Paul Musson is emphasizing continuity in his new role as the leader of the Mackenzie Ivy team.
The senior vice-president, investments at Mackenzie Financial Corp. in Toronto took on his expanded duties in February, nine years to the month after joining the firm. His predecessor and long-time mentor, Jerry Javasky, is retiring at the end of March.
"In terms of investment approach," says Musson, "there definitely won't be any change. The responsibilities have been set up for a long time, we have our own Ivy corporate culture, and the way we do things seems to work."
The Ivy team of five portfolio managers and analysts is currently responsible for approximately $8 billion in assets under management. In terms of style, according to Musson, "we're buy and worry."
Musson says risk is controlled by the quality of names as opposed to owning a lot of different names. Each of the holdings in the concentrated Ivy portfolios meets the team's criteria of being considered quality companies.
The characteristics of these companies, as defined by Musson and his colleagues, include strong balance sheets and strong free cash flow, and competitive advantages. The team favours companies with consistent and sustainable growth and a competitive edge.
"One thing that's worth mentioning," says Musson, "is that there is no sort of template that we have that pumps out a buy or sell." Rather, the initial screening tool highlights a company that might be of interest -- "so it's thinking afresh."
Exemplifying the team's approach is the $2-billionMackenzie Ivy Canadian 
, the largest and one of the original funds managed by the Ivy team. Its portfolio is concentrated in about 25 holdings. The top 15 holdings often represent more than 70% of the portfolio, and it's normal to have numerous positions with weightings of 5% or more.
Though the Ivy team's mandates tend to avoid deep cyclicals such as natural resources companies, a notable exception is Imperial Oil Ltd. ( IMO/TSX). Mackenzie Ivy Canadian has held the integrated energy company for more than a decade. "It is a very high quality, very well run business," Musson says.
Mackenzie Ivy Canadian invests the largest single portion of its portfolio in Canada. But foreign holdings play a large role since the team's focus is on bottom-up stock selection as opposed to geographic considerations. Currently, the fund has a 50% weighting in Canadian equities, about 27% in the U.S., and approximately 13% in international equities. The cash position is a residual of the stock-picking process, Musson says.
Among the non-Canadian holdings in the Mackenzie Ivy Canadian mandate is the fast-food giant McDonald's Corp. ( MCD/NYSE), whose strengths include its strong brand name and purchasing power.
After the company "slipped" in trying to expand its stores, says Musson, management is now focusing on modernizing its existing stores and offering healthier menu choices. "In particular in this environment, they've been doing fine because people still want to go out," he says.
Musson, 47, a business commerce graduate with a finance major from Montreal's Concordia University, had to be patient in entering the industry. After receiving his degree in 1988, he found it difficult finding work in the Montreal area, so he moved to Toronto in December 1990. He took on two jobs, working at night for a video store and taking a short-term contract with an insurance company.
"From there I progressed," says Musson, laughing. He joined Wood Gundy Inc. (now CIBC Wood Gundy) in 1992 as an assistant to a broker. He then went to the international sales desk at the firm in 1994.
Musson received the CFA designation in 1995 and became head of the international equities group at Wood Gundy about three years later. He left the brokerage to join mutual fund manager AIC Ltd., where he worked as a senior investment analyst in 1998 and 1999 before joining Mackenzie.
Back in 2002, with Javasky as his mentor, Musson took over managingMackenzie Ivy European. Now it's Musson who plays the role of mentor to analyst Matt Moody, a "quick study," delegating to him partial responsibility for managing the European equity mandate. Musson says this will enable him to concentrate more on Canadian companies and on his new leadership role.
Musson has a vested interest in the funds' performance, since he is a personal investor as well as a portfolio manager. "We watch them like hawks. We all invest strictly in the Ivy funds for our personal accounts," he says.
"What gives us confidence is that we pick names that we're working on every day," Musson says. "If I look at the quality of these names with a five- to 10-year view, especially today with these valuations, I think we'll do extremely well. If the markets continue to fall, we've got businesses that are less impacted in a weak economy."
