A discussion with Patrick Farmer, CEO of Edgepoint Wealth
June 13, 2023
A conversation with Patrick Farmer where he shares pearls of wisdom amassed through his 30+ years working in financial markets.
1 00:00:07,760 --> 00:02:21,330 Speaker1: Well, good afternoon, everyone. First off, I want to thank each and every one of you for for joining us today for our first virtual event. So even an old dog can learn new tricks. And this is a first for us. And we're really looking forward to hearing from Pat Farmer at each point. And the purpose of this meeting was really to highlight the long term nature of the relationships that we built with some of the people who who manage your money. Our history with Pat and his colleagues at Edge Point actually go back into the 1990s. Pat was at that time with with Trimark funds. And in fact, Pierre Novak, who's on this call, was my first mutual fund representative who introduced me to Trimark. So our history goes way back. Many of our clients have been with us for decades. Um, and Pat and his team has also been with us for decades. The purpose of the call really is at a time when there's lots of noise out there, obviously lots of news flow about what's happening in the markets is to really talk about the long term nature of our relationship with Trimark and how Trimark Trimark philosophy dovetails with ours. We always preach long term thinking and no more important time to think long term than now. And so we thought that this would be a timely moment to have a conversation with one of the more quiet and successful investment managers in Canada. Many people haven't heard of Pat. He's not on TV all the time. But but trust me, these guys have been at it for a very, very long time and have been extremely successful, not just in building a business, but in making money for their clients. Before we start, we're going to Matthew is going to go over some housekeeping items and introduce Pat, and then Pat will take it away. 2 00:02:22,270 --> 00:03:19,000 Speaker2: So good. Good afternoon, everyone. Just a few housekeeping items. Everyone probably noticed your camera is off and you are currently muted. That being said, we want the meeting to be as interactive as possible. If you have any questions, there's two ways you can do that. There's if you look at the top of your screen, if you're on a computer, there's a Q&A section. You could type in your questions there or else also at the top, you have the ability to raise your hand. So if you raise your hand, we at an opportune time, we will let you know, remove you from mute, and you can ask your question. As Jim said, this is our first time organizing something in this format. If we'd appreciate some feedback, anything we can do better. Any room for improvement, things you did like? Definitely. We'd appreciate getting some feedback on how you enjoyed this format and presentation. And with that, I'll hand it off to Pat. 3 00:03:21,370 --> 00:05:13,830 Speaker3: Right. Thank you. I'm going to just share my screen. I can see it. So that means everyone else can see it. So thank you very much for the invitation to speak today. Um, this is the disclaimer that I'm not giving advice that our compliance department forces us to, to show. But when I was asked to do this, I was trying to think of what I should talk about, and I zeroed in on I'm going to talk about how we can achieve. What we all really want to achieve in from a financial perspective. So I believe I think it applies to me. So hopefully it applies to you. I would like long term investment success. I would like to have a comfortable retirement, possibly. We're saving money for a significant purchase. There are great things. How do we achieve them? And so I've tailored the presentation. Um. To to answering that question. I believe I've got the answer. And I'm going to I'm going to share it with you and we'll be feel free to ask me questions as we go. There are four key components, in my opinion. And I will go through each of these in detail. You've got to hire a good financial adviser. You have to use a proven investment approach. You've got to measure success over an appropriate time frame. And importantly, and this will be the toughest one for you to grasp. You've got to understand and embrace the opportunity and volatility. So hire a good financial adviser. 4 00:05:13,840 --> 00:06:59,430 As Jim said, I have known him for decades. He is very experienced, as is Matt. But having said that, they need to understand your requirements. So presumably when you come in to see them, whatever frequency you come in, you are explaining your requirements to them. They are they in my opinion, they are required to perform due diligence on external managers like an edge point. They've got to ask simple questions like Have we changed the way we manage money? And if the answer to that question is yes, you should run for the hills, because that's not what we're supposed to do. And you're to they are to make sure that we are training the next generation. Not all of us stick around forever. And so when someone retires, there's got to be a replacement that is capable of following the same approach. I know for a fact that these are the type of questions that that Jim and Matt ask on a regular basis. So now we have to use a proven investment approach. I'm going to talk briefly about who Edge Point is. I'm going to show a picture about the investment approach over time and and a pretty interesting slide as well. Who is edge point. We are a new wealth management company that was founded in 2008 by four individuals. One, the only famous person is Bob Crumble. He started Trimark back in 1981, but tie Buzzsaw to Jeff McDonald and myself had the privilege of working for Bob for a number of years. 