Jenkins latest to leave AIM Trimark

AIM Trimark, once home to a slew of high-profile managers, has reported yet another high-profile departure. Richard Jenkins is the latest top-level fund manager to leave the firm, joining his old colleague Bill Kanko at Black Creek Investment Management.

Jenkins’s move comes less than two months after Tye Bousada left AIM to start his own firm, EdgePoint Capital, and about half a year after CIO Patrick Farmer and fund manager Geoff MacDonald tendered their resignations.

“Clearly the saying ‘it gets worse before it gets better’ is playing out,” says investment analyst Dan Hallett of Dan Hallett & Associates. “As we’ve said before, our level of concern rises exponentially with each additional departure. Trimark’s cream of the crop is now gone, and this has all happened with no chief investment officer.”

As a result of the move, Hallett says, several Trimark funds run the risk of being removed from his recommend list. He’ll now decide whether or not to recommend the two Hartford Investments funds that are run by Black Creek.

With the move, Jenkins will become a co-owner in Black Creek — once his four month non-compete clause expires — and help to manage the Hartford Global Leaders Fund and the Hartford Global Balance Fund.

Bhavna Hinduja, an analyst at Morningstar Canada, has become increasingly worried about the future of AIM Trimark’s funds with every departing manager. She says Jenkins’s departure is “very disconcerting.”

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AIM Trimark’s funds are on Morningstar’s picks list, but Hinduja says that status is now under review.

One explanation for Jenkins’s departure — and the exodus of the managers before him — is that the company hasn’t been the same since INVESCO took over in 2000. “We get the sense that all the folks that have left are probably not very comfortable with Trimark becoming a part of this global entity,” says Hinduja. “They’ve been very used to the culture of the small company under Bob Krembil.”

Hallett, who has met with AIM’s executives about their recent rash of employee departures, agrees with Hinduja. He says there was a cultural shift when INVESCO took over, and while the back office and sales side felt the shift at the beginning, it’s now the investment managers who are noticing the change.

“For about eight years or so, changes that were happening were not really affecting the investment management side to any significant extent,” says Hallett. “At some point that changed, and it spilled over to the investment side.”

Jenkins himself alludes to the discontent he was feeling at AIM. “Bill hired me originally into the Trimark organization when it was a small firm,” he says, from Black Creek’s office. “To some degree, it’s good to have a small organization focused purely on investment management.”

For more proof that the ex-AIM managers felt disaffected by their former company’s culture, look at where other recent departures have ended up — Bousada started his own firm, which Trimark’s ex-CIO and co-founder Bob Krembil bought into, and they recently hired MacDonald to be the company’s CIO.

“So far at least, people that have re-emerged have gone to small independent shops,” says Hallett. “That says to me that they’re not just going after a better deal somewhere else. They’re not doing it for the money, at least not upfront. It appears that they want to create the type of environment that they had at one time or they think should exist.”

While there is no tangible evidence yet that these departures have a significant impact on AIM Trimark’s business, it’s likely investor confidence in the company is precarious at best.

To get back on track, AIM has to get the hiring ball rolling. First off, it would be wise to fill its vacant CIO position, Hallett suggests, and then it’d be best if no one left the company for an extended period of time.

“I have put all the funds that I was recommending under review until I’m pretty confident that they wouldn’t have any more departures,” he says.” That comfort can only come with the passage of time — at least six months — and hopefully with new quality hires, including a confirmation of a new CIO.”

Hinduja says even if the company finds new managers, it could take years before Morningstar recommends its funds again. That’s because Morningstar analysts like to see long track records with managers going through a number of market cycles. It’ll take newbie managers time to gain that experience, while industry veterans, Hinduja says, will likely stay away from AIM.

“They have to start hiring from scratch because a veteran manager might not fit in with Trimark’s discipline,” Hinduja explains. “We’ve always been fans of Trimark’s mentoring process, but bringing in an experienced portfolio manager won’t be very helpful.”

Peter Intraligi, AIM Trimark’s COO, says the company has already hired new “investment professionals” and is actively looking for more people to join the team.

“Three years ago, the team had 14 members, and today we have 27,” says Intraligi. “In addition to hiring eight analysts over the last three years, the investments team has been actively interviewing candidates over the past few months with the intention of adding several more investment professionals to the broader Trimark Investments team in the near future.”

While that will definitely help, it’s no guarantee that the company’s stalwarts — Dana Love, Bruce Harrop, Judith Adams — will stick around to see the rebound. “Jenkins was the one I was afraid of,” says Hallett. “I can’t say I have a real strong feeling or any inside scoop on another departure, but again, the last three exits have been in pretty close succession.”

As to what Jenkins’s immediate plans are, he has to wait out his non-compete clause before officially joining Black Creek in July. He can’t manage any funds during that time, nor can he discuss the future of Black Creek with Kanko until he’s allowed to go back to work.

The big question now is will Kanko and Jenkins go after any other AIM Trimark managers? “I prefer not to comment on that,” says Jenkins. “There are some very good people in that organization that I respect, but I’m obligated to neither discuss that nor actively pursue anyone.”

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

(03/03/08)

Bryan Borzykowski