It is basically our broad definition of networking capital. We take the current assets of the business and subtract all the liabilities of the firm, except for the equity. We deduce that any company that manages to pay down that ratio over time must be generating cash somewhere in the balance sheet. We won't sell it all immediately, but we will start to sell and monitor trading and momentum in the stock very closely to make sure we are selling into demand for the company. We are always leaving something on the table for the next guy.
Companies often trade through and well above their fair value on the way up.
Occasionally, it may be a top-down or a country reason, but the most common reason is valuation based on our price target. We want to diversity away the absolute risk. We are diversified not only by sectors, but by country. We don't just want a portfolio full of cheap banks, but banks that are cheap, highly profitable, and with a secure capital structure. Banco Itau fit all these conditions.