5 00:06:59,430 --> 00:08:35,390 I was I was there 15 years, and in 2008 we decided there was an opportunity for a new wealth management company that could do things a little bit different than than what was being done out there. And maybe some two highlights of, of our structure is that we are an investment led organization. So Bob tie Jeff myself either were or are and I'm not anymore an investor in the markets Bob tie and Jeff are certainly are and and we we look at we're not trading pieces of paper around for a 10% return or a 20% return. We're we're interested in taking an ownership stake in a business and we try to know as much as we can about that business. Bite at an attractive price and then hold that business until the story develops. And that's very different than some of the sales and marketing operations that are out there that are just trying to raise as many assets, charge as high a fee as they can to make as much money. And the second characteristic of our business is it's a private company, so it is impossible for someone to come in and buy us and start dictating how it should be run. That is very different than the bulk of the firms on the street today. And what that does is that offers tremendous stability for Jim and Matthew and as well as yourselves that they don't have to contend with someone buying us. 6 00:08:35,410 --> 00:10:18,250 They have to understand if the new purchaser is as good or worse and and then come to you and ask if you want to stay with the new the new manager. So it offers a tremendous amount of stability. When we talk about how we define success at Edge Point, again, it's very, very different than our competitors. You will never hear us say we are the biggest or we manage the most amount of money. A lot of firms do that. It makes no sense to me. You really don't care if someone is the biggest money manager in the world. All you care about is do they deliver good returns? So our first goal is we would like to deliver top quartile investment returns over ten years. We pick ten years because if we do it, it's a long enough time frame that you can't say it's a fluke. There's got to be some skill. So we have been in business for 14 years. We had our first ten year number in December of 2018, and every month after that we have put up another ten year number. I think we have 5010 year numbers and all 50 of them are top quartile. So we are very pleased. And just so I can tie into how differently we look at things. There are some firms that offer fee rebates, cuts to your management fee if you give them lots of money. The more money you give them, they will in turn lower your fees. 7 00:10:19,500 --> 00:12:01,710 They don't have any thought about. Well, those returns should be good. Why do you want to discount on fees when returns are crummy? So we looked at it a little bit differently and we developed a partner program where if you stay invested with Edge Point for ten years. We will lower your fees. We are so confident that you will have a good experience if you stay for ten years. That you should be rewarded for for staying that long with even better performance. And I can say I was looking at my notes before we came, Jim, and you've got 48 accounts that are benefiting from reduced fees. And over the next two years, you've got 87 more. So that that's kind of very different. Um, our next measure of success at Edge Point is we want to cultivate meaningful relationships with our investment partners. And advisors are classified as investment partners. And how do we do this? Well, there are 90,000 financial advisors in Canada. It is impossible for us to cultivate meaningful relationships with all of them so we don't even try. Only 2400 advisers are doing business with Edge Point out of 90,000. We find it easy to cultivate meaningful relationships with that small group. And then finally, we measure success by everyone that works at Edge point. Maintain a culture of ownership and walk around as if there's owners of our business and treat people that way. 8 00:12:01,710 --> 00:13:40,480 And the only way we can figure out how to do it is to make every single person an edge point, a true owner of our business. And then we tell them, you're an owner, make the business better. So that's who is edge point. Um, this investment approach has been around for 55 zero years. You're looking at a chart in the upper left is the first iteration of the approach Bob Crymble and Russell Morrison used it, invented it, used it at Bolton Trombley when they managed the Taurus fund. And you can see for a decade there, the returns are quite pleasing after after fees relative to benchmarks and absolutely. And on the right side of the chart, Bob Crymble left Bolton Tromblay and started Trimark in 81, and here we see for 26 years the investment approach has delivered pleasing returns after fees and the bottom slide. We've only been around for 14 years and so far we're pleased. What's interesting, looking at these slides and these pictures and I'll talk about it later, is that you see in each of them there are pinch points, if you will, and in the top left, it's 74 where the performance with the benchmark is very similar. And then it diverges in the Trimark. It's 1998 99, it becomes very similar and then it diverges. And then in edge point, it's in that November or, you know, March of 2020 time frame. We will touch on that a little bit later. And finally. 