Five reasons I am getting back in the portfolio management game after nearly a decade off

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As of a couple of weeks ago, after nearly a decade off, I got back into the portfolio management business, becoming an associate portfolio manager, for the i2i Long/Short US Equity Fund, with Belco Private Capital as the registered exempt market dealer for the fund. What motivated me to return to portfolio management? Here are five reasons:


What other job ensures that every day is completely different? What other career puts you on the front line of every single important news event? What job expects you to predict the future? Think about it: Portfolio managers literally need to know almost everything. That’s because everything, collectively, impacts companies, the market and investment psychology. What other job has great math on your side? You can only lose 100 per cent on a stock when you are wrong. But when you are right — oh boy — you can make 1,000 per cent, 2,000 per cent, or more. It is a challenging and dynamic position.



After 30 years working as a “salary man,” in 2011 I started a stock research business and also bought Canadian MoneySaver magazine. The shift from an employee to an entrepreneur was the best move I have ever made, and for the past near-decade I have been beating myself up for not doing it sooner. But once one gets the entrepreneurial bug it is hard to squash, so here I am now with a brand-new venture to try to grow. I have also enjoyed mentoring my partners, and Ryan Modesto, also an associate portfolio manager for the fund, now gets a chance to publicly prove his investment acumen.



The new hedge fund is U.S.-focused, because that’s where we see the greatest opportunities in the small to mid-capitalization space. In the U.S., one can find $4 billion companies that few investors have ever heard of. In Canada, there are only 134 companies bigger than that, and the Canadian market is very thin across the board. Most managers own the same stocks. The U.S., conversely, has a wide selection of investable companies in every sector. In Canada, though, sometimes there are only three or four investable stocks in a sector.



When I was a mutual fund portfolio manager, there were of course a lot of restrictions. Whether they were from my ‘boss’ (I always had one) or from a regulatory standpoint, strict rules were in place that had to be closely followed. For example, there were limits on position sizes, short selling and (sometimes) market capitalization restrictions. Borrowing money for the fund was not allowed. But a hedge fund has a much more flexible mandate. Shorting securities can help manage volatility, and leverage can be advantageous, at times. Generally, fewer restrictions results in more investment options, to try to generate good returns for investors.



Having been in the investment industry (in some form or another) for 35 years now, with a high profile, on TV regularly and with my own National Post column (for 14 years now!), friends and clients were always asking what I was doing with my own investments. It’s always a difficult discussion, because my style and investment goals might be very different from theirs. I may love a stock that they just sold, for example. It’s awkward. Now, back again as an associate portfolio manager, I have put a large amount of capital into the i2i Long/Short US Equity Fund. Friends, family and others can invest alongside me, if they choose. Or not. But at least they know where a large portion of my money is, and that is in the fund.

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*This article was first published in the Financial Post on Nov 26, 2020