Bousada’s departure worries analysts

With Tye Bousada’s departure from AIM Trimark’s flagship fund yesterday — the third top employee to leave the firm — analysts are concerned about the company’s future.

Dan Hallett, an independent fund analyst, says Bousada’s unexpected exit from Trimark Fund puts AIM Trimark “between a rock and a hard place,” especially since the company still hasn’t replaced ex-CIO Patrick Farmer, who left the company in October, and fund manager Geoff MacDonald, who departed in August.

These holes have forced Hallett to “seriously” reconsider the status of its funds on his recommendation list. He adds that this situation is “the most serious the firm has ever faced.”

Morningstar Canada is also worried about the sudden rash of departures. Fund analyst Bhavna Hinduja says that Morningstar is keeping Trimark Fund under review.

Neither Hallett nor Hinduja are concerned about the fund itself. Both say current co-manager Dana Love and Bruce Harrop, the lead manager on the company’s Trimark Global Balance Fund, are more than competent enough to handle the fund. However, they’re curious to know why so many top brass have left in such a short period of time.

“We will definitely try our best to get the best possible answer,” says Hinduja, who adds that she will be meeting with AIM Trimark executives in the near future. “This pattern of manager turnover is somewhat concerning for us. This visit will focus on that, and not on whether Love or Harrop are capable of managing this fund.”

Where Bousada ends up is another big question. AIM Trimark says that he left for “personal reasons” but the ex-Trimark Fund manager himself says he’s starting up his own operations.

“I decided that I wanted to establish my own firm,” he told Advisor. “I’m an employee of AIM Trimark until the 16th of this month, and then after that I can start the firm.”

Bousada doesn’t have a non-compete clause, so all he did was give two weeks notice when he returned from his holidays and, come next week, he’s free to do what he wants.

While he won’t give too many details on what his new company will be, he says it’s “definitely going to be an equities centered firm. It’s going to follow a similar investment approach to [what I’ve been doing.]”

While Brousada has faith that Love and Harrop will do a great job with Trimark Fund — he’s currently helping them with the transition — his departure is still a big blow for the company. But, if history’s any indication, losing a top manager doesn’t mean the fund should throw in the towel.

Not too long ago, CI lost four senior investment managers in fifteen months, while Dynamic struggled with turnover in the late 1990s. A U.K. firm lost six investment professionals last spring and, says Hallett, “their performance hasn’t missed a beat and it has now filled all of the once-vacant posts.”

Even AIM Trimark, in the years before INVESCO took over, struggled with staff retention. In the mid-’90s, three key managers left, leaving co-founder Bob Krembil to hold down the fort. Hallett says that while it recovered, that situation is a bit different from today’s predicament, given the lack of a CIO.

“Krembil really was the mentor for everyone there. The company’s philosophy flowed from him,” he says. “They don’t have that leadership today, and that’s probably the key reason why this is a much more serious situation that they’re in.”

The question of who will be the next CIO is a big one for many analysts, including Hinduja. When she meets with AIM Trimark executives, she’ll try to find out who the replacement will be, who the acting CIO is and who’s monitoring the portfolio management team.

Aysha Mawani, a spokeperson for AIM Trimark, says the company is closer to finding Farmer’s replacement today than it was three months ago. “Right now we’re taking the time to find a great candidate,” she says. “We’re actively looking, and it’s one of our top priorities. We’re doing our due diligence.”

It’s anyone’s guess as to whether or not there will be more defections, but Hallett says some of the turnover might be due to Krembil’s exit in 2000. At the time, it was back-office employees who were let go, but it might have taken until now for the company’s money managers to make their moves.

“You assume, when you’re going in on their company’s premises, people are going to be on their best behaviour; they’re not going to sit there in the office and say they’re unhappy,” says Hallett, commenting on his past visits to the company. “[But maybe] it’s only had an impact recently on money managers, or at least we’re only seeing it materialize in the last few months.”

While Mawani says the company is “committed to do whatever it takes to have resources and investment management talent,” she can’t say if anyone else is on his or her way out. “I don’t know what to say. I don’t know if anyone else will leave.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com

(01/09/08)

Bryan Borzykowski