9 00:13:42,010 --> 00:15:22,510 Tying. Jeff. If I take the two principles that are running money at edge point. Bob does not run money for Edge Point. He's just more of a consultant or a resource for us. But tying Jeff over the past 30 years have run billions of dollars and they have never purchased a single share in any of these companies and had them go to zero because these are pretty, pretty spectacular flameouts in our industry. And it's not to say we're never going to make a mistake. We do make mistakes. But the fact that this list is as long as it is leads me to believe that this investment approach has an ability to to help us avoid some of these landmines. I said. The third point was measure success over an appropriate time horizon. I believe your original plan should be focused on ten years. Just like we classify being successful, if we have ten year investment returns that are at or near the top of the pack. I think you should look in ten year blocks. You can have fulsome reviews with with Jim and Matt every 3 to 5 years, but on an annual basis, you're not reworking your entire plan. You're just having a checkup. Let me talk let me show you what I mean by that. Busy slide. I know it. Don't worry. Just. Just listen and I'll explain it. This is bar charts. The gray bars are returns from the S&P 500 from 1980 to December 2022. 10 00:15:22,510 --> 00:17:23,300 43 years, for instance. Far left side of the chart, there's a gray bar that has 35%. In 1980, the S&P 500 returned 35%. What's interesting about this chart? A Over the course of these 43 years, the compound annual return from being invested in the index is 11.9%. That's pretty attractive. What also is interesting is that 34 of the 43 years you had a positive experience. That's 80%. That's very interesting. But the most important part of this slide are the little black squares below the bars. Going back to 1980 on the far left, the S&P 500 returned 35% in 1980. However, look below that. You see that there's a -15. That means at some point during the year, the index was down 15%. You would have read in the newspaper that markets are down 15% and likely you would have called Jim up and said, what the heck's going on? Markets are down 15%. Should we be doing something? What I need you to understand is look at all the black boxes. Every single year, the markets experience a downdraft. Over these 43 years, the average is 13%. If I were a financial adviser, I would tell all my clients at the beginning of the year, you will be down at least 13% at some point in the year. Don't panic. It happens all the time. Let's have a little glimpse into each point. Global one of our portfolios. The same basic chart. The orange bars are our returns from. 11 00:17:23,300 --> 00:19:10,110 We started in zero 8 to 2022. There's 15 of them. You'll see that over that 15 year period, our compound annual return is 13.6. Not bad. You'll see that 11 of the 15 years are positive. Again, that's kind of interesting. There are little boxes below the bars and they show that the average downdraft in our portfolio is 13%, the same as the benchmark. So that should be in your mind happening every year and you don't lose sleep about it. The more important question is what do you do when that happens? And we'll talk about that. Here's just an illustration of of of why you shouldn't rework your plan every one year and why you should kind of focus on ten years. This is just looking at the S&P 501 year returns monthly one year returns monthly, five year returns monthly, ten year, monthly, 20 year. And what do you see? The more frequently you look at your returns, the more negative numbers you see. If we could ever get your focus out to ten years, you can see there's not very, very many periods where you have negative returns. And that's what it's about, keeping focus on the long run and not getting sidetracked by by the short term one year numbers that that can be negative at times. My last key to success was understand and embrace the opportunity and volatility. Probably the hardest one to do, but I think one of the most rewarding. So we're going to look at the anatomy of a crisis. 12 00:19:11,170 --> 00:21:01,020 Crises are inevitable. Each crises is different. In 2000, we had the bursting of the tech bubble. In oh one we had 911. Scary as can be. In zero eight, we had the great financial crisis. Right? When we are launching, our business markets are down. 45 banks have been seized by the US government. Bear Stearns, Lehman Brothers. They're all bankrupt. Oh, my God. This is this is crazy. 2020 COVID hits in March of 2020, our global portfolio is down 33%. How are we going to survive a pandemic? We've never experienced it before. 2022 You've got Putin invades Ukraine in a senseless act. There is always something and when you're in the middle of each of them, you can't see the way out. You think it's going to last forever, but they do end. And let's talk I'm going to highlight a couple that apply to us in our space in the financial world and and sort of role play how we would have reacted. Now, the next chart is going to be a little busy, but don't read it. Just listen to me and I'm going to orient you to it. I want to turn your attention down here. 1998, I'm at Trimark. This is our flagship global equity fund. And we underperformed the benchmark by 27%. Let me say that again. 