Burgundy Asset Management- An empowering story
If status isn’t the most important thing, then why does Richard Rooney, who has $13 million just in his foundation and the body of a Greek god, insist on re-casting himself as a co-founder of Burgundy Asset Management? If status isn’t the most important thing, then why does Richard Rooney have the body of a Greek god?
Is he a co-founder, or not? We’ll learn. Already, we can tell that Tony Arrell, the alpha dog, is not going along with things. Just look at his title below. Why does one have the title “Co-Founder” and the other “Founder”?
In my very first post, I mentioned that as of the year 2020, Richard Rooney will no longer serve as the Chief Investment Officer of Burgundy. What I didn’t know was that the change in CIO had been signalled two years earlier than I thought it had been.
It seems like the Burgundy is a fairly large ship. In addition to that, it’s a political party. Since 1997, Richard has been known by his former title of “President and CIO.” But as of late, he has begun to formally refer to himself as a co-founder. That can’t be right because Burgundy wasn’t established until 1990, and Richard didn’t join until 1995.
A few of you are aware of the fact that even Tony Arrell was not one of the founding members of Burgundy. Tony Arrell was the Chief Executive Officer of Midland Walwyn in 1990, the same year that Burgundy was established.
Midland Walwyn was a large brokerage firm that was eventually acquired by Merrill Lynch. Burgundy was purchased by Midland for a minority stake. The power struggle between Tony Arrell and Midland’s President Tim Miller resulted in Arrell’s departure from Midland in 1991. After that, Tony attempted for an entire year to establish a Mexican investment fund catering to institutional investors.
It wasn’t until 1993 that he became involved with Burgundy, eventually acquiring a controlling stake and becoming Chairman of the Board. The true co-founders of Burgundy were John Di Tomasso, Bryan Smith, and Lee Wong, although the latter is frequently overlooked. Tony Griffiths served as the organization’s first ever chairman. Lee Wong is still a significant player and is involved in a number of different ventures.
In any case, Burgundy was nothing before Arrell joined the team. He is the one who introduced the concept of value investing with a long-term perspective. John Di Tomaso left the company and is now working in managed futures.
It would be more accurate if Tony and Richard referred to themselves as the Great Saviors and Builders of Burgundy, so they could call themselves that. I find it remarkable that Tony has been able to maintain a sizeable stake in the company despite the passage of time, the increase in AUM, and the expansion of staff. This stake is probably somewhere between 40 and 50%.
Forgive me for being blunt, but he is a man who enjoys a wide variety of activities outside of work, and the operation could certainly function without him. Is Burgundy capable of luring and retaining the most talented individuals if the original owners, who now take a more passive role, continue to levy a significant tax on the economy?
My preference is for smaller, more independent investment firms that operate more like boutiques, where the investment experts handle the majority of the economic analysis. Tony Arrell, a gentleman farmer, has a foundation that is solely worth $57 million. It was a wise decision on his part not to establish a fund in Mexico. Tony is well into his 70s at this point. Since Stephen Jarislowsky sold his company when he was 93 years old, there is still a lot of time to figure out an exit strategy.
In related news, United Corporations Limited, a listed vehicle with a market capitalization of $1.8 billion owned by the billionaire Jackman family, made the announcement the previous week that it was going to redeem out of the Burgundy Emerging Markets Equity Fund.
This is the latest in a string of significant account losses that I initially wrote about on this page. The Jackmans appear to have a preference for a French company known as Comgest as a replacement. A company from France! The breach of honour is complete.
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