist in one place!
"I hope that when the stock is returned in 88, when our agreement expires, you will repay my Coca-Cola stock! As far as I know, you have a lot of Coca-Cola shares. In this way, perhaps for you, the pressure is also It will be much smaller!"

"I can understand that you plan to invest in Coca-Cola next step?"

Putting down the knife, Carter suddenly thought.
88 was indeed the year Buffett started investing in Coca-Cola.Shigekura Coca-Cola, he could not have investigated and researched in advance.
In this way, it is not unreasonable for him to propose at this time that when he returned the shares, he would exchange them for shares equivalent to Coca-Cola.Just like this, the variables are big!
"How to calculate the price?"

"Simple, take the Nebraska furniture stock held by Hathaway as an example! If it is used 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 The stock of furniture is equal to 1 share of Coca-Cola, and then multiply this amount by our agreed interest rate plus 1, which is the total principal and interest you need to repay.”

"This is giving me a problem!"

Carter has a headache
It seems that the cost paid is 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 now shorting the company named Nebraska Furniture, and sold all 10 shares he borrowed at a high price. Calculated at a ratio of 2.1 to 1, the principal is 47620 shares Coca-Cola's stock is multiplied by the agreed interest rate, assuming it is still 3.6%, and you need to repay 49334 shares.

It looks reasonable.But the stock price fluctuations of the two companies are not necessarily the same!Now perhaps, the share price of Coca-Cola divided by 2.1 equals the share price of Nebraska Furniture.But when I repurchase, maybe the share price of Coca-Cola divided by 3 or 4 will be equal to the share price of Nebraska Furniture!

Nebraska's share price fell more than Coca-Cola's!
This means that I need to spend more costs to buy Coca-Cola stock to repay.

Although he was not shorting a certain company this time, and this slight variable had little impact on the overall situation, Carter still instinctively wanted to refuse.For me, this is completely uncontrollable risk!

But the same problem, Hathaway, which currently holds no less than 20 billion US dollars worth of stocks, is still a pure long-term institution. After talking, it can directly achieve 40/[-] of its goal. It is impossible not to pay attention to it!

There are only so many large organizations in total, what needs to be discussed, what is easy to discuss, is almost done!Carter is not so relieved to find organizations that he has never cooperated with or knows nothing about.In contrast, Hathaway, in Carter's original plan, was a link that he could not give up.

As a result, this link created a problem for myself!
I have to say, Buffett is very calculating!
(End of this chapter)