What Geoff MacDonald lacks in speed, he makes up for in persistence. Last year, the 36-year-old fund manager was concerned about his physical fitness, so he took up distance running. This spring, he ran the Boston Marathon. By mile seven, his calves were in rebellion, cramped and on fire. But he ambled on, finishing in five hours, nine minutes and 51 seconds. He came in 19,317th.
MacDonald's investors are more accustomed to seeing him near the front of the pack. Over the past three years, the Trimark Global Endeavour Fund has left most of the competition eating dust--a stellar feat given the rise in the Canadian dollar, which hurt the returns from the U.S. stocks he favours.
Unlike some Rosedale-bred money managers whose fathers read them the business pages at bedtime, MacDonald grew up around politics, not finance--his dad was the mayor of Charlottetown. "I didn't even know what a stock was," he says. Not until his third year of business studies at Bishop's University did he get turned on to the market.
But the leap to Bay Street from Maritime blueberry patches was difficult. "I was shipping off resumés like crazy for anything I saw in The Globe," he recalls. "But you're 21, you're in PEI, and your resumé says 'grass-cutting experience,' which is all it said--grass-cutting and painting. Summer jobs." Through a friend he met Keith Graham, now a heavy hitter for AGF Management, who was impressed and hired him as an analyst for the Ontario Teachers' Pension Plan Board.
There, MacDonald began to develop his style, which he says is "not that hard" to grasp.
The key is finding a company with a competitive advantage--dominant market share, great demographics, the lowest costs in an industry--and managers capable of using it. He also wants a growing business, not just a cheap stock. "I don't want to buy a company that's making a million widgets today and five years later it's still making a million widgets," he says.
How about one that makes hips and knees? "We're getting older, we're getting fatter and we're living longer," says MacDonald. Of course, everyone knows about the boomer wave, but MacDonald also knows that Indiana-based Zimmer Holdings Inc. is one of the best-run companies in orthopedics. He bought when its share price dipped after a stumble in its sales growth and regulatory concerns. At the end of 2006, it was one of the largest holdings in the fund, purchased at an average price of about $64 (U.S.) a share. In early May, Zimmer was trading above $90 (U.S.).
That's MacDonald's modus operandi--he waits for a temporary misfortune to strike a promising company. At a conference in Dublin years ago, he met executives from Ryanair, the discount airline famous for its superlow costs, low fares and full planes. "If you look at the size of the European market, you know they're going to be two or three times bigger," he says. He bought after the stock plunged following a poor quarter of earnings, and it has more than doubled.
MacDonald's success in managing global money from Toronto has earned him a following among brokers in the U.S., where his AIM Trimark Endeavour Fund is a star performer in the mid-cap category. Trimark also plans to start a new U.S.-focused fund for Canadian investors. "I've spent most of my time in the U.S. in the last six to nine months. I'm finding more value there than I'm finding anywhere else," says MacDonald. Who says you've got to be fast to win?
TRIMARK GLOBAL ENDEAVOUR FUND
|1 year %||3 year %||5 year %|
|Average annual compound returns (to March 31, 2007)||25.9||17.5||10.6|
|Index (MSCI World - $Canadian)||14.6||10.4||4.0|
© 2007 The Globe and Mail. All rights reserved.
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