An update on BloombergSen, Larry Bloomberg, and their new Optimist Fund
In May, Lawrence Bloomberg turned 80. Here’s an update on what’s going on in Larry’s world. The good news is that BloombergSen’s $2B flagship fund (for ease of reference, the “BS” fund) is solidly middle of the pack this year, losing 15% to July.
However, the same cannot be said for the firm’s newest product, the Optimist Fund, which debuted on March 1st. That fund has lost 45% in its first four months. That’s worse than the ARK Innovation ETF, which has been the poster child for the current downturn (down 42% over the same period).
While BloombergSen‘s website does not even mention the very small fund, Jonathan Bloomberg and Sanjay Sen are listed as “advisers” to the Optimist Fund. They are “advisers” in the “consigliere” sense, not “portfolio managers” in the “portfolio manager” sense.
Jordan McNamee, a former small cap manager at CI Global Asset Management, is the man in the hot seat. OPM Wire’s thorough investigation has revealed the root cause of this setback. Jordan is approximately 30 years old. He believed that stocks could only rise. His investments are typically in “less proven” business models.
Without firsthand knowledge of the situation, this is how I would have imagined the story:
- For more than a decade, pressures have mounted on active managers, particularly so-called “value” managers. This is the typical cyclical pattern of investment styles, but it is likely the most extreme cycle in memory. These forces include heavy flows into passives, outperformance of technology stocks, the rise of “disruptors,” and so on. A comprehensive description of the zeitgeist would be far too long and complex.
- The pandemic strikes. Surprisingly, rather than eradicating the zeitgeist, the pandemic appears to be intensifying it within weeks.
- OPM Wire, which many on the street regard as a worse scourge than Covid, publishes a scathing blog post about BloombergSen’s inability to outperform the S&P 500 since its inception in 2008. The ensuing mockery exacerbates the usual cyclical pressures.
- BloombergSen cries uncle and decides to invest his own money in a new manager. This manager had only recently graduated from Wilfrid Laurier, had worked as a buy-side tech analyst for a few years, had been a co-manager for a year and six months, and had been the lead manager of a fund for all of five months. But, presumably, he understands the New World Order completely.
- Jordan will begin working for BloombergSen in October 2021. The Nasdaq will reach its peak in November 2021.
The reality, however, may be quite different. Jordan claims that the fund is his own show, which is hosted by BloombergSen. Jonathan Bloomberg and Sanjay Sen are merely consultants. Jordan described the Optimist Fund as consisting of only his own money and that of friends and family.
While the Optimist Fund is a BloombergSen fund in terms of securities regulation, I completely believe Jordan’s story. I’m not sure why the firm’s principals would take the reputational risk of backing a small newbie manager under their licence, but I applaud Jordan for taking on this role at such a young age. Although I’m sceptical, it’s far too early to draw any conclusions about Jordan’s strategy. As I am gracious, I have offered to review the fund in four years.
In Larry’s world, this is big news. He is now known as Dr. Dr. Bloomberg. In June, he received his second honorary doctorate from McGill University. Larry has made several six-figure donations to McGill, but that’s a dog bites man situation. Larry’s philanthropy has been most visible in healthcare, particularly his long-standing support for Sinai Health, where he remains Director Emeritus.
His name is also on the Faculty of Nursing at the University of Toronto. Despite this, he received an honorary PhD in law. That is, of course, because almost no institution grants an honorary degree in medicine. A PhD in outperforming the S&P 500 is even rarer.
Where does the Optimist Fund stand if, as stated, the BS fund focuses on “high quality businesses”? It’s ironic that the BS fund was founded on the acquisition of an unproven manager from obscurity, Sanjay Sen. The BS fund is a $2 billion abomination to Rational Economic Man fourteen years later.
Larry’s career reminds me of an old investment adage: it takes twenty years to build a good reputation and another twenty years to destroy it, because inertia is such a powerful force. It’s a little unfair to drag Larry into BloombergSen’s performance issues, because he only owns about 5-10% of the company.
It’s all about his son Jonathan Bloomberg and investment prodigy Sanjay Sen. Sanjay is well-treated by the Bloombergs, and he appears to have the same ownership stake as Jonathan. I’m guessing the Bloomberg name is what brought the majority of the assets to the fund.
The BS fund has a $2 million minimum investment. It most likely helps that the firm is well-connected. Carolyn Mulroney, for example, was vice-president there before entering politics. They’re also not afraid to throw their weight around. They allegedly lobbied the Ontario PC party to stop criticising the activities of one of their holdings, Great Canadian Gaming. They accomplished this through the highly connected celebrity lawyer Walied Soliman. There are probably less difficult ways to make money. As if a monkey were to throw darts at a stock table.
Brian Ginsler, the firm’s salesman, recently left. He left to start Ginsler Wealth, a Multi-Family Office operation. Brian is possibly the only Harvard MBA who is also a CFP® professional. Jeremy Freedman, former CEO of Gluskin Sheff, has joined his advisory board. But don’t worry!
BloombergSen’s so-called brain trust remains intact. Even Larry Bloomberg, although his main capacity seems to be sales, did you know he’s still an active Chartered Financial Analyst? Please read all 7 paragraphs of his official biography.
Larry reportedly pocketed $74 million from the sale of his brokerage First Marathon to National Bank for $712 million in total in 2000. Larry’s convocation speech at McGill was something I listened to. I discovered that his First Marathon had successful offices in London, New York, Geneva, Zurich, and Paris. That’s impressive; Canadian boutiques don’t have much of a global presence these days.
Larry was also a pioneer in the securities clearing business, which National Bank expanded by acquiring First Marathon. That business is now called NBIN and I believe it’s currently the largest clearing operation in the country. The highlight of Larry’s speech, however, was when he opened up about a difficult time in his life and how he persevered. Larry was apparently the Chairman of a $2 billion fund that underperformed the S&P 500 over 14 years. But he never considered quitting because of the high fees involved. Moving!