Swimming Naked

Q2 | May 2020

Topic: Inside Nexus

R. Denys Calvin CFA

May 12, 2020

Image used with permission: iStock/ZAAZI


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Swimming Naked

Q2 | May 2020

Warren Buffett has a wonderful line. “Only when the tide goes out do you discover who's been swimming naked.” He uses it in an investment context to refer to businesses that aren’t all they appear to be, and how the revelation of their shortcomings is inevitable when times get tough.

But the expression has application more broadly. It has been running through my mind off and on the last 8 weeks as we at Nexus have been figuring out how to operate in a “shelter-in-place” world. My variation of Buffett’s line goes something like this. “Only when you can’t be in the office together do you realize the things that won’t work unless you’re in the office together.” Each realization is usually prefaced with something like “Oh. Yeah. I guess that’s right. That won’t work so well…” Suffice it to say that that utterance has been heard rather a lot lately.

Fortunately, this isn’t a tale of drama and close calls. In fact, things are working remarkably well. We’re in touch with clients at least as often as before, if not in person. Investment decisions are getting made and portfolios are receiving all the attention they deserve and need at times like these. Even our usual quarterly reporting to clients went into the mail and onto our portal right on time last month.

Most of us have been working from home since mid-March. On any given day, only those who want, or feel they need, to be in the office are there – between two and four Nexus people. Mercifully, as an “essential business” in the eyes of the Ontario Government, we and other portfolio managers are not completely shut out of our office.

While there are some things – like mail, deliveries and producing printed materials – that simply can’t be handled from home, it is extraordinary how much can be accomplished with a combination of software, the Internet, and a little ingenuity.

All the tools we use in the office day-to-day are available to each of us through a high-security, remote access arrangement we’ve had in place for years. For sure it is getting a much bigger workout than ever before. And we’ve had to add capacity to it a couple of times to accommodate the demands of 15 people using it all day, not just one or two occasionally after hours. But each person, using whatever computer or laptop they have at home, can do all the same things there as they can in the office, without any sensitive firm or client information having to escape the confines of that secure environment.

As implied by my fondness for the Buffett quote, however, we’ve had to make a myriad of changes to have any hope of doing things as smoothly as we would in the office. Some of these are easy to describe. We had to forward everyone’s office phone to their cellphone so calls to the office wouldn’t get relegated entirely to voicemail. Procedures that depended on a piece of paper circulating from desk to desk in the office have been converted to some sort of electronic/email process. And we had to scramble to make arrangements with one supplier so their sophisticated research and trading tool that the investment team shares on a single physical device in the office could be accessed remotely.

Other things are a little trickier and have required some quick, interesting workarounds. When you pay suppliers by cheque, and it takes two to sign, you know a courier is going to be involved at a couple of stages. We can’t email something to a client for their signature if they don’t have email. Even if they have email, but don’t have a printer, we need to be able to handle that.

These are just our processes. Our suppliers aren’t standing still. They, too, are making changes that we’ve had to respond to. The most significant was our custodian’s announcement late one Sunday night at the end of March that they would no longer accept cheques from clients who wanted to add money to their Nexus accounts. In less than two weeks we modified our processes and systems so we can now “pull” funds from a client’s bank account electronically.

Many of the adjustments we’ve had to make will be permanent. They’re simply a better way of doing things than before. And for as long as we have to operate while practicing “social distancing”, we’re optimistic we’ll be able to do all the things clients count on us for. But we’re also rooting for the pharmaceutical and scientific communities to find a vaccine for this plague soon so we have the option of going back to the in-person exchanges and collaboration that make our business so stimulating and rewarding.

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