Rough Week for Canada
| Jun 8th, 2007 | Filed under: Hedge Fund Industry Trends | By: Alpha Male |
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Stanley Cup in Disneyland as Ducks Prevail!.
The headline of the Montreal Gazette slipped under my door screamed out the sad reality facing Canadians as they woke up this morning. The Stanley Cup – one of the most respected symbols of Canadiana – had once again slipped into American hands. Canadians from coast to coast cried in their beer late into last night.
So it seems oddly fitting that another group of Canadians met today in a small village 90 minutes north of Montreal to discuss why another piece of Canadiana – the investment dollars of the county’s largest pension funds – was also being awarded to Americans this year. They were joined by visitors from the US and Europe.
The inaugural Canadian HFM Live event organized by HFM Week magazine was held in the Great White North Thursday and Friday. One by one, Canadian mega-investors stood up today to tell the audience about how they would love to invest more in Canada – but that the managers simply weren’t big enough. The result: few if any Canadian hedge funds in their multi-billion dollar portfolios.
For their part, Canadian hedge fund managers stood up one by one to say that they had filled the home-country gap by raising money off-shore – where they were apparently better appreciated.
While sessions ranged from due diligence to the quintessentially Canadian topic of principal-protected notes (PPNs), the question permeating each discussion was obvious: how do Canadian hedge funds compete in a global investment marketplace?
The Day 1 navel-gazing produced a consensus that the global hedge fund industry knows no borders. Yet at the same time few of the international participants had been to Canada before and few were aware that Toronto – Canada’s financial capital – was only 15 minutes further from New York than was New York’s favorite neighbor, Boston.
It turns out that major hedge fund investors are actually getting their Canadian (read: resources & financial services) exposure from US managers who are active in Canadian names. In addition, Toronto is not generally part of the whistle-stop tours regularly conducted by European and Asian investors as they trek through North America.
And now that hockey’s famous prize is spending the year at (the warmer and more convenient) Disneyland, those Europeans and Asians have yet another reason to avoid Canada.
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[...] Canadians won both categories in which were nominated last night. The $100 billion Ontario Teachers’ Pension Plan picked up honors for the best public sector pension plan and the Vancouver-based managers of the Weyerhaeuser pension plan won for best corporate pension plan. While this may seem to make up for Ottawa’s loss to Anaheim in the recent Stanley Cup final (see posting), Canadian managers might beg to differ. In a further knock against Canada’s small, but talented, hedge fund manager community, both of these awards were given to investors, not managers. At least these Canuck managers can take heart that their continued lack of recognition means they can also continue to exploit pricing anomalies in Canada’s well regulated, yet less informationally efficient capital markets. [...]