Geoff is one of the most successful money managers in Canada. He has been professionally investing now for over 25 years and has one of the best investment track records in North America, which is no small feat.

 

He started his investing career at Ontario Teachers Pension Plan (one of the largest pools of investment capital in Canada). He then spent a bunch of years honing his skills working under Bob Krembil (The Warren Buffett of Canada),  co-founder of Trimark Investment Management.

 

Then about ten years ago he co-founded Edgepoint Wealth Management where they currently have one of the best investment track records in Canada. The firm now manages roughly $15 billion in assets.

 

This is quite an achievement for a guy who grew up right here in Charlottetown! I spent some quality time with him  earlier this week.  

 

Here is the summary of what I learned during our discussion:

 

• Edgepoint now employs 65 people.
• The investment management team is now up to 8, started with 2. In my opinion, these are some of the most brilliant investment minds in this country. They have hired 2 young protégés this year and have a well thought out plan to mentor them.
• Key to their success is keeping top talent. Culture of success is critical.
• Geoff thinks we are closer to the end of this economic cycle than the beginning.
• Their team is positioning the funds with this in mind, looking for more HIGHER QUALITY businesses that can still double their earnings over the next 5-7 years even if we have a more challenging economy.  He gave an example of a company they own called TE Connectivity, which manufactures sensors for the automotive industry, among other things. Because there are so many more sensors used in cars today, they continue to see strong growth even as car sales begin to decline.
• Real Estate prices in PEI can continue to go up, so long as they remain below replacement costs (what it would cost to buy the lot and build the same house on it today). May have been significantly undervalued for years. Lack of supply in Charlottetown could keep prices stable.
• Young people are going to have to get used to living in smaller spaces due to affordability.
• Geoff is confident that their team can still generate strong returns over the next 10 years, but not as good as the last 10. Today we have rising interest rates and higher valuations, making the next 10 years more challenging.
• Given that we’re in a late cycle environment, we need to be thinking about the next recession. EdgePoint will not be immune to it, but how we act as investors will have a drastic impact on future returns. This means not selling equities at a discount (when they fall) and, if possible, using the price declines to our advantage by being buyers.
• Geoff and Tye (the two founding partners) are planning to work for the next 20 years at least. They will slowly pass over investment duties to the younger generation as they hone their skills and take on more ownership. This will transpire over the next 10-20 years. Geoff is confident in their ability to continue to recruit and retain top talent.

We remain very impressed with EdgePoint’s culture, values, and investment approach. We are confident that they will continue to deliver on their primary goal – building long-term wealth for their investors.