Reborn in America, I am a legendary short seller on Wall Street.

Chapter 133 Holding Company
Larry returned to his office at Paine Weber Securities, closed the door, picked up a piece of paper, and listed all the problems he could think of.

First, there's a series of companies that will be established soon: including a gun company that's currently under discussion and preparation with the Browning brothers, a retail company that operates convenience stores, and a food chain that operates steamed milk tea and barbecue.

Larry plans to establish separate, independent entities, so that if one of them encounters a problem, it will not affect the other business segments.

In addition, Larry received a tip when he co-invested in Ford Motor Company with Kennedy: using funds or holding companies to invest in actual companies can effectively hide one's presence in the company register.

After engaging in in-depth discussions with lawyers and senior banking professionals, Larry also learned a great deal about modern corporate governance.

Besides remaining anonymous to the public, this method of using holding companies to control physical companies has other advantages.

For example, building a firewall against debt risk—if the entity company goes bankrupt, the debt is limited to that layer and will not spread to its own assets or other assets of the holding company;

The second very attractive point is tax optimization—dividends received by the holding company from the entity company are not subject to corporate income tax and can be directly used for reinvestment; if the holding company wants to acquire a loss-making company in the future, the loss can be deducted from the overall profit of the holding company.

Another hidden benefit is that this multi-tiered shareholding structure can circumvent future antitrust investigations. Larry knew that the United States would increase its control over monopolies, and the Sherman Antitrust Act of 1890, passed by Congress, was already a precursor to this.

Using a holding company as an investment platform allows for the simultaneous control of multiple companies of different types and business formats, preventing business diversification and circumventing scrutiny regarding industry monopolies.

In addition, by designing a multi-tiered holding structure, one can leverage the company's control over the entity with a small amount of capital in the later stages.

Based on some scattered knowledge of company structure from his previous life, Larry had the idea that using holding companies, trusts, or funds to control physical companies would definitely become the mainstream in the future.

If the top-level control framework for commercial investment is clearly defined now, many detours can be avoided in the future.

Furthermore, Larry himself is now a speculator, and all his money comes from the stock market. If he wants to use money obtained from stock market speculation for equity investment, a strong barrier must be established between the two.

If you suffer losses in your corporate equity investments, it won't jeopardize your assets and cash. Similarly, if you misjudge the stock market or are wiped out by a sudden black swan event, your other equity investments will not face any risks.
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After designing the holding company's structure, Larry went on to analyze Ford Motor Company, Browning Firearms Company, convenience store retail, and bubble tea and barbecue chain food stores one by one.

Ford's current shareholding is still too small! Only 25%.

Larry knew perfectly well that Ford would become the king of the American automobile era, and holding such a small stake was simply intolerable.

However, this matter needs to be considered carefully, since the current equity structure is most conducive to the early development of the car company.

Moreover, Larry had a feeling that Kennedy's investment in Ford Motor Company was not necessarily due to his own confidence in the invention of the automobile, but rather a wealthy person's angel investment for the sake of "good fortune".

He might exit once his investment yields excess returns. After all, he's a career politician who values ​​tangible political gains like voter turnout and doesn't think like a professional investor.

This is like a Hong Kong "stock market tycoon" in a past life who bought 20% of Tencent's shares, made a tenfold profit in two years, and then happily sold all his shares to a South African media company. Then he watched those shares rise thousands of times over.

Even if Kennedy hadn't withdrawn, Ford would have eventually gone public.

If all else fails, he can take advantage of stock market fluctuations during bull and bear markets to indirectly increase his holdings of Ford Motor Company shares in the secondary market. In short, he will never be satisfied with a mere 25% stake in Ford Motor Company.

Larry was more worried about Henry Ford than Kennedy, because he truly believed that automobiles could change the world.

In other words, Larry himself knew that there would be a car era in the future, so he "believed because he saw"; but Henry Ford "saw because he believed." He had an extreme confidence in his inventions, which was both the driving force behind Ford's progress and an innate characteristic of him as an inventor and business tycoon.

Once the car company truly made a lot of money, Larry had no doubt that Henry Ford would try every means to monopolize the company, because he knew in his heart how much value his car company would create once the automobile era arrived, coupled with the "killer weapon" of efficiency and cost reduction, the assembly line!
Therefore, Larry felt he had to keep a close eye on Ford, not to become enemies over the distribution of profits, but also not to be left behind and become a fool. This was of utmost importance.

