Barron clearly had his sights set on Costco. By acquiring the company, Argos Retail Group would extend its reach into North America, the home of its competitor, Amazon.
Costco also has numerous stores in Asia and China, though its Chinese presence is primarily concentrated in Taiwan. Costco stores in Taiwan are arguably among its most profitable globally.
Costco entered mainland China relatively late, opening a store in Shanghai in 2019. The store's initial success left a deep impression on Barron.
The advantage of acquiring Costco is that the company has no controlling shareholder. Therefore, Barron only needed to secure a sufficient stake and obtain approval from the company's board of directors. There was no need to engage in a battle with the controlling family or group, as with acquiring companies like Hermès.
A similar disadvantage is its lack of a controlling shareholder. Nearly 70% of Costco's shares are held by institutions. The Vanguard Group, BlackRock, Berkshire Hathaway, State Street, Geode Capital Management, and FMR LLC, among the top holdings, collectively hold nearly 30% of the company's shares.
Therefore, Baron needs to acquire Costco shares from retail investors in the secondary market while also working with some of these institutions to purchase their Costco shares. Costco 's
stock price is currently above $70, up 32% year-over-year.
However, it is still vulnerable to the subprime mortgage crisis, with its share price expected to fall to around $40 this year. Therefore, Baron can take advantage of this trend to acquire a certain percentage of Costco shares through the secondary market.
Furthermore, for some institutions, many of their holdings were affected by the unfolding subprime mortgage crisis, and many of these assets require funding to recover.
Under these circumstances, persuading them to sell their Costco shares should not be difficult.
Baron's fund has already begun accumulating Costco shares. This will be a lengthy process, gradually achieving a controlling stake.
Specifically, Costco is the largest membership-based warehouse retailer chain in the United States, and its operating model differs significantly from Argos Retail Group's existing stores. However, considering
both the investment returns and the potential benefits to Argos' business, Costco is arguably one of the best acquisition targets.
After all, the North American retail market is highly competitive, with some of the world's largest retailers located there.
Argos's model, while suitable for Europe, may not be suitable for North America, let alone Asia. In the original universe, Argos's attempts to enter the Chinese e-commerce market failed.
Entering the North American market from scratch would undoubtedly be extremely difficult for Argos Retail Group, facing immense competition—and the e-commerce sector would also face pressure from Amazon.
The best option would be to acquire Costco to expand its market share and then leverage Costco's distribution channels to supplement its e-commerce operations.
This, of course, is something that will need to be considered later.
"
Congratulations, Mr. Guanhai. I hope you will ultimately win this election."
"Thank you for your support, Your Highness."
During this time, Barron also took time out to meet privately with Ao Guanhai.
This year is an American presidential election, and in early June, Ao Guanhai became the Democratic Party's candidate in the internal election.
In this Democratic Party election, Ao Guanhai's biggest opponent is Hillary Clinton, the wife of former President Laszlo Tandon.
In this internal election, Ao Guanhai won 1,762 delegates and 394 super electoral votes, for a total of 2,156 votes.
Hillary Clinton won 1,637 delegates and 283 super electoral votes, for a total of 1,920 votes.
Because the rules require 2,118 votes to win the Democratic Party nomination, Hillary had no choice but to admit defeat and withdraw from the race. Ao Guanhai secured enough votes to be confirmed as the Democratic Party candidate.
It's also worth noting that the Democratic Party candidate also competed this time, including the Mei Xizong from Barron's previous life. However, he and four other candidates had already fallen behind Ao Guanhai and Hillary Clinton in January of this year and withdrew from the race.
In this election, since George W. Bush had already served two terms, Ao Guanhai's opponent, the Elephant Party candidate, was confirmed as Arizona Senator John McCain in March of this year.
As mentioned before, the national economic situation before and during the election has a significant impact on the outcome.
Due to the impact of the subprime mortgage crisis, public discontent with the incumbent Elephant Party is considerable. Therefore, according to current survey data, the Democratic Party's prospects for this election remain relatively optimistic.
During Barron's meeting with Ao Guanhai, his expression revealed his confidence in the upcoming election.
Of course, once O'Guanhai took office, he would be burdened by the subprime mortgage crisis.
O'Guanhai's affection for Barron wasn't just because Barron had provided him with substantial financial support through certain channels. Barron's influence over the media, including the Sinclair Group, also played a crucial role in O'Guanhai's campaign.
Besides O'Guanhai, Barron also took the opportunity to meet with many people, including several Wall Street capitalists.
For example, JPMorgan Chase Chairman and CEO Jamie Dimon.
JPMorgan Chase had just acquired the bankrupt Bear Stearns, arguably having already reaped some benefits from the subprime mortgage crisis—a move that both expanded JPMorgan Chase's size and fulfilled its self-proclaimed responsibility to "save the economy."
JPMorgan Chase's name suggests that this Wall Street giant is connected to the Morgan family.
In fact, there are currently two Wall Street giants with the name "Morgan": Morgan Stanley and JPMorgan Chase, often referred to as "Big Morgan" and "Little Morgan."
Their emergence dates back nearly 80 years, and it's linked to the famous Titanic...
If anyone has ever been the unsung king of America, the Morgan family is one of the most worthy candidates.
At the beginning of the 20th century, the Morgan family directly controlled 38% of all US financial capital, valued at nearly $20 billion. They also held $12.5 billion in insurance assets, representing 65% of the insurance industry.
They once spearheaded a remarkable effort to save the American economy . In
October 1907, stock prices on the New York Stock Exchange plummeted 50% year-on-year, triggering numerous runs on banks and trust companies.
With the collapse of numerous state and local banks and businesses, panic spread throughout the country, resulting in the Panic of 1907.
At the time, America had yet to establish a central bank, preventing it from effectively intervening in the market.
J.P. Morgan, the head of the Morgan family, stepped in to save the market. He quickly assembled executives from major banks and trust companies, along with other major families, including the Rockefellers, to form a consortium. This consortium was responsible for channeling interbank capital flows into the market to buy stocks, effectively stemming the stock market's plunge.
Thanks to the forceful intervention of the Morgan-led consortium, the panic ended in less than a month.
However, the American government also began to recognize the excessive power of private financial groups and began to gradually curb the influence of the major families.
This foreshadowed the creation of the Federal Reserve five years later...