Spanning the globe for entrepreneurs

Andrew Waight, the new man in charge of the BPI Global Small Companies fund, is set to prove that you can manage a global equity fund from Toronto just as well as it was managed from BPI Global Asset Management LLP headquarters in Orlando, Florida. The fund has been the best global small cap fund since its inception in 1993 and there will be high expectations from investors but Andrew claims that he is not hindered in the least. "Toronto is on the map, it's a global financial capital" he says. "There's no disadvantage to managing from here, and no shortage of information."

The BPI management team in Orlando wanted to focus on large cap stocks, an area that has always been their forte. They turned to Andrew, who also co-manages the BPI Canadian Small Companies fund, because he is a mid- to small-cap equity specialist with a solid technical and health industry background. It's no coincidence when you know that these are the hottest and fastest-growing sectors today.

Andrew explains his job as "scouring the world for the best businesses run by entrepreneurs." The best way to think about it, he says, is that he's looking for exciting opportunities in companies that are jumping in to fill the gaps and service emerging trends. "I'm very excited right now," he says, "because we're finally starting to see the effects of globalization, deregulation and other new global trends." These trends are spreading: trade barriers are falling, the European Union, the Asian economies are getting closer, Latin America joining the party. "U.S.-style Capitalism is taking hold in some countries where we would have never thought it possible," he remarks, "like Eastern Europe and to a certain degree, China."

Some of the downside of global investing is also disappearing as political risk, patronage, fraud and accounting method differences are beginning to fade away. "When accounting standards are harmonized," Andrew says, "companies are easier to compare."

All these trends are creating the necessary environment for small, dynamic and entrepreneurial companies to achieve the type of growth that could churn out the next Intel or Microsoft. And Andrew is very excited about the opportunities that the Internet is making possible for companies. "It's creating new trends, new markets and new opportunities," he says.

Last year was a big-cap market and small cap stocks are now very undervalued compared to the large caps. Andrew is very optimistic about the future. He focuses on attractive companies with growth potential at a reasonable price, and aims to buy a company at a price based on a discounted cash flow.

One of his favourite stocks is a Canadian company that could be instrumental in the success of online shopping by ensuring successful fulfillment of orders. This past e-Christmas showed that many e-tailers were not prepared for the volume of orders. Descartes Systems software takes on the challenge by optimizing truck delivery routes, re-routing in real time, managing the delivery schedule and tracking the packages carried by the fleet. As an additional benefit beyond ensuring shopper satisfaction, the company also saves its clients a large amount of money.

Another stock Andrew likes is Telelogic, available only on the Swedish stock market. It is a perfect example of a company taking advantage of a new trend, a new market and going in to fill the void. Scandinavian companies have a reputation of knowing the wireless industry better than anyone else, and this company is contributing to that reputation. "There is a huge transformation underway right now," Andrew says, "where you use your phone to do much more than talk. Somebody has to write the software and build the tools to do that," he adds, "and that somebody is Telelogic." The company has solid cash flows and is priced well even under traditional methods of valuation (that means it's a tech stock that is not selling at tech stock prices).

Levi Folk, Richard Webb and Peter Diplaros are Investment.com mutual fund specialists and editors of the Fund Counsel newsletter. They can be reached by e-mail at peterd@hqinvestment.com.