The situation at Browning Firearms Company was much simpler, since it was a lean company. Larry didn't plan to create a corporate structure like Ford Motor Company to exploit Browning's patents. Instead, he wanted to cooperate on an equal footing while respecting Browning's intellectual property rights.

After all, Larry had a way to keep things in check within the company: he handled the most important aspects, namely, product sales and order acquisition.

Browning was undoubtedly a brilliant weapons designer, but he lacked the foresight to see the future. Securing firearms contracts from various countries wasn't particularly difficult for Larry, who was familiar with future warfare and weapon development.

For example, Larry is now encouraging the Browning brothers to research the "Mauser-like" 1888 Commission Rifle because this rifle has indeed proven to be the mainstream firearm for World War I and World War II.

Later, Larry could also guide the Browning brothers in developing general-purpose machine guns, anti-materiel rifles, semi-automatic rifles, and even automatic rifles similar to Browning's most successful BAR. Whatever weapons a country's military wanted, we could provide a ready-made solution.

The most important thing about a weapon is that it meets the needs of the battlefield at that time. As long as Browning can invent weapons according to his own ideas, Larry can sell guns.

As the war escalated into trench warfare, Larry even thought it was feasible to have Browning invent the mortar; once tanks and automobiles were widely used on the battlefield, he could then guide Browning to try inventing a recoilless rifle...

The design concept of these weapons was not particularly difficult; the difficulty lay in the fact that people at the time did not know whether these weapons were even useful.

Therefore, as long as Browning focuses on his gun designs, the situation at Browning Firearms Company will definitely be a win-win situation.

The remaining projects are two retail projects in collaboration with Mr. K and Logan.

Larry's current design is quite simple: cross-shareholdings create checks and balances. If one or two of these shareholdings become a huge success, then they'll invest heavily or raise funds for massive, viral expansion.

After Americans upgrade their consumption habits, then we can start thinking about more advanced retail formats like McDonald's, KFC, Burger King, or Walmart...

If the two retail companies can grow large, then they can hire professional managers and accountants to establish a set of effective modern management and financial systems.

In short, the more formal the better.

If you keep clear accounts even between close brothers from the start, you can avoid conflicts between partners over profit distribution later on.

Larry cherishes the friendship between his two partners. Besides, there are many challenges ahead, and Larry needs to gradually build a core circle around himself.

If these two retail projects are successful, there is great potential for development in the upstream and downstream sectors, such as establishing fast food production lines, bottled water factories, or canned food factories producing luncheon meat and other similar products.

Firstly, it can improve the gross profit margin of products under normal circumstances, and secondly, in the event of war, it can quickly switch from civilian products to military supplies.

At the same time, Larry also learned that the world-renowned white-feathered chicken in the United States had not yet been truly bred. Chicken meat was not expensive, but it could not be produced and supplied on a large scale like beef. This was also an opportunity for seed and livestock breeding companies...

Moreover, Larry also has his eye on Coca-Cola and tobacco company stocks...
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Larry wrote more and more on his piece of paper, just like the mathematical arc wave problem posed by the old bookstore owner, letting his thoughts wander freely.

After considering all the possibilities, Larry revised and improved his original design for his holding company, realizing that he needed to register at least two holding companies to meet the needs of future business development.

Larry went through all the ideas in his mind, placed the sheet of paper filled with dense information in front of him, and read it carefully.

“There are basically no problems now, the problem is… money! I need more money!” Larry muttered to himself.

Larry had initially thought he could use a significant amount of money from his accounts and savings for investments, but after planning it out this way, he realized he still didn't have enough money...

Fortunately, the current investments are still in the initial stages, and there is no need to invest a large amount of money all at once. Larry feels that he has a relatively long time to gradually invest the money he earns from the stock market into real businesses.

On Tuesday and Wednesday, Larry plans to visit the professionals he has met in the past few days to have them help him register a holding company and several other entities.

We need to withdraw the $1.79 in bank deposits first as a reserve for equity investment.

By Thursday, Larry will have cleared up all other things and focused entirely on the "final battle" against the Rostan gang!
Larry no longer needs to go to the betting company; he can now enjoy this meticulously planned three-week hunt at the brokerage firm.

(End of this chapter)