Seamark reports weaker 2005 profits

Seamark Asset Management earned $11.2 million in 2005, down from $13.2 million the previous year, as the Halifax-based firm stayed true to its traditional stock-picking approach and lost a major institutional client.

“Over the past few years, our investment style has been somewhat out of favour in the marketplace and our assets have suffered,” said company CEO Peter Marshall in a conference call with analysts on Tuesday morning.

Seamark has limited exposure to the energy sector, Marshall said, preferring to focus on buying quality growth companies at attractive prices and holding them for the long-term. And while he insisted that sticking to that discipline will deliver value over the long-term, he conceded the firm must improve its short-term performance to attract and keep institutional clients.

In Q4 of last year, SEI Investments dropped Seamark as manager of a portion of the SEI Canadian Equity Fund and SEI Social Integrity Canadian Equity Fund.

Net assets at the end of 2005 stood at $9.34 billion, but dropped to $9.1 billion by the end of January, reflecting withdrawals of $529 million, partially offset by market appreciation of $302 million during the month.

“But what goes around tends to come around in this business and there’s no doubt that lower oil prices, higher interest rates, a recovery in growth stocks and a lower Canadian dollar would do wonders for our performance. We happen to believe those trends will come our way.”

Seamark also manages the Clarington group of funds, and that relationship is now being questioned by some analysts in the wake of Clarington’s recent takeover by Industrial Alliance.

“Seamark’s performance numbers over the past five years have generally been average to well below average,” wrote Morningstar Canada investment funds editor Rudy Luukko in a recent online commentary. “For example, the largest Clarington fund — the $1 billion Clarington Canadian Dividend A, has a one-star Morningstar Rating and is a fourth-quartile performer over one, three and five years.”

Still, Marshall says he’s hoping Seamark can continue to work with Clarington. “We will be meeting with Industrial Alliance at some point but as far as we’re concerned, it’s business as usual.”

As for Marshall himself, he was re-appointed as the firm’s CEO in May last year following the departure of Robert McKim. Marshall was Seamark’s CEO from 1996 to 2003 and the firm had hoped to have a successor in place by the end of 2005. Marshall described the search as active, but slow. “We want to make sure we get it right.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com