Move over Mike Katchen, this whiz kid founded three separate billion dollar investment firms
|Oct 29, 2019||1|
I have been telling myself I need to improve my titles, so I am proud of the one above, because it combines three clichés of business journalism: rivalry, whiz kids and billions. At OPM Wars, everything is a pissing contest, so consider the following my competitive response to Report on Business Magazine putting Michael Katchen on its cover.
Tye Bousada is in his forties, but he did start three different billion dollar investment organizations before the age of 38 (the official cutoff for whiz kids, as decreed by the Ryerson School of Journalism). Like Katchen, Tye is a graduate of the Ivey School of Business. Tye started his career as a Procter and Gamble salesman, but then switched to the Ontario Teachers Pension Plan, where at age 28, he became one of their youngest portfolio managers in history. He then became manager of the Trimark Fund, which was originally managed by legend Bob Krembil. Eventually, with Krembil's backing, Tye co-founded EdgePoint Wealth, where he's now a key portfolio manager. Founded from nothing in 2008, the company is approaching about $30 billion in assets under management mostly from retail investors.
EdgePoint is financially stable, charging 1% fees and only having about 70 employees (and no wasteful sub-scale offices in London and New York). Tye once made a trip to the UK and collected a few hundred millions in AUM. That’s how he rolls. And he didn’t have to write some boring blog post on the money habits of Margaret Atwood to do it either. (It was an institutional mandate).
If you're the sentimental type who cares about social good, the firm claims to have made more than $6 billion in gains for clients to date, net of fees. I haven't looked at EdgePoint's returns closely, but they do appear to add some decent value over benchmarks so far. I totally agree with their buy and hold philosophy, they're probably one of the closest adherents of the Buffett approach in Canada. They only have four funds, so if you need a Halal strategy, go with Wealthsimple. They describe themselves as an investment-led firm (as opposed to asset gathering)...if only they could apply themselves at marketing, they could raise some real money.
EdgePoint Wealth Management (ie the management company behind the funds) has been formally valued at $1.2 billion dollars and has thrown off $300 million in dividends since its founding. So it's a unicorn, which Wealthsimple, for all its achievements, is not. Based on my info, Bousada owns probably around 20% of all that, maybe more.
The ROB article revealed that Katchen has bought a first home and has a mortgage. Our man Bousada is a considerably bigger player in real estate. In 1999, at age 28, he was a co-founder of Timbercreek Asset Management, which is now a global asset manager specializing primarily in real estate and some other alternative investments. Timbercreek has more than $10 billion in assets under management (though tragically, it has more than 600 employees, as real estate is labour-intensive). Even more terrifying, the firm has 19 offices around the world. I hope they're still able to eke out a profit. Although not the driving force behind Timbercreek, Tye has been an important shareholder and advisor until a few years ago. (He seems to no longer be a shareholder as of around 2016.) Also, Tye lives in a country estate in King City that Katchen would kill to have.
The other billion-dollar investment operation Tye is associated with is Cymbria, a publicly traded closed-ended fund. Cymbria raised $234 million to be managed by EdgePoint, it was their first fund in 2008. In addition, Cymbria owns a 20% stake in EdgePoint (the manager), for which it only paid $500k, resulting in a near $300 million payoff for shareholders so far. (I talked about some of this in an earlier piece on Bob Krembil). Overall, Tye and his investment team have created several hundred millions in value for shareholders of Cymbria and the company now has more than a billion in capital. Cymbria's success is essentially tied to EdgePoint's success, so you might say that I am adding Cymbria as a 3rd homerun just to make for a catchy title. That is partly true, but Cymbria is its own entity and is in the early stages of launching a Berkshire type acquisition strategy. I will write about that in my next post.
So there you have it, one man behind three billion dollar, profitable operations created in 20 years and as best as I can recall, he’s never had a magazine cover. At OPM Wars, we haven't figured picture technology yet, so for the sake of completeness, I should mention that Tye Bousada, on top of everything, is just as attractive as Michael Katchen, but in a more classic, less boyish way. Eat your heart out Katchen!