Chapter 771: Buffett's Helplessness

Although he had learned about Xia Yu's information from the data before coming, Buffett was still inevitably shocked when he saw Xia Yu's youthful appearance.

However, he was already in his fifties and had long been able to hide his true thoughts well.

He smiled kindly and said, 'Mr. Xia, I'm sorry to bother you this time, and I may have to take up some of your time.'

Xia Yu smiled and shook his head: "Mr. Buffett, you're too kind. In fact, I've long wanted to get in touch with you and learn from you some investment experience, but just now my company has just set up a branch on Wall Street, so I've been quite busy.'

Buffett nodded and said, "I can understand. The initial stage of a company's establishment is the busiest.'

'Mr. Buffett, your coffee!'

'Thank you!'

Xia Yu took a gentle sip, set the cup down, and looked calmly at Buffett and said, 'Mr. Buffett, I heard of your reputation a long time ago. You are an investment guru with a very sharp investment mind. Berkshire Hathaway was previously just a textile factory on the verge of bankruptcy, but in your hands, it has been turned around perfectly and has become a vibrant financial company, which is extremely rare on Wall Street!'

Warren Buffett laughed, as if he had sensed Xia Yu's attitude. He said modestly, 'No, there were many accidental factors in my success. There were several times when my company almost went bankrupt, but it was just that I happened to have help or just got lucky.'

Xia Yu laughed, skipped over this uninteresting topic, and suddenly said, 'Mr. Buffett, you came this time to ask why we suddenly bought a large stake in Berkshire Hathaway, didn't you?'

Buffett didn't expect Xia Yu to bring this up on his own, which disrupted the scenario he had originally envisioned. He suppressed the fluctuations in his heart, looked at Xia Yu with burning eyes, and nodded, saying, 'Yes!'

Xia Yu said with a smile, 'I already said earlier that because I am very optimistic about your investment philosophy, I believe that under your management, Berkshire Hathaway will develop very well. It just so happens that I also want to make friends with you, so I am expressing my support and recognition for you in this way!'

'I'm sorry, it seems to have caused you trouble.'

Buffett's eyebrows shot up. He didn't expect Xia Yu to say that.

He stared at Xia Yu with a frown, as if trying to confirm the truth of what Xia Yu had said. Xia Yu smiled faintly and calmly returned Buffett's gaze.

A few seconds later, Buffett broke into a broad smile and said, 'I see. Thank you, Mr. Xia, for your recognition. It's my honour. I'm very happy to be your friend!'

...

'Mr Xia, can I know how many shares Polaris Capital has purchased?'

Xia Yu had not reported the purchase of shares to the New York Stock Exchange in time, so it was normal for Buffett not to know that Polaris Capital already held 5.1% of the shares.

Xia Yu did not hide it and said frankly, 'Mr Buffett, our company now holds 5.1% of the shares.'

Buffett's gaze sharpened, and he said with a smile, 'It seems that my company will have another important director, which is really a happy thing.'

After laughing, Buffett suddenly asked, 'Mr. Xia, can I know how many shares you plan to purchase?'

After saying this, Buffett stared at Xia Yu intently.

Xia Yu gave a faint smile, thought for a moment, and then said slowly, 'Mr. Buffett, please be assured that I hold a friendly attitude towards you, so I can tell you our company's plan. The original plan was to purchase a total of 10% of Berkshire Hathaway's shares, and the plan remains unchanged.'

Buffett's face immediately relaxed. He wasn't sure if he believed Xia Yu's words, but he smiled and said, 'Is that so? Then I'm relieved.'

Then, he laughed at himself and said, 'Mr. Xia, I've made a fool of myself. To be honest, I'm a little afraid of Polaris Capital. After all, your company is very strong and has the full strength to merge with our company, but Berkshire Hathaway is the most important part of my life, so I have to be nervous.'

Xia Yu nodded and smiled, 'I can understand that. I'm sorry for causing you trouble with our sudden actions.'

'I believe that we will get along very well in the future.'

'Before I came, I was still worried, but now, I'm completely at ease. I wish us a happy future together!'

After letting go of his worries, Buffett was in a good mood, and seemed to want to get to know his upcoming partner better. He and Xia Yu continued chatting for a while, and then Buffett invited Xia Yu to go golfing the next day. Xia Yu gladly agreed.

The following morning, they met at the National Golf Links of America.

Xia Yu, dressed in sportswear, met Warren Buffett at the entrance to the golf course. After a brief exchange of pleasantries, the two men entered the course and played golf.

Although Xia Yu was young, Buffett was amazed by his skilled golf game and praised him repeatedly for his superb technique.

While playing golf, they discussed the latest news from the New York financial market or explored the financial situation in the United States.

