Why Jimmy Pattison has been building up a cash position in recent months
Canadian billionaire Jimmy Pattison says his businesses are stockpiling cash in preparation for a possible downturn as rising U.S.-China tensions spur global uncertainty.
“We are certainly watching our dollars maybe a little bit tighter than we were before,” Pattison said in an interview Thursday with BNN Bloomberg Television from his Vancouver headquarters, where he runs a conglomerate that operates across 85 countries.
The 90-year-old titan says his group began increasing its cash piles about six months ago.
“We do a lot of business in the United States and we’ve been doing more and more business in China,” Pattison said. “So what happens politically has a dramatic effect with us -- but we’re diversified and that’s good.”
The risk is particularly acute for lumber producer Canfor Corp., the biggest public holding in the Pattison Group’s $10.6 billion portfolio. Canfor’s two biggest markets in recent years have been the U.S. followed by China. Pattison’s Great Pacific Capital Corp., which already owns 51 per cent of Canfor, offered last month to take the lumber company private for about $982 million, or $16 a share, after the stock fell 69 per cent in the previous 12 months.
“The board has to get a valuation of what they would consider to be a fair price,” he said. “They should have something within the next month or six weeks.”
Pattison, Canada’s third-richest man with a fortune worth about $6.4 billion according to the Bloomberg Billionaires Index, is often dubbed Canada’s Warren Buffett. He built an empire spanning a dizzying array of industries: supermarkets, lumber, fisheries, disposable packaging for KFC, billboards, as well as ownership of Ripley Entertainment Inc. and the No. 1 copyrighted best-seller of all time, the “Guinness World Records.”
On one wall of his office overlooking the Vancouver Harbour, there’s a framed photo of Pattison and Buffett with a message scribbled across the top by the head of Berkshire Hathaway Inc.: “To a man who’s built a business as interesting as Berkshire’s.”
Many of those businesses were built on close U.S.-Canadian ties, but growth in recent years has come from China. Asked if he believes a time is coming where businesses will have to choose between either the U.S. or China, he answered, “I don’t know. I hope not.”
China has become particularly worrisome for Canadian businesses since Canada arrested the chief financial officer of Huawei Technologies Co. Meng Wanzhou on a U.S. extradition request last December. The case has sparked a diplomatic crisis that’s plunged Canada-China relations into their darkest period in five decades and halted nearly $5 billion worth of Canadian agricultural imports to China.
In such unpredictable times, Pattison’s tilt appears to be toward the U.S.
“We just are concentrating on where we think the stability of what we have can continue,” he said. “In our case, we’re interested in investing more in the U.S.”
Pattison, one of Canada’s most famous rags-to-riches legends, was born during the Great Depression into a family where money was so tight he wore clothes stitched together from the castoffs of other children. He built Canada’s second-biggest private company from a single, loss-making Pontiac-Buick car dealership in Vancouver in 1961.
He remains chairman and chief executive officer of the Jim Pattison Group and isn’t about to give those positions up, even as he turns 91 on Oct. 1. “I have no plans on stepping down.”
But he also adds unperturbedly that lately he’s been refining his group’s succession plan that maps out a 25-year strategy.
“If something happened to me after this interview, we’re all set to go,” he says with a big grin. “Nothing has to be done, nothing has to be sold, and we’re in good shape.”