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<span style="font-weight: bold">Michael Lee-Chin: Unshakable...</span>
Michael Lee-Chin persevered through seven years of losses and criticism before he finally sold the company he built. He wouldn't change a thing. Lee-Chin sits down with Canadian Business for a frank conversation.
By Steve Maich
Michael Lee-Chin bought AIC in 1987 and quickly became a legend in the mutual fund business. Emulating the patient, deep-value philosophy of Warren Buffett, he built the firm into one of the country’s most powerful financial brands as he amassed a personal fortune of more than $2 billion. AIC’s assets peaked at $15.4 billion in 2002, but the past seven years have not been kind. Poor results and dwindling assets tarnished AIC and its billionaire founder, much to the delight of Lee-Chin’s rivals and critics. This month, he hands over control of AIC’s Canadian mutual fund business to Manulife Financial. But the strain of the past few years hasn’t changed much about Canada’s most prominent investor. He is still the towering, smiling optimist who quotes his business heroes constantly, and speaks in parables about the secrets of financial success. His belief in the mantra of focus and patience remains unshaken. A week after he sold AIC, Lee-Chin sat down with Canadian Business editor Steve Maich for a frank conversation about seven years of struggle, the damage he has sustained to his reputation, and how he plans to re-establish his legacy in Canada, and beyond.
<span style="font-weight: bold">I should start out by offering you congratulations.</span>
Thank you.
<span style="font-weight: bold">But I have to tell you that for the past three years I’ve had people saying to me, “Michael Lee-Chin’s going to sell AIC.” I always said, “No, Michael Lee-Chin is not going to sell. He is AIC, and AIC is Michael Lee-Chin,” and then I would read you say, “I’m not going to give up on my dream,” and I would feel very smart. And now I’ve got people calling me. …</span>
They’re throwing it back in your face (laughing). Ah, well.
<span style="font-weight: bold">So is the dream over?</span>
The question is, What is the dream? How do you define yourself? No, the dream is not over, because we sold our retail mutual fund business to Manulife. We will be managing the Advantage series of funds, the Diversified Canada Fund and the Canadian Focused Fund. I will be managing the Advantage Fund, which I’ve managed since 1987. That is my legacy, because from the get-go, Steve, I said to myself, “I’m going to manage this fund in a way that is 100% akin to how wealth is created, 100%.” And I am not veering.
<span style="font-weight: bold">There’ve been many opportunities over the past 10 years for you to sell at a much higher price.</span>
Yes.
<span style="font-weight: bold">Why sell now when you could have sold for so much more before?</span>
It’s easy to tell you in retrospect! Retrospective thinking is perfect, Mr. Steve Maich, OK? But you’ll recall, in 2007 I sold Berkshire to Manu. I took Manu stock, 100%. In 2009, I sold the AIC Canadian retail mutual funds business to Manu. I also am going to take 100% Manu stock. So, as a value investor, am I really leaving the game, or am I transferring ownership of AIC and getting ownership of Manulife shares?
<span style="font-weight: bold">I’ve gotta think it was difficult.</span>
It is difficult. Not was — is difficult, Steve.
<span style="font-weight: bold">Can you talk to me a bit about why?</span>
Because any time you have to make an indelible change in your life, any time a change is one that you have been identified with for 22 years … my children, that’s all they’ve known, is AIC. I have been synonymous with AIC. So any time you have to make a change that needs a separation of sorts, it’s always difficult.
<span style="font-weight: bold">It’s been a rough few years. For the past half decade, the strategy of buy and hold has produced poor results.</span>
Yes.
<span style="font-weight: bold">And your most loyal customers — the people that you’ve dedicated yourself to building wealth for — have done the worst. Were you just too stubborn for your own good?</span>
Good question, Steve! Yes, I’m dogmatic, and I went into this knowing the volatility that will be associated with having principles that are so rigidly defined. But on the other hand, the rewards of having principles is personal fulfilment, is legacy-building.
When I first got into AIC, I knew that was the risk and the reward. And at the end of the day, all of us were seeking to build a legacy that society can be proud of. And you certainly won’t build a legacy that society can be proud of by doing what everybody else is doing. Was I too rigid for my own good? Well, what was my choice, Steve? If you have principles, and if you’re thinking long term, and if you really believe your principles are right, net worth is secondary.
Now, so let us look at what I could have done. Suppose, Steve, in the middle of this asset deterioration, I’d gone down to main street, to Bay Street, and stood at a corner of Bay Street and took a sampling of the average passerby saying, “Average passerby, I’m depressed. I see my net worth shrinking. Assets were $14 billion. They’re now $8 billion. What should I do?” In 1999, the average passerby would have said, “Mike, get with it! Don’t you see what is happening? What you have, the customers don’t want.” So what didn’t we have in 1999?
<span style="font-weight: bold">Tech stocks.</span>
Exactly. We didn’t have tech stocks. So, “Mike, you want to keep the assets? You want to keep your net worth up? Just start a tech fund and clients will leave the Advantage Fund and go into tech. You still keep your assets.” But could I have done that? Would it have been in keeping with my principles? :- 1st page of a long read.
For pages 2,3 & 4 see Link
http://www.canadianbusiness.com/managing...0001&page=1
_________________________
"At a time of universal deceit," wrote George Orwell, "telling the truth is a revolutionary act."
