The Globe and Mail, Report on Business
Published January 12, 2008

Note: this article is a revised version of a previous blog posting titled Fit to be Tyed that was picked up by the Globe and Mail.

It was a fairly quiet week for business news, so the departure of an AIM/Trimark portfolio manager got a lot of coverage. Tye Bousada, the talented and high profile manager of the Trimark Fund, is leaving the company and going to set up his own firm.

Besides the fact that his former fund was AIM/Trimark’s flagship, this event is news because the company has had a string of departures over the past year. While there is still plenty of brainpower at Trimark, including Richard Jenkins, Ian Hardacre and Heather Hunter, there is no doubt the team has been depleted.

My comments below can certainly be interpreted as self serving, but I have reasons for making them. My interest and involvement with the Trimark side of AIM/Trimark goes back a long way and has gone through a number of phases. The company intrigued me because, despite its size and success, it maintained a defined investment philosophy and had a strong investment culture.

That made it unique amongst the large, diversified fund companies and was due to the strong hand of Bob Krembil, the co-founder of the company.

I became familiar with Trimark in the 1980s when I was a young sell-side analyst and used to trot over to see Bob, Dennis Starritt and Bill Kanko. I can tell you, I was overmatched. But in my short visits to their office, I learned a lot about investing and what really matters. Bob Krembil has always been a hero of mine.

Over time, I came to appreciate the way Mr. Krembil structured his investment team. Each fund had a senior and junior portfolio manager assigned to it. The pair had full autonomy to manage their fund, but worked in a supportive team environment where ideas and resources were openly shared. It is my long-held belief that people, not organizations, make money.

My Trimark interest changed gears in the ‘90s when I crossed the street to the buy side and Trimark went public. I started to research it as an investment candidate, with the result being that we made a bunch of money on Trimark Financial Corp. for the Phillips, Hager & North’s clients.

My interest more recently has focused on the way the Trimark managers run their funds. Ultimately, we designed our Global Equity Fund, and hired Scotland’s Edinburgh Partners to run it, with the ”Krembil approach” in mind.

Fund managers at Trimark have always been global in their thinking and they don’t let borders get in the way of seeking value. As a result, they are not benchmark oriented and concentrate their funds on a limited number of holdings (as much as a $46 billion asset manager can).

While this approach has been successful in building wealth for Trimark clients, it has also been out of favour for periods of time (which is the best time to buy it). Indeed, Trimark has tested its clients’ patience a couple of times, notably the late ‘90s during the technology boom and in recent years when commodities have been running. In the first case, Trimark clients won at the end of the day when the funds performed superbly after the bubble burst. I suspect they are poised for a comeback again when the tone of the market changes.

In the meantime, Trimark investors have a decision to make. First of all, they have to assess whether the research department still has the horses to manage the funds. And secondly, whether the company’s size will allow the team to execute the way Krembil, Starritt, Kanko, DeGeer, Maida, MacDonald, Graham, Farmer and Bousada did.

I don’t pretend to know all the global funds out there, but I do know that there are a limited number of ”Krembil-like” options. Mr. Kanko is back in the game, having hooked up with Laurie Davis at Hartford; and I expect other Trimark alumni will set up shop soon enough and give us other options.