No matter what the topic, Xia Yu could talk about it at length, as if there was nothing he didn't know.

After playing for a long time, he seemed a little tired, so Buffett suggested going next door to take a break for a while.

The two leaned back in comfortable deck chairs, the soft sunlight pouring down from the azure sky, warming them as the breeze blew past, the sweet fragrance of the grass wafting to their noses.

'Mr. Xia, I wonder what you think of the insurance industry?'

Buffett suddenly asked, taking a sip of juice.

Xia Yu's eyebrows shot up, his mind racing. He looked at him and said, 'After World War II, the insurance industry market has been expanding. The peak period was 1977, when direct premiums for non-life insurance grew the fastest, reaching 20% at one point, and premiums for reinsurance grew by more than 25%.'

'However, after 1977, the growth rate of the insurance industry began to decline rapidly. According to the current trend, it will definitely be lower next year, and there is even a high probability that it will continue for the next two years.'

Warren Buffett frowned at Xia Yu's judgment. After thinking for a while, he looked Xia Yu straight in the eye and said, 'Mr Xia, do you think it is necessary for the company to continue to hold onto its investment in GEICO?'

Had the cat got out of the bag?

Or was Warren Buffett simply testing the waters?

Several thoughts flashed through Xia Yu's mind.

After thinking for a while, he considered the future relationship between them and decided to get things clear from the outset. He said, 'Mr Buffett, I personally think that Berkshire Hathaway, with its limited capital, should invest in companies with lower risks.'

'To be honest, before we noticed Berkshire Hathaway, we were just looking to buy an insurance company. But as you know, the insurance industry is mostly the core business of major conglomerates, so our company noticed GEICO and entrusted Merrill Lynch to acquire it.'

'That is, among the shareholders of GEICO, we discovered Berkshire Hathaway. After learning more about it, we decided to purchase your company's shares.'

'You're asking this because Merrill Lynch has already approached you?'

Buffy nodded: 'Yes, Merrill Lynch has been to the company three times, but I didn't expect it to be you who wanted to acquire GEICO.'

'You just said that the growth rate of the insurance industry will continue to decline, so why do you still want to enter the insurance industry? Or are you eyeing the GEICO company, which is in deep trouble?'

Xia Yu smiled and said: 'It is precisely because the growth rate of the insurance industry is declining that it is easier for us to enter. Isn't it easier to acquire GEICO, which is losing money?'

'As for the investment risks and losses it will bring, our company doesn't care. We can afford it. If GEICO were a healthy company, we would have to bear twice the difficulty and cost to acquire it fully, which would be much higher than the current risks and losses.'

In summary, Xia Yu's words were: I know about GEICO's losses and risks, but our company is strong and we don't care at all, as long as we can buy the company.

This kind of arrogant rhetoric made Buffett not know what to say.

At this time, he felt a mixture of emotions. Meeting someone like Xia Yu, who doesn't play by the rules and just throws money around, he simply didn't know what to say.

After a long while, he said with a last glimmer of hope, 'Mr. Xia, do you really have to acquire GEICO completely?'

Xia Yu nodded and said matter-of-factly, 'Of course. Only by acquiring it completely can we invest several hundred million dollars to transform it, and it will even be easier to merge and acquire other insurance companies later. This involves Polaris Capital's long-term strategic planning in the insurance sector.'

Well, they are going to invest hundreds of millions of dollars to renovate the company again, and they are also preparing for mergers and acquisitions later.

Each of these moves requires a large amount of money, and Berkshire Hathaway simply does not have the capital to follow through.

In other words, if Berkshire Hathaway retains its stake in GEICO, it will be diluted step by step if it does not invest a large amount of capital.

However, Berkshire Hathaway is already short of funds, and if it is locked in by this, then it really won't be able to invest according to his philosophy.

Moreover, Buffett has also considered Berkshire Hathaway's positioning. To enter the insurance industry, it definitely needs a core pillar. Now it is clear that GEICO cannot become the core pillar. Holding a little equity has become tasteless, and it is even a burden.

'Well, I have to say, Polaris Capital is very powerful.'

Buffett laughed helplessly, and had already decided to give up GEICO.

Xia Yu smiled and said softly, 'It's not bad. The major shareholders behind it don't lack money, and they can still come up with tens of billions of dollars.'

Upon hearing this, Buffett couldn't help but smile wryly, and a feeling of envy arose in his heart.

'Okay, I know what to do. We'll give up our stake in GEICO.'

'Thank you, Mr. Buffett, for your help.'

'If there is anything we can do to help in the future, I would be happy to.'

Xia Yu's words made Warren Buffett's bad mood much better. He smiled and said, 'Then thank you, Mr. Xia.'

'You're welcome. We are friends and should help each other.'

'Yes, we are friends...'