Coming out of retirement this year to re-assume the role of CEO at Seamark Asset Management Ltd., founder Peter Marshall says the firm will stick to its discipline despite lagging performance in recent years.
Since what Marshall refers to as "the bust in 2000," the two largest Clarington mutual funds [#150] both managed by Halifax-based Seamark [#150] have lagged their peers. The $1-billionClarington Canadian Dividend A, a one-star Morningstar-rated fund launched in September 1999, has a fourth-quartile five-year annualized return of 5.9% to Sept. 30. That's little more than half the 10% achieved by the Morningstar Canada Canadian Dividend Mutual Fund Index during the same period. Meanwhile, the $946.8-millionClarington Canadian Income A -- launched in December 1996 and which is rated two stars -- has a 3.5% return over the same period. That also puts the fund in the fourth quartile, compared with 5.1% for the Canadian Income Balanced Mutual Fund Index.
Despite the sub-par performance, investors in the Clarington funds should "keep the faith," says Marshall. "We have confidence that things are going just fine. Our style has always been growth at a reasonable price, and, when growth underperforms, we usually suffer for a while."
In the Seamark portfolios, a diversified, balanced mandate would include up to 80 Canadian and foreign companies. Portfolios typically hold securities in eight out of the 10 industry sectors. Stock holdings rarely exceed 10% of the portfolio and are usually below 5% overall.
Seamark's managers are not "index chasers," nor are they active traders, says Marshall. He and his team seek quality, sustainable growth companies for the longer term. Historically, the average holding period for a stock would be roughly six to eight years, which represents annual turnover in the range of 12% to 18%.
Many things can trigger a sale, Marshall says. For example, the team could conclude that it has been wrong in its analysis, or there could be new developments at a company that lessen its growth potential. A decision to sell a stock could also be made if the credit rating on a company's bonds deteriorates to junk bond status.
Marshall's investment career began four decades ago, after he graduated in 1964 from Dalhousie University with a bachelor of commerce degree and headed to Toronto in search of work. He joined Midland Osler Securities in Toronto as a trainee, gaining experience in many areas of the firm. In 1967, he moved to Montreal to work as a portfolio manager for Jones Heward, which is now a Bank of Montreal subsidiary.
In 1970, Marshall returned to Toronto to work as an analyst for an institutional boutique firm that no longer exists. The next year, he joined Bolton Tremblay, accepting a job as a portfolio manager.
In late 1982, Marshall left to start up Seamark. "It was the only way I could get back home [#150] far from the maddening crowd," he recalls. Marshall has come a long way since that time. Today, publicly traded Seamark ( SM/TSX) oversees $10.3 billion in assets.
The 67-year-old Marshall's return was prompted by the resignation of Robert McKim as director, president and CEO in May. Marshall cites "irreconcilable differences" between the board and McKim regarding the day-to-day operations.
Marshall, who acted as a consultant after his retirement in 2003, has also taken on the role of Seamark's chief investment officer. He remains chairman of the firm.
Seamark designates a chief portfolio manager for each Seamark account but investment decisions are a team effort. The current equity and income team of 15 investment professionals, including Marshall, focus on stock-driven analysis.
Research is predominantly conducted in-house with analysts covering each of the 10 industry groups. Before a company is included in a portfolio, all research and ideas are funneled through a master list of 250 companies then rated. The buy ratings determine where the overweight and underweight positions should be.
Using a theme-based strategy, Marshall is poised for growth opportunities in applied materials, such as semi-conductor equipment manufacturers, health care and media.
"We think today growth is where the value is," he says. "It's starting to be reflected in the marketplace. We're going to stick with it because we tend to perform very well once growth resumes."
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