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Dundee upstaged on trust news

IPO of its Goodman money manager could be valued at up to $250-million, KEITH DAMSELL writes

MUTUAL FUNDS REPORTER

On Oct. 11, BCE Inc. trumped Dundee Wealth Management Inc.

That day, Dundee Wealth said its board of directors had approved the conversion of its investment management division, Goodman & Co. Investment Counsel Ltd., into an income trust. Unfortunately for Toronto-based Dundee, the news was buried in the back pages of the business press by an avalanche of coverage of telecommunication giant BCE's same-day decision to go the trust conversion route.

A prospectus detailing the offering of 15 per cent of Goodman & Co. to the public is expected to be filed within the next several months. The company accounts for about 80 per cent of Dundee's $1.5-billion stock market value, equity analysts reckon. Using back-of-the-envelope math, and incorporating a 30-per-cent income trust premium, one comes up with a value of up to $250-million for the offering.

In a September report, Toronto brokerage Westwind Partners noted Goodman may be worth as much as $14.93 a unit. The money manager, with about $23-billion in assets, is priced at "a whopping 50-per-cent discount to publicly traded competitors," Westwind said. "This anomaly is unlikely to last."

Parent Dundee is a company in transition. In recent months, Dundee has hired a long list of seasoned Bay Street executives, sunk $25-million in to the launch of a Schedule I bank and poured resources into its Dynamic Mutual Funds division, making it one of the country's fastest-growing fund companies.

David Goodman, Goodman & Co.'s president and chief executive officer, is tight-lipped about specific strategy. Growth will continue and proceeds from the Goodman offering will be used to build the money manager's position in a consolidating market, he said.

The IPO "will provide us with a better currency to participate in that consolidation," he said. "There are many businesses that we have started that are very early, and we look forward to a lot of growth."

Guess Who's helping promote

Manulife's IncomePlus?

Takin' care of my retirement income portfolio . . . every day!

Randy Bachman and Burton Cummings have been hired to play what's been dubbed The Boomer Retirement Bash of the Year. The Nov. 8 gig at Toronto's Roy Thomson Hall is the official kickoff of Manulife Financial Corp.'s IncomePlus, a guaranteed income fund marketed to retiring baby boomers.

The Guess Who front men aren't the first aging rockers to front the fund industry. Prior to his messy divorce saga, former Beatle Paul McCartney found time last year to do a series of Fidelity Investments Canada Ltd. television ads.

New CI manager no slouch

when it comes to high returns

Fans of Kim Shannon's CI Financial Income Fund may want to delay making the "sell" call to their financial adviser even though MS. Shannon no longer runs the fund.

The new manager of the $5-billion fund, Daniel Bubis, who heads Tetrem Capital Partners Ltd., has no plans to mess with the fund's winning formula.

"We're not going to go in there willy-nilly and change things," Mr. Bubis said. "A lot of the names [in the portfolio] we would have added, had we had this mandate from day one, are already in the portfolio."

Earlier this month, the Winnipeg-based money manager replaced Ms. Shannon, who ended her long partnership with CI to form a joint venture with Brandes Investment Partners & Co. There is some speculation loyal investors will follow Ms. Shannon to Brandes -- and Toronto-based CI, Canada's third-largest fund company, is gnashing its teeth.

Little-known Tetrem is no slouch when it comes to performance. Since 1993, it has managed the United-Canadian Equity Pool on behalf of United Financial Corp., a unit of Toronto's Assante Wealth Management Ltd. The $1.4-billion fund has returned an annual average of 16.6 per cent for the 10 years ended Sept. 30, compared with CI Canadian's 13-per-cent average during the same period.

There's likely to be little turnover in the CI Canadian portfolio in weeks to come as there's few differences in investment management style between Mr. Bubis and Ms. Shannon. Both are value managers, favouring depressed stocks with strong fundamentals that are poised for recovery.

"When things look a little bit negative, we think that's when you get a great opportunity to buy a really good company," Mr. Bubis said.

The CI fund holds 37 Canadian stocks, most blue chip stalwarts like Royal Bank of Canada, Petro-Canada and Sun Life Financial Inc. Mr. Bubis may increase the portfolio modestly over time, holding between 35 and 55 Canadian names.

The most significant change will be foreign content. At the end of September, only 78 per cent of the portfolio managed by Ms. Shannon consisted of Canadian stocks. The rest was divided equally between foreign stocks managed by Altrinsic Global Advisors LLC and the fund's cash reserve.

Going forward, Altrinsic's portfolio allocation will be doubled to about 20 per cent. And the Tetrem team will increase foreign exposure by holding U.S. positions within their 80-per-cent interest. The goal is total foreign content of between 30 per cent to 35 per cent.

Keith Damsell is editor of GlobeinvestorGOLD

kdamsell@globeandmail.com

© 2007 The Globe and Mail. All rights reserved.

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