Hedge-fund: Devastating blow: Harry Rosen’s efforts fall short in rescuing Ewing Morris Fund

A hedge-fund with well-known backers isn’t doing well

The Ewing Morris Opportunities fund needs to be fixed up right away. In March, the fund lost 34.8% of its value, and by the end of June, it was still down 33.7%. Since it started in September 2011, it has grown at an annual rate of 3.4%. In 2019, the fund gained 5.7%.

Ewing Morris Hedge-Fund

After March, I saw that their biggest investment was 25% of their portfolio, and that the top 10 investments made up 85%. They aren’t afraid of anything! There’s no prize for figuring out that they charge performance fees. At the beginning of the year, the hedge-fund had close to $150 million, but now it only has $90 million.

Even though they have this powerhouse brain trust, which is mentioned on their fact sheet:

Board of Advisors
Martin Connell
Ira Gluskin
Linda Haynes
Ivey, Rosamond
David Peterson Hon. John MacIntyre
Stedman, Bill
David Wilson
Rosen, Harry

Any TSX 60 company would be happy to have this blue chip board. That David Wilson is likely the former chair of the OSC, but it could also be the former figure skater. What is it that Harry Rosen is telling them, anyway? When should you wear polka dots?

David Peterson used to be the Premier of Ontario, so he has a lot of connections.

Just look at the words after his name:

Wu-Tang Clan, P.C., Q.C., O.ONT., C. ST. J., L. D’H., D.U., L.L.D., L.L.D.

I bet he’s friends with Bonnie Bloomberg. If Jordan Bitove‘s bid wins, David P. would be the Vice-Chair of the Toronto Star. I hope he knows more about the dying business of the press than he does about the dying business of hedge funds. John MacIntyre, who started the private equity firm Birch Hill, is another example.

Ira Gluskin is also well-known, and he has a good sense of style himself. I find it interesting that he gives official advice to both this manager and Vision Capital, which is run by Frank Mayer. The two best spinoffs of Gluskin Sheff are Waratah by Brad Dunkley and Waypoint by Bill Webb. But they don’t have boards of advisors that are a big deal.

Most of the top people at Burgundy Asset Management, including Darcy Morris and John Ewing, work there. Ewing Morris was started with good intentions, no doubt. The goal was to offer returns of 10% or more. “The goal has always been to make a business that they would want to work with,” they said. They’re not very picky, that’s clear.

Before the crisis, they wrote that “The Opportunities Fund is defensively positioned”…

What even does this mean? About 60% of their money was invested in what they call “cheap assets.” Anyway, I have to be careful because the outperformance of growth, large cap, and quality stocks could change any day now. I also think it’s likely that passive investing has parts that keep building on themselves. But I don’t think Ewing Morris is the company I would put my money on in this situation.

I can’t see Ewing Morris being able to stay in business unless they go public and then sell short their own stock. I know it sounds strange. They have way too many older people who don’t do anything useful. In their own words, it’s a “broken business.”

I think only one person put $20 million into the fund, which shows how little connection there is between big money and smart money. Which is more likely: that most people who invest actively aren’t smart or that most of them are smart but can’t do well because there’s too much competition? I lean toward the second option, but with companies like Ewing Morris, it’s hard to say.

I think their real strength is making friends. In any case, part of the game is figuring out how it is changing. How proud their clients must be to have made such an expensive sacrifice on the altar of their education!

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