Michael Lee-Chin persevered through seven years of losses and criticism before he finally sold the company he built. He wouldn't change a thing. Lee-Chin sits down with Canadian Business for a frank conversation.
By Steve Maich
Michael Lee-Chin bought AIC in 1987 and quickly became a legend in the mutual fund business. Emulating the patient, deep-value philosophy of Warren Buffett, he built the firm into one of the country’s most powerful financial brands as he amassed a personal fortune of more than $2 billion. AIC’s assets peaked at $15.4 billion in 2002, but the past seven years have not been kind. Poor results and dwindling assets tarnished AIC and its billionaire founder, much to the delight of Lee-Chin’s rivals and critics. This month, he hands over control of AIC’s Canadian mutual fund business to Manulife Financial. But the strain of the past few years hasn’t changed much about Canada’s most prominent investor. He is still the towering, smiling optimist who quotes his business heroes constantly, and speaks in parables about the secrets of financial success. His belief in the mantra of focus and patience remains unshaken. A week after he sold AIC, Lee-Chin sat down with Canadian Business editor Steve Maich for a frank conversation about seven years of struggle, the damage he has sustained to his reputation, and how he plans to re-establish his legacy in Canada, and beyond.
<span style="font-weight: bold">I should start out by offering you congratulations.</span>
Thank you.
<span style="font-weight: bold">But I have to tell you that for the past three years I’ve had people saying to me, “Michael Lee-Chin’s going to sell AIC.” I always said, “No, Michael Lee-Chin is not going to sell. He is AIC, and AIC is Michael Lee-Chin,” and then I would read you say, “I’m not going to give up on my dream,” and I would feel very smart. And now I’ve got people calling me. …</span>
They’re throwing it back in your face (laughing). Ah, well.
<span style="font-weight: bold">So is the dream over?</span>
The question is, What is the dream? How do you define yourself? No, the dream is not over, because we sold our retail mutual fund business to Manulife. We will be managing the Advantage series of funds, the Diversified Canada Fund and the Canadian Focused Fund. I will be managing the Advantage Fund, which I’ve managed since 1987. That is my legacy, because from the get-go, Steve, I said to myself, “I’m going to manage this fund in a way that is 100% akin to how wealth is created, 100%.” And I am not veering.
<span style="font-weight: bold">There’ve been many opportunities over the past 10 years for you to sell at a much higher price.</span>
Yes.
<span style="font-weight: bold">Why sell now when you could have sold for so much more before?</span>
It’s easy to tell you in retrospect! Retrospective thinking is perfect, Mr. Steve Maich, OK? But you’ll recall, in 2007 I sold Berkshire to Manu. I took Manu stock, 100%. In 2009, I sold the AIC Canadian retail mutual funds business to Manu. I also am going to take 100% Manu stock. So, as a value investor, am I really leaving the game, or am I transferring ownership of AIC and getting ownership of Manulife shares?
<span style="font-weight: bold">I’ve gotta think it was difficult.</span>
It is difficult. Not was — is difficult, Steve.
<span style="font-weight: bold">Can you talk to me a bit about why?</span>
Because any time you have to make an indelible change in your life, any time a change is one that you have been identified with for 22 years … my children, that’s all they’ve known, is AIC. I have been synonymous with AIC. So any time you have to make a change that needs a separation of sorts, it’s always difficult.
<span style="font-weight: bold">It’s been a rough few years. For the past half decade, the strategy of buy and hold has produced poor results.</span>
Yes.
<span style="font-weight: bold">And your most loyal customers — the people that you’ve dedicated yourself to building wealth for — have done the worst. Were you just too stubborn for your own good?</span>
Good question, Steve! Yes, I’m dogmatic, and I went into this knowing the volatility that will be associated with having principles that are so rigidly defined. But on the other hand, the rewards of having principles is personal fulfilment, is legacy-building.
When I first got into AIC, I knew that was the risk and the reward. And at the end of the day, all of us were seeking to build a legacy that society can be proud of. And you certainly won’t build a legacy that society can be proud of by doing what everybody else is doing. Was I too rigid for my own good? Well, what was my choice, Steve? If you have principles, and if you’re thinking long term, and if you really believe your principles are right, net worth is secondary.
Now, so let us look at what I could have done. Suppose, Steve, in the middle of this asset deterioration, I’d gone down to main street, to Bay Street, and stood at a corner of Bay Street and took a sampling of the average passerby saying, “Average passerby, I’m depressed. I see my net worth shrinking. Assets were $14 billion. They’re now $8 billion. What should I do?” In 1999, the average passerby would have said, “Mike, get with it! Don’t you see what is happening? What you have, the customers don’t want.” So what didn’t we have in 1999?
<span style="font-weight: bold">Tech stocks.</span>
Exactly. We didn’t have tech stocks. So, “Mike, you want to keep the assets? You want to keep your net worth up? Just start a tech fund and clients will leave the Advantage Fund and go into tech. You still keep your assets.” But could I have done that? Would it have been in keeping with my principles? :- 1st page of a long read.
For pages 2,3 & 4 see Link
http://www.canadianbusiness.com/managing...0001&page=1
_________________________
"At a time of universal deceit," wrote George Orwell, "telling the truth is a revolutionary act."
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