QV Investors portfolio manager Ian Cooke details the career touchstones that have shaped his investment philosophy
As starts in the business go, Ian Cooke’s was more memorable than most. Having completed his bachelor of commerce degree at the University of Calgary, he was hired by one of the world’s largest conglomerates. The year was 2001, and his new employer had been named America’s Most Innovative Company by Fortune magazine for the sixth consecutive year, recording revenue of more than US$100 billion. The company in question was Enron, and unless you’ve been living on Mars for the past 16 years, you already know what happens next.
“I was recruited while still in university to work on their gas trading floor,” Cooke says. “That was right at the peak of the company’s share price. The very first day of my career, I was front and centre for the biggest corporate collapse in world history. That experience ingrained in me the need to read the details of financial statements and not just buy into the notion that a business is good.”
After the debacle of his first investment job, Cooke rebounded with a much more stable and rewarding stint with Calgary-based hedge fund Savoy Capital. While
Enron taught him to never believe the hype surrounding a company, at Savoy he was able to hone the research due diligence that has become synonymous with QV funds.
QV, which manages $15 billion in assets, is an employee-owned firm and has been a subadvisor to iA Clarington since 1997. Cooke joined QV in 2006, starting out as a research analyst. He excelled in the role and was chosen to manage the firm’s small-cap funds only two years later – the year of the market meltdown. As with his hiring with Enron, the timing could have been better, but it turned out to be another formative experience as Cooke steered the IA Clarington Canadian Small Cap Fund through the crisis.
“The important thing to note about 2008-2009 is that we didn’t change our investment approach,” Cooke says. “We invest in enduring businesses run by capable and committed people and for an indefinite period of time. In early 2009, we brought the cash levels in the fund down to the lowest level ever. Although there was terrible macro uncertainty, we were seeing value in a lot of high-quality businesses. We checked our emotions at the door.”
Currently there are 38 companies in the fund. In choosing them, the QV team have a set criteria that has served them and their clients well over the years. It is a point of pride for QV that its fund managers and clients are very much in the same boat from an investment perspective.
“Our team only invests in the funds we manage,” Cooke says. “We think that’s the appropriate alignment in terms of making sure that every good idea we have goes into these funds and we feel all of our decisions along with our clients.”
Cooke’s aim is to identify companies with attractive valuations and strong balance sheets, which can give them potential for better growth prospects than the overall market. Security selection is a dynamic process, and the team is constantly evaluating the portfolios to see if there is room for improvement.
“Every month, we have to defend our portfolios to our investment committee on a risk-management basis,” Cooke says. “That means not just current data, but in the context of our 20-year history. That provides some context on what the strengths and weaknesses of the portfolio are.”
In building these funds, the QV team takes the long view – the average investment period is between four and five years. That approach has served them well, and in 2017 it means having the discipline to wait for more favourable market conditions.
“Right now it is more difficult to find opportunities to invest our clients’ capital in a fashion that generates an acceptable return,” Cooke says. “Our cash levels have increased, and we’re patiently waiting for opportunities to gain better entry points for the kind of risk-adjusted returns we’re aiming for.”
Ian Cooke
“I was recruited while still in university to work on their gas trading floor,” Cooke says. “That was right at the peak of the company’s share price. The very first day of my career, I was front and centre for the biggest corporate collapse in world history. That experience ingrained in me the need to read the details of financial statements and not just buy into the notion that a business is good.”
After the debacle of his first investment job, Cooke rebounded with a much more stable and rewarding stint with Calgary-based hedge fund Savoy Capital. While
Enron taught him to never believe the hype surrounding a company, at Savoy he was able to hone the research due diligence that has become synonymous with QV funds.
QV, which manages $15 billion in assets, is an employee-owned firm and has been a subadvisor to iA Clarington since 1997. Cooke joined QV in 2006, starting out as a research analyst. He excelled in the role and was chosen to manage the firm’s small-cap funds only two years later – the year of the market meltdown. As with his hiring with Enron, the timing could have been better, but it turned out to be another formative experience as Cooke steered the IA Clarington Canadian Small Cap Fund through the crisis.
“The important thing to note about 2008-2009 is that we didn’t change our investment approach,” Cooke says. “We invest in enduring businesses run by capable and committed people and for an indefinite period of time. In early 2009, we brought the cash levels in the fund down to the lowest level ever. Although there was terrible macro uncertainty, we were seeing value in a lot of high-quality businesses. We checked our emotions at the door.”
Currently there are 38 companies in the fund. In choosing them, the QV team have a set criteria that has served them and their clients well over the years. It is a point of pride for QV that its fund managers and clients are very much in the same boat from an investment perspective.
“Our team only invests in the funds we manage,” Cooke says. “We think that’s the appropriate alignment in terms of making sure that every good idea we have goes into these funds and we feel all of our decisions along with our clients.”
Cooke’s aim is to identify companies with attractive valuations and strong balance sheets, which can give them potential for better growth prospects than the overall market. Security selection is a dynamic process, and the team is constantly evaluating the portfolios to see if there is room for improvement.
“Every month, we have to defend our portfolios to our investment committee on a risk-management basis,” Cooke says. “That means not just current data, but in the context of our 20-year history. That provides some context on what the strengths and weaknesses of the portfolio are.”
In building these funds, the QV team takes the long view – the average investment period is between four and five years. That approach has served them well, and in 2017 it means having the discipline to wait for more favourable market conditions.
“Right now it is more difficult to find opportunities to invest our clients’ capital in a fashion that generates an acceptable return,” Cooke says. “Our cash levels have increased, and we’re patiently waiting for opportunities to gain better entry points for the kind of risk-adjusted returns we’re aiming for.”
Ian Cooke
