The Goliath vs. Goliath battle that captivated Bay Street had no winners.
Greg Boland was once dubbed “the Smartest Man on Bay Street” by former Globe reporter Derek DeCloet. Greg’s company, West Face Capital, managed billions of dollars and employed dozens. West Face’s business has been “destroyed,” to use the company’s own words.
All three of Boland’s original partners, as well as all key employees, have left in the last two years. West Face was operating out of 15,000 square feet of office space with a 24-seat trading area ten years ago. One master fund with $40 million in assets was the most recent indication of size I could find.
I’m not sure what the current status of the company is, whether it’s a smaller firm or a family office. But, for OSC purposes, Greg Boland is now his own chief compliance officer. That is a significant setback for a Bay Street titan. It’s The Globe’s curse to be called a legend.
Greg Boland- Invest Like a Legend
Greg Boland‘s journey from waiter to hedge fund mogul has been remarkable. I mentioned him right at the start of this blog. At the time, I was on a quest to find his performance numbers and speculated that his numbers were not as hot as they once were (when he was compounding at 25%+). But I still expected him to outperform the market.
Well, my knowledge was out of date, and his performance was already mediocre at the time. However, his early numbers were so impressive that his overall career record is likely still respectable. I revoked his title as “The Smartest Man on Bay Street” in 2020, but that was just a joke; I have no such authority.
Softbank CEO Masayoshi Son famously asked, “Who wins in a fight: the smart guy or the crazy guy?” The answer could be that only lawyers triumph. The well-documented “Goliath vs. Goliath” multi-round, no-holds-barred brawl between Boland’s West Face and Newton Glassman’s Catalyst Capital was undoubtedly a factor in both firms’ setbacks.
The conflict began over Wind Mobile, an acquisition that Newton Glassman was pursuing but lost to Boland. West Face made 5 times its money on that deal in 18 months. Since then, Canadians have had access to a variety of competitive cell phone options. However, West Face paid a high price for upsetting Newton Glassman, who launched a barrage of legal actions against the company in the years that followed, the majority of which he lost badly.
Boland had three illustrious partners. Were the partners fighting in the midst of the chaos? There is some hearsay evidence of the partners “fighting” while West Face was “imploding” in court filings. Thomas Dea, a former Onex player, left in 2020. “Co-CIO” Peter Fraser and Anthony Griffin both left in 2021. Dea and Griffin have reformed their partnership at Kicking Horse Capital.
Philip Panet, West Face’s operations and compliance manager, left in May 2022 to work for Waratah Advisors. This is fitting given that Waratah is the new hedge fund king. Ironically, three of Bay Street’s most accomplished men are now their own Chief Compliance Officer (the other two are Bob Krembil and Roland Keiper, probably in order to run family accounts). That is typically the lot of small businesses.
Boland had large institutional clients who were total squares and were easily intimidated by controversy. Boland blames the cloud of litigation created by Catalyst in court filings for affecting West Face’s ability to attract and retain clients, business partners, and employees.
Recruits, for example, were concerned about their reputations and even their safety, given the cloak and dagger tactics of some Catalyst agents. In marketing literature, West Face touted its “strong network and relationships” as a competitive advantage, but that is outdated business thinking. Indeed, many experts now believe that businesses should actively seek out adversaries in order to test their resiliency. You can’t rely on a bunch of nervous nellies to run your business, can you?
A high-quality operation will generate numerous spinoffs (like Tiger cubs). Here are some former West Face employees who have gone it alone:
-Nandeep Bamrah, who worked at West Face from 2010 to last year, recently launched his own fund. Hunsbury Capital specialises in special situations and event-driven investing. Nandeep’s claim to fame is that he completed his MBA at the age of 17. Peter Fraser, the former CO-CIO of The West Face, is a Senior Advisor.
-White Crane Multi-Strategy, based in Vancouver and led by Yu-Jia Zhu, has an AUM of between $100m and $200m.
-Brandon Moyse, a former West Face employee who was central to the parties’ first legal battle, now works for an obscure firm called Stornoway Portfolio Management.
Jim Doak, a former partner of Greg Boland’s previous firm, marvelled at Boland’s “James Bond lifestyle”. According to the Globe, “Boland’s idea of relaxing is defying death,” a reference to his daring outdoor activities. Boland enjoyed investing in risky, contrarian situations.
Surprisingly, for a “normal” investor, he was quite active in energy for many years. That most likely did not help matters. Contrarians and distressed investors have had a difficult decade, and this could be a classic case of someone lacking capital just as their strategy is about to shine.
Greg Boland is currently around the age of 57. He has a long history of activism as well as some legal action. His most notable achievement as an activist was being appointed to the board of Maple Leaf Foods. He once sued Home Capital Group for false disclosure, which influenced his SHORT position in the stock. I thought that was novel. Some thugs will rejoice at his demise.
Catalyst was also not unharmed by the fight. West Face was a key player in informing the public about the troubled loans at Newton’s Callidus Capital, causing its stock price to plummet. Newton Glassman had planned to launch other public vehicles in addition to Callidus, but that now appears unlikely.
Mutually Assured Destruction (MAD)- was in effect. Someone better versed in pop psychology will have to explain how two ostensibly astute businessmen could have ended up in such a shambles. According to journalistic conventions, such an article should be titled How West Face Went South.
“Most investors consider risk to be a four-letter word. It’s a beautiful thing, according to Greg Boland. He is unconcerned about bankruptcy plays. Accounting shambles? The more sloppy, the better. He’s all for hated companies and orphaned stocks that everyone else has given up on. He is the investing world’s equivalent of a car wreck enthusiast.” -In 2006, Derek DeCloet on Greg Boland
Derek DeCloet, a former Globe reporter, has retired to raise sheep in his native Australia. I’m not sure if that’s Barry Critchley. Things change, that’s my point. Finally, hedge funds almost always retrench for the same reason: poor performance. I saw some of West Face’s performance data, and there were problems dating back as far as ten years.
Trying to be brilliant, I’ve discovered, is a difficult task. One useful outcome of researching other people’s investing careers is to ask yourself: if they can’t deliver alpha, what are my chances? On paper, West Face’s four partners had better credentials and resources than 99.9% of Bay Street. Where does that leave the broker at Harbourfront Wealth if they can’t hack it? This is how life goes down on Bay Street.
One day, you’re terrifying business titans, and the next, only a blogger cares enough to write your company’s obituary. That being said, I believe in life after death, at least in terms of money management. Consider Tom “Lazarus” Stanley.