Editor’s note: On Michael Lee-Chin

Canada’s business establishment says of Lee-Chin, good riddance. But the billionaire investor has other plans.

 

One of the sad realities of life is that success often breeds as much envy as it does admiration. Over his two decades in the Canadian business world, Michael Lee-Chin has attracted more than his share of both.

He was a poor kid from Jamaica, born to a single, teenage mother. Against all odds, he not only graduated high school but earned a government scholarship to study engineering at McMaster University in Hamilton. After putting in some time working on highway projects back home, he returned to Canada and found work selling mutual funds. His innate charisma and skill for spotting opportunity in the financial markets served him well, and in 1987, at the age of 36, he bought a tiny mutual fund firm known as AIC, with less than $1 million in assets.

He studied the greats of finance — Warren Buffett and Ben Graham — and deduced that the key to success was owning just a few great companies, and holding them for the long term. “Buy. Hold. And Prosper.” became his mantra, his slogan and his calling card. By 2002, AIC’s assets had swelled to more than $15 billion, and Lee-Chin himself was a multibillionaire.

But this outsider always presented a bit of a problem for Canada’s business establishment. While other funds typically held hundreds of stocks, buying and selling in a constant frenzy of activity, Lee-Chin took the opposite approach and had the audacity to point out that his rivals had grown rich by collecting high fees for lousy results. He refused to chase the market’s latest fashions. But the price of rigidity is that you will sometimes find yourself out of vogue, and that has been Lee-Chin’s fate for seven long years now. As financial stocks lagged, AIC funds foundered, and clients pulled out in droves. The firm’s assets have dwindled below $4 billion, and last month’s acquisition of AIC by Manulife Financial is widely seen as a desperate retreat.

The experience has been humbling, and there are many who quietly are enjoying Lee-Chin’s misfortune. They never did much like him, with his helicopter, his Ferrari, and his self-assured smile. They especially resented his sermons on what ails Canada’s cozy financial services industry. They will happily tell you that Michael Lee-Chin is history, and good riddance.

But when I spoke to him recently, I came away with a very different impression. As you’ll see in our feature interview, he admits to some frustrations and many disappointments. But he accepts that these are the consequences of a life lived according to certain inviolable principles. He’ll tell you patience and persistence are the keys to success in life and in the marketplace, and he has plenty of both (not to mention billions of dollars to back up his ideas). It’s been a terrible few years, but Lee-Chin isn’t quitting. He’s planning on a comeback.

By all means, bet against him if you’d like. History says it’s a bad idea.

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