Author Topic: VB - Versabank  (Read 2838 times)

valueinvestor

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Re: VB - Versabank
« Reply #10 on: February 11, 2019, 09:47:26 AM »
I think it had ~137.5m market cap when I wrote that or I just made a small mistake.  25m pre tax at 5.5x is $137.5m.  Current market cap is ~152m.

I have no insight into their real estate book other than (low) historic default rates which people concerned with Canadian housing would take issue with (understandably).  I'm less concerned about their portfolio given its geography/performance but obviously it could wind up having bad surprises. 

I do have some insight into their receivable purchase program.  Versabank retains a cash holdback 5 times the worst loan loss experienced by the borrower in the last 10 years as a buffer.  If one of the loans goes into default for 90 days Versabank sells the loan back to the vendor at cost and takes no loss or reduction on the value of the receivable.  That is my understanding based on the work I've done.

That in conjunction with their historic loan loss ratios gives me confidence I'm getting more than 75 cents on the dollar for these loans.

I get the historic growth rate (which I believe is structural and will continue) for free.

Time will tell.

Never mind, I think you have it right, going off memory. I typically include taxes as an expense, when calculating earnings. Especially since there NOLs has been used I think, no?



bigbluffzinc

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Re: VB - Versabank
« Reply #11 on: February 11, 2019, 11:26:28 AM »
At the end of the day taxes are an expense and I include them too but when I'm doing my own work (comparing opportunities) I'm using pre-tax numbers so things are standardized and faster.  When I use after tax numbers unless something is going on (NOL's/advantaged industry/tax credits/etc) I standardize the tax rate for my own comparative purposes.

Might be a mistake.  Just being honest about what I'm doing.
« Last Edit: February 11, 2019, 11:28:29 AM by bigbluffzinc »
Current Portfolio: VB, LBTYK, HWO, BAM, AGN, LNR, FB

valueinvestor

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Re: VB - Versabank
« Reply #12 on: February 11, 2019, 06:02:51 PM »
At the end of the day taxes are an expense and I include them too but when I'm doing my own work (comparing opportunities) I'm using pre-tax numbers so things are standardized and faster.  When I use after tax numbers unless something is going on (NOL's/advantaged industry/tax credits/etc) I standardize the tax rate for my own comparative purposes.

Might be a mistake.  Just being honest about what I'm doing.

Thatís perfectly understandable.