Resilience According to Boivin and Letko?

I attended a CFA Montreal luncheon today at the Sheraton hotel titled Resilience According Pierre Boivin and Peter Letko:
How investment pros navigate challenging situations, manage change and bounce back from setbacks.

Learn from the personal experience of Pierre Boivin and Peter Letko, CFA; how they mitigate risks, react to adversity, overcome challenging setbacks.
  • How they survived financial crises and other professional or personal challenges.
  • How they manage stakeholders.
  • How they manage risks.
  • What are their coping strategies to face setbacks and stress.
Here were the panelists and moderator (click on image):

Let me first thank Christelle Lenoir of National for sending me an invitation to this event.

I typically don't go to these events but this one intrigued me because I've never heard or seen Peter Letko and Pierre Boivin, only heard of them by reputation.

The topic, resilience, also intrigued me not because I'm a stranger to it. I can easily write THE book on resilience given all my life experiences but I wanted to hear perspectives from more experienced pros.

This was a more intimate affair and what I liked about it was these two classy gentlemen shared a lot of personal experience, values and some professional insights on how they learned all about resilience from their parents and mentors and through their unique experiences at work.

The best way I can describe it to you is let's say you were going to have dinner and wanted to invite interesting people with a wealth of knowledge and experience, these two would be at the top of my list.

Before the event started, I met a very nice lady who now runs her own family office. She impressed me with her investment knowledge and basically figured out on her own most private wealth outfits at the big banks are "full of it" as are many investment managers.

She told me over 95% of investment managers can't beat the S&P 500 over a three-year period and when she sees Canadian brokers investing primarily in Canada, charging outrageous fees, she's hardly impressed (she did tell me she invested in Manulife's Real Assets fund and got 7% and was fine with paying higher fees).

Moreover, she told me "it's all about matching assets with liabilities," I like to travel and the "Canadian peso" hasn't been a good currency these last few years.

I told her Canadian equities are mostly cyclical in nature -- big banks, energy, mining and industrials -- so unless you have a very favorable view of global growth, stay away. I much prefer US stocks and the US dollar over the long run and any broker who tells me "I don't invest in technology" has significantly underperformed the market no matter what they claim.

I can't say I disagreed with her observations on how the investment industry is full of charlatans, seen plenty of them over the years, but what I told her is Letko, Brosseau & Associates are the real deal, they have a very long and enviable track record and I wouldn't flinch one second recommending them to her or any other high net worth individual looking for professional money managers to manage their assets.

In fact, since its inception in 1987, LBA has delivered $13.5 billion of value added to its clients (click on image):

You'll be hard-pressed  to find any other investment manager in Canada with such a track record spanning over decades.

Are they perfect? No, nobody is, but what I liked about Peter Letko is his honesty in sharing some of the more difficult times.

For example, when Nortel hit 40% of the Toronto Stock Exchange capitalization, he said it was stressful visiting clients explaining why they didn't own any. "We looked at the numbers and the company wasn't making any money and we saw insiders selling their shares in droves so resisted buying any shares. In the end, Nortel went bankrupt and we went on to manage billions."

I grinned because that whole Nortel saga brought back haunting memories. At the time, I remember taking part in a meeting at the Caisse when then-president and vice-president, Jean-Claude Scraire and Michel Nadeau were asking senior VPs whether they should add to Nortel as shares fell to $60.

I remember the Caisse's then CIO, Pierre Lussier, was pounding the table to buy but Adel Sarwat who was the senior VP of global equities was much less enthusiastic and reluctantly agreed.

I myself made money on Nortel buying call options early on, kept buying calls and amassed an over $50,000 position in Nortel calls in my late twenties and thought I was going to retire stinking rich.

That didn't pan out so well for me, the Caisse and millions of Canadians who got royally screwed investing in the Nortel mania (till this day, my father keeps cursing "Frank Dunn and the Nortel thieves" and thinks the stock market is nothing but speculation).

Anyway, back to Peter Letko, he talked about the 2008 crisis and said they thought they were in pretty good shape, selling cyclical shares prior to the crisis because the "US savings rate hit zero" as the housing frenzy hit a peak and bought solid companies like Pfizer at $25 a share and some German utility company, but they too got clobbered during the crisis.

He said "all you could do is sit and wait" but he called it the "investment opportunity of a century" and in retrospect, it was, with a lot of help from Hank "the Tank" Paulson, Ben Bernanke and Tim Geithner and a whole lot of quantitative easing (QE which I predict is coming back soon).

What I remember from back then is that it was insane, unlike anything I've seen before. The meltdown was nothing compared to 2008, there was real tangible fear, unlike anything you can possibly imagine unless you lived through it.

For his part, Pierre Boivin talked about his life experience and it's quite an interesting life.  At the age of 25, he founded Norvinca Sports which would become the largest sporting goods distributor in Canada. In later years, he would become the CEO for Canstar Inc., the company which owned the Cooper and Bauer sports equipment brands.

From September 1999 to June 2011, he was the President of the Montreal Canadiens, succeeding Ronald Corey.

Mr. Boivin spoke of "having a long-term plan" and "executing on the plan." He said after accepting the job for the Canadiens, he took six months to visit other sports franchises to benchmark best practices in everything including managing real estate.

He said some of the most incredible influences in his life were his stepfather who helped him set up his first business and hockey legends Jean Beliveau and Bob Gainey. "I admired both of them, Jean was a class act till the day he died and Bob is the epitome of resilience. When he lost his daughter and later his wife to cancer, he went through a very difficult time and yet he always remained strong."

