Plus: Wise, Danske Bank, Happy Holidays
Every hedge fund manager remembers their first short. Mine was a stock called Commerce Bancorp. At the time, it was one of the fastest growing banks in America. Under the stewardship of its founder-CEO, Vernon Hill, the bank had spent thirty years expanding its branch network beyond its original base in southern New Jersey. By 2006, it had over 400 offices across eight states and Washington DC.
Vernon Hill treated his branches as stores; his product: deposits. “From our inception, Commerce has refined a business model patterned after the great retailers of America, i.e., Home Depot, WalMart, McDonald’s, Starbucks, rather than the typical bank or financial institution,” he told shareholders in his 2000 annual report.
His thinking was that there were two sides to banking: lending and deposits. With most banks focused on lending, his time was better spent focusing on deposits: “Banking is, essentially, a government license to borrow money cheaply. Anyone can make loans, but only licensed…