Well not quite.
I was recently interviewed by Globe and Mail. It is quite a revealing interview and at least puts a face to the name Petty Cash.
Check it out here.
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Petty Cash · Value investing in Canada
Nice interview. I have read Larry’s column for years, it is nice to read a profile about someone that I actually know! Keep up the good work!
Nice.
Question though. If your worst ideas, some banks, were outside of your circle of competence, how could another bank have been your best idea?
Thanks Saj.
Some explanation is required here…
The reason the US banks were out of my circle of competence is that I didn’t understand how the great purge of their bad loans would look and what that would require from a capital standpoint. It seems that they were still waiting for all the cockroaches to emerge while hoping there wasn’t going to be the need to raise capital from a regulatory standpoint. It didn’t help that I knew nothing about their local retail presence. What I am trying to say is that I lacked the understanding of the drivers for each individual bank.
For CWB… I can tell you that according to a few ratios they are among the best (if not the best) bank in Canada. That’s still not enough to take the large position though. I have a few friends that work for the bank who speak highly of the banks discipline. Though many Canadians feel that our bank executives were “better” or “smarter” than their counterparts south of the border, I think that is complacency. They were/are forced to act smarter thanks to our regulators. When our real estate market turns we will see who is swimming naked in Canada. Though I think the ramifications won’t be as harsh on the balance sheets of the banks in Canada as they were in the US. CWB was still growing the deposit base through the recession, and has a great culture. So the investment made sense.
Hope this clarifies some things.
Dean