One thing I liked about what Pierre Boivin said is when you succeed, you have a responsibility to help others. "Those were the values instilled in me at a young age and those are the values that guide me today." And he added: "Helping isn't just about writing a cheque, it's about rolling up your sleeves and doing anything you can to help charities and organizations in need."

Mr. Boivin had a few choice words about the younger generation and that included his children who are adults now: "Analysis, paralysis. You spend too much time analyzing something and take no decisions."

In terms of dealing with stress, he said he trains every day and sleeps like a baby, a full eight hours a night. He added "I'm not stressed but others say I stress the hell out of them!" which made the audience laugh.

He also shared a story about when Bob Gainey brought up Carey Price from the minors at a young age of 19 after stunning the world when he drafted him. "Bob told me he's dominating the minors, it's time for him to play with men. He's going to screw up in the first three years so it's best to get the criticism out now (as Montreal fans are notoriously critical of their hockey team):

Anyway, Pierre Boivin struck me as a very smart and classy man with great business and life experience. He said he's surrounded by a great team at Claridge and his job is to be "le chef d'orcheste" (ie. the composer).

At the end, Peter Letko spoke very kindly of his partner, Daniel Brosseau. He called him "a true renaissance man, an engineer/ MBA student who reads on many subjects, loves arts and is a great partner and friend."

He said the two met working at CN Investment Division, they used to travel together for work, and decided to open their own firm in 1987.

When asked if his partner ever stressed him, Mr. Letko said: "Only once, a long time ago, when I walked into the office early one morning and saw Daniel on the floor with what was our server in pieces. He said 'don't worry, Peter, I'm fixing the DRAM47 and it will be up and running before the market opens."

I remember seeing Daniel Brosseau many times on the train as I headed home, always reading something.

Mr. Letko also spoke highly of his mentor at work, Ron Woods, "a man who taught me how to interview companies."

In terms of investments, he still likes airlines stating "as people make money, they travel more" and he said they still own Air Canada shares after amassing a 20% stake in the company when shares were cheap."

He said he likes their portfolio more now since "the multiples came down significantly at the end of last year and are now at 12 or 13 times earnings."

[Note: I track LBA's portfolio every quarter when I go over top funds' activity.]

In terms of his investment outlook, he ended it on an optimistic note saying there are almost 8 billion people on earth, most of them are starving but over a billion live in the developed world and secular economic growth will continue, companies are managed much better nowadays."

Interestingly, before that comment, he said how he admired his parents who fled Czechoslovakia during the second world war with "nothing but me on their back" and came to Canada. "Their resilience shaped me and led to my success" which explains his optimistic outlook.

At the end, the moderator, Ludovic Dumas, VP Direct Investments at Claridge, asked both men which books they recommend.

I can only remember one of them that Peter Letko recommended, Back to Beer...and Hockey: The Story of Eric Molson, because it was written by a family friend, Helen Antoniou who is married to Andrew Molson.

Mr. Letko said: "It's a great book because it shows you how even blue-chip companies can have major board dysfunctions. In fact, I liked the book so much, I bought copies for all my board of directors."

I'm biased because Helen is a friend and I know she put her heart and soul into writing that book, but truth be told, it really is a great book about a very interesting, successful and humble man, her father-in-law, Eric Molson.

A couple of years ago, I was invited to Eric and Andrew Molson's birthday party and the story that stood out to me was something Geoff Molson shared with family and friends. It was about how as kids they were once walking with their father and saw a man who seemed homeless and down and out. Eric, their father, turned to them and said: "You see that man, be nice to him, he might be a customer of ours."

I don't know why but that story stuck with me and if you ever meet the Molson family, you'll see the sons are like their father, engaged with the community, low key and humble.

Anyway, I've shared enough. I was surprised I didn't see many people I knew at this event because it really was a great one. The next CFA Montreal event is on March 28 featuring Bob Woodward discussing the age of American presidency.

That should be a great one too, over 600 people are attending it, but I'm going to be in Toronto that day attending a CFA Toronto conference on pensions and looking forward to a panel discussion featuring Marlene Puffer, Jean Michel, and James Davis.

I did get to meet someone from the Caisse at this lunch, Frédéric Godbout, Senior VP Strategic Partnerships which is a new group headed up by my former boss, Mario Therrien. Frédéric handles partnerships with large family offices and the Caisse struck a deal with Claridge which I discussed when I went over pensions and cybersecurity.

I told Frédéric I'll put him in touch with Joseph Kruger and Greg Doyle, VP Investments at Kruger, since they are one of the most sophisticated private company investment shops I know in Montreal and Mr. Kruger and Greg are extremely impressive, they really know their stuff.

That's all from me, hope you enjoyed reading this comment, I enjoyed writing about it and enjoyed hearing Pierre Boivin and Peter Letko speak.

In the end, I introduced myself to Mr. Letko and told him one of my mentors at McGill, Tom Naylor, is a long-time investor in his fund and was always very pleased. I also told him I liked his story about his parents and how it shaped his resilience and optimistic outlook on life.

Below, the trailer of the movie The Martian featuring Matt Damon. Peter Letko referred to it a couple of times when discussing resilience so I'll watch it because I haven't seen it yet.

I embedded the trailer from my favorite movie of all-time, all about resilience, as well as my favorite speech on resilience from Rocky Balboa to his son. "It's all about how hard you get hit and keep moving forward!".

Lastly, my family friend and author Helen Antoniou discussing her book Back to Beer...and Hockey: The Story of Eric Molson, on Breakfast Television Montreal.

Helen did a great job writing this book and it definitely doesn't read like a sterile business book, I was very engaged from the first pages. You will learn a lot about the resilience, intelligence, generosity and humility of Eric Molson and you will learn a lot about what it takes to manage a successful family business through many generations.