Winnipeg money manager back in the game

(August 22, 2005) Larry Sarbit, one of Canada’s best-known value investors, has struck out on his own with the creation of Sarbit Asset Management, which officially opened its doors for business today.

Sarbit has been working on the launch since resigning from AIC in April. He says didn’t entertain offers from other firms. In fact, his phone didn’t ring once. “I guess I’m not good looking enough,” he says with a laugh. “But I wanted to run my own firm. I wanted to finally call my own shots, have that independence of decision and not have to worry about answering to other people.”

Sarbit, who has managed more than $2 billion on more than one occasion, most recently as portfolio manager of AIC’s American Focused Fund, is also launching his own fund called the Sarbit U.S. Equity Trust.

It will be available through brokers and financial advisors. Sarbit says he expects to expand his product shelf when the right opportunity presents itself and he has the required expertise at his disposal.

Sarbit says he was initially reluctant to stamp his own name on both the company and the fund but he eventually acquiesced. “I come from a family of extremely modest people. But it was a logical decision. I think a lot of people in the industry know who I am. Why would I make it more difficult for people to figure out who’s running the company and managing the money?” he says, adding there was never any question of him leaving Winnipeg for Toronto.

Dan Hallett, president of Dan Hallett & Associates, says he expects the new firm to get off to a “decent” start but he’s not sure if Sarbit will reach the lofty heights of $2 billion in assets like he did at AIC and Investors Group.

“Advisors either love him or they hate him, but those that love him are pretty loyal. He certainly has a following in the advisor community. He’s pretty outspoken and his style reflects that,” he says.

Hallett says there are several reasons why a significant contingent of his followers at AIC won’t rush to join him. For one, his replacement at AIC, Jamie Cole, has a good record and two, Lee Matheson, an analyst who used to work on the fund with Sarbit, has been brought back to work on it with Cole.

The fund has also become significantly more invested than it was during much of Sarbit’s cash-happy tenure. “A lot of advisors will take a wait-and-see attitude. I wouldn’t expect a huge amount of cash to walk out the door (at AIC),” he says.

Charlie Spiring, CEO of Wellington West Capital, shares a similar affinity for the Manitoba capital as his brokerage has grown from one office to 19 across the country and more than $6 billion in assets. He says it’s good to see Sarbit back in action.

“I absolutely applaud Larry’s initiative and his entrepreneurial spirit. He has a unique brand in the marketplace and his long-term numbers have been terrific,” Spiring says. “He’s a great name out there and he’s been very successful. In the value class, maybe the ultra-value class, he might be the best in Canada.”

Leading a tour of his office, Sarbit provided examples of practicing what he preaches. To the untrained eye, eight leather chairs in one of his boardrooms could very well have been imported from Italy.

“They’re from Costco,” he says proudly. “They’re $125 each. I’m a bargain hunter.”

Sarbit’s new company is also a family affair. His wife, Harriet Berkal, designed all the changes to the 5,000-square-foot space that used to be home to Shindico Realty. She’s also a member of the day-to-day team working on strategic initiatives. Sarbit’s brother-in-law, Harvey Berkal, is the firm’s senior financial analyst.

When clients are using the company’s call centre, the jazz recordings of his daughter, Sophie Berkal-Sarbit, play in the background and the office walls are adorned with the paintings of his son, Manny Berkal-Sarbit.

Sarbit also didn’t have to look far to round out his staff. Two members of his sales team, Shaun Hauser and Aris Economou, worked with him at AIC before leaving for Portus Alternative Asset Management last year. They were both part of the company-wide layoff in the spring.

Geoff Kirbyson is a Winnipeg-based freelance writer

(08/22/05)