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Tetrem thriving under the radar

10-year-old firm managing $5.8B

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Tetrem CEO Danny Bubis (left) and portfolio manager Alec MacIsaac at the HQ.

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Tetrem CEO Danny Bubis (left) and portfolio manager Alec MacIsaac at the HQ. Photo Store

Tetrem Capital Management may not be the most well-known brand in the financial services industry, but the clients of the privately held Winnipeg money manager probably like that just fine.

Recently marking its 10th anniversary, the firm that started up after the sale of Assante Corp. in late 2003 now has $5.8 billion in assets under management and a growing reputation as a large-cap, contrarian shop that focuses on value rather than short-term gains.

Since its inception, it has produced solid long-term returns.

Danny Bubis, Tetrem's founder, CEO and chief investment officer (and the former CIO of Assante) said the firm's philosophy would work regardless of where it is located.

"We are not a public company, we're private. We are able to take the long-term view," he said.

With strict securities-disclosure regulations now in place, there is no advantage in being close to any of the companies it invests in and with modern communication -- "Everyone has the same Bloomberg machines," he said -- there is no disadvantage when it comes to access to market intelligence.

There are pros and cons in being anywhere, but Bubis, 48, said the best thing about being a money manager based in Winnipeg is there is less noise.

"If the biggest risk is getting caught in the herd mentality and getting trampled... there is always that risk with modern communications, but there is a little less risk of that here," he said.

Alec MacIsaac, Bubis's partner and portfolio manager at Tetrem, said, "We can stay a little more balanced and that should never be underestimated in these markets."

With just under 10 per cent compound annual returns over the past 10 years, the firm has built a solid reputation as a boutique firm with a plan.

CI Investments, which acquired Assante, was Tetrem's first client and continues to be its largest.

Tetrem manages the CI Canadian investment Fund, Canada's oldest mutual fund, which started in 1932.

Derek Green, president of CI Investments, said, "CI's long partnership with Danny means that we are quite familiar with his approach and how he has performed through various market conditions and business cycles... Tetrem holds concentrated portfolios of stocks in which they have a high conviction about their prospects. This is by its nature a conservative and longer-term approach to investing."

Bubis understands the dynamics of the market as well as anyone -- and the danger of thinking you know too much.

"Whether you believe we are in a bull market or not, we are past the halfway mark or further," he said. "And the second half of a bull market favours large-cap stocks over small-cap stocks. We are starting to see the change, and that's good for us."

Tetrem focuses on the fundamentals for its investments -- companies that produce consistent cash flow, not necessarily the highest yield, ones that can grow their dividend, generate cash to reinvest in new factories or acquire new businesses and still have a reasonable multiple.

"It's not all about which party you never heard of that just won got two extra seats in a Greek byelection," said MacIsaac in reference to the kind of market gyrations that occur when uncertainty is in the air.

The firm has a team approach to investing, with 12 people in Winnipeg and five in Boston where it has had an office since 2008.

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition August 9, 2014 B6

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