This week we continue our conversation with Rob Morris, founder and managing partner of Olympus Partners. Prior to founding Olympus in 1988, Rob held a variety of management positions in various manufacturing and financial services businesses at General Electric Corporation, the last of which was Senior Vice President of GE Investment Corporation, where he managed GE Pension Trust’s $1.6 billion private equity portfolio. Olympus manages over $8.5 billion on behalf of corporate pension plans, public retirement systems, university endowment funds, and the executives of Olympus’ portfolio companies. Second of two parts – View part one.

TLL: Where’s the trade right now on financial service companies?

Rob Morris: They’ve been 15-20% of our portfolio investments historically. We’ve taken advantage of macro events (e.g. 9/11 or Katrina) with micro approaches. Our investment in Churchill, for example, back in 2008 when we infused new capital to support your firm. Or our investment in Neptune Finance when we raised their CLO capacity with equity and took advantage of crushed senior debt prices.

Sometimes you confront market fear and loathing, buying debt in good credits, then watch as the valuations went from deep discounts to par. Our investment in Eldorado when we bought that $1 billion of California bank’s assets and sold later to Zion’s. Or a series of bank roll-ups in Oklahoma.

We take advantage of regulations where we can. Banks were “too big to fail,” but have only gotten bigger. There may be forced divestitures down the road. Given all the news on Bitcoin and Ripple, there will be companies that can better secure your financial information. Same as in the 1990’s with businesses like Entrust that created PKI [public key infrastructure] security for healthcare and banks.