Fosun: China's Warren Buffett?

09/22/2015 10:00 am EST


Tony Daltorio

Editor, Investors Alley Premium Digest

Warren Buffett's legendary investment prowess wins him fans all over the world. China is no exception, notes Tony Daltorio in Daily Profit.

At this year's annual meeting of Buffett's Berkshire Hathaway (BRK-B), the delegation from China numbered 2,000.

That is double last year's figure and forced the company to set up a room for the Chinese that had simultaneous translation of the question and answer session.

For me, the most interesting bit of this Chinese capital movement is to watch what the “Warren Buffett of China” is doing.

He is billionaire Guo Guangchang. Guo is the chairman of China's largest private conglomerate, Fosun Group.

The parent company of the $8 billion Fosun Group is Fosun International Ltd. (FOSUY).

Guo has described himself as a pupil of Buffett. He added that he believes Fosun is where Berkshire was 30 years ago.

Fosun is building itself using the Buffett model. It's a model that is centered on insurance, but which then uses the funds from that cash cow to invest in diverse businesses.

Guo concentrates in three sectors: financial services, healthcare, and consumer goods. Why those sectors? He said that he wished to fulfill the needs of China's middle class.

Guo said that the middle class now numbers 300 million people and will rise to between 500 million and 600 million people in the years ahead.

But Guo is not just adding Chinese companies to his portfolio. Fosun spent over $4 billion this year alone on acquisitions. Last year, it spent nearly $26 billion in a true spending spree.

Among the European firms he has scooped up positions in are tourism groups Club Med and Thomas Cook; fashion brands Tom Tailor and Folli Follie; Portuguese insurer Caixa Seguros; Belgian financial services company BHF Kleinwort Benson Group; and German bank Hauck & Aufhauser.

Fosun owns One Chase Manhattan Plaza, built by David Rockefeller, in New York. It also owns a stake in Cirque du Soleil. Its venture capital arm is also very active in funding a number of startups around the globe.

Fosun's shares doubled in price earlier this year and now, like the Chinese stock market as a whole, has given up those gains. Investors could learn a lesson from Buffett and Guo and take the long-term view.

The sell-off is offering investors a second chance to get in on China's version of Berkshire Hathaway at a bargain price. Sounds like something that should appeal to a patient, value investor.

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