After telling you for the sixth or seventh time that she's a bottom-up value manager who aims for "above-average returns with less volatility than the market," Heather Hunter laughs. "Am I repeating myself?"
Well yeah, but staying on message is important, and traditional value investing à la Benjamin Graham and Warren Buffett is a popular spiel these days.
Hunter has followed that approach for more than two decades, starting as an equity analyst at Confederation Life Insurance Co. in 1976 before rising to vice-president. In 1990, she joined the Ontario Teachers' Pension Plan to set up an equity investment program. By law, Teachers' $18-billion portfolio had been invested entirely in provincial bonds. When she left nine years later, the pension fund had more than $60 billion, about two-thirds of which was in stocks.
Hunter then became the lead manager of the troubled $3.9-billion Trimark Select Canadian Growth Fund. Despite an 18% return in 1999, it was lagging behind rivals stuffed with what she calls "the TMTs-technology, media and telecommunications." For her, that meant there were bargains in other sectors.
The fund has returned to the top quartile of Canadian equity funds for one, three and five years, remarkable given how large it is. To outperform, Hunter has to beat hundreds of other fund managers choosing stocks in the relatively small Canadian market.
She says she follows "basically the same approach any of us would use if we were looking to buy a business." That means assessing a company's long-term prospects and, just as importantly, whether it is available at the right price. She likes to see five things: market leadership; growth potential; high and stable profitability and cash flow; a strong balance sheet; and strong management.
That doesn't mean she ignores external factors. When markets tanked after the World Trade Center attacks, she bought: "I probably spent about $400 million in two weeks." Nor does the long-term focus mean she won't sell if the price is right: "I have bought and sold Alcan, I think, four times in the past 27 years," she says.
In typical fashion, Hunter works with a team at Trimark, which is owned by AIM Funds Management Inc. Still, she easily reels off details about individual companies, in part because recent reports are spread out on the floor of her otherwise immaculate office.
The hours are long, and you wonder when she has time to get away from it all, especially since husband Jim Hunter is CEO of Mackenzie Financial Corp. But the two won't talk business at home. When Investors Group Inc. bought Mackenzie in 2001, she says, "I had to go to a colleague at Trimark to get my information." The upside? Around the house, at least, she doesn't have to stay on message.
Trimark Select Canadian Growth Fund: Year-by-Year Returns (%)
Tri Select Cdn. Growth/S&P,TSX Composite
1999: 18.0/31.7
2000: 15.5/7.4
2001: 4.8/-12.6
2002: -3.7/-12.4