27. We had a positive return of six, but elsewhere you could have achieved 33. The next year in 99, we underperform by 2.5%. 13 00:21:01,380 --> 00:23:05,930 So. If we looked at it from a three year basis at the end of 99 and you end to see Jim for your fulsome three year review, you would have said, Jim, I think we might have a problem with these guys. They're lagging the index by 11 percentage points. Should we stay or should we go? To quote a Clash song. And Jim, being the experienced advisor that he is, said they haven't changed the way they're managing money. They haven't lost their minds. They have avoided this tech bubble and they own good businesses and I think we stay the course. And what would have happened in 2000. The index was minus ten. Our fund was plus 12. The next year, the index is -11. We're plus ten. The next year, the index is -20 or -5. How did that look? Because you stayed, your three year return was a positive, 5.4%. But if you had left and chased the index, you would have been -14. Now we're at edge point. And in 2019 we generated a fourth quartile return. We did 14. The index did 21. We underperformed by 6%. The next year we did zero. The index did 14. We underperformed by 14. Our three year number at the end of 21, including this one. Sorry. We did 19 index did 20 and change. At the end of that three year period, you would have sat down with Jim and Matt and said, These guys are under behind the index by 7.5%. 14 00:23:05,960 --> 00:24:55,360 What do we do? Do we stay or do we go? And they'll say, we've seen this before. We stay. They haven't lost their mind. They're avoiding, again, another sector that has gone ridiculously high. We're going to be fine. We've only had one year. 2022, we're down five. The index is down 12 member in the tri mark period. We had two more years of double digit negatives and we did significantly different. I hope we do the same thing. This is an interesting slide and I put it here for a reason that often you probably see an edge point portfolio versus a benchmark. And in this case, if you look at the orange squiggly line and that's our fund, the Global Fund and the gray line is the benchmark. And you might go, oh, look, they're above the benchmark. It goes straight up to the right. That's great. These guys are good to be invested with. It's a pleasing experience. Yes, in the long run it is a pleasing experience. But I said you've got to learn to embrace volatility. And the only time volatility matters is when the markets are down. And when we are down more than the markets, that is going to get your attention every single time. Notwithstanding that this orange bar is above the index. For instance, in March of the very first one where it says Edge Point Global dropped 22% and MSCI dropped 20. We launched our portfolio in November of zero eight. 15 00:24:55,480 --> 00:26:54,550 By March of zero nine, the markets retested their lows and the markets dropped 20%. We dropped 22%. And then our portfolio manager called active Managers. They're realigning the portfolio to take advantage of this volatility. Few years later. This is when Europe hit the headlines for the first time that they may be bankrupt and the MSCI index is down five. We're down 16 and our managers are realigning the portfolios once again and we see a rebound. I can go all the way up to the second from the top edge point global portfolio down 35%. That is March of 2020 when COVID hits. The index is down 26 and I've never seen our portfolio managers busier than they were then adding to positions that are getting beaten up, selling positions that haven't gone down because this is a great opportunity to realign the portfolio. And then we see in this part the rebound to the portfolio versus the benchmark. So that is what we talk. That is what I mean when we say you've got to embrace volatility and take advantage of opportunities in the marketplace when it doesn't look clear. And this is I'm going to give you the I think one of the clearest illustrations I can possibly give you. This is. This is the the flow of mutual funds, the flow into or out of mutual funds in 2008. We launched our portfolios in November of 2008. I quit my job at Trimark in June of 2007, and Jeff quit his job in September of 2007in time to quit his job in January of oh eight. 16 00:26:55,340 --> 00:28:41,200 When Ty called me up and quit in January of oh eight, I immediately called my broker and I said, Can you sell all my Trimark holdings and move it to cash? And that was January of oh eight. And fortunate. I'm very fortunate. But then the markets declined 45% and we launched in November of oh eight, and I sat down with my wife and I said, my shoulder this chart. And I said, here because the markets are down 45%. People are redeeming us mutual funds, US equity, mutual funds en masse, even international equity funds are being liquidated hand over fist. And I go to my wife, Ani, the average person doesn't know what they're doing. This could be interesting. And then she said, Well, why are they redeeming? And I said, Well, this is what 2008 is. This is a grid. A brick chart of every return that the S&P 500 has returned since 1826, 180 years. And I said the second worst ever has just been experienced and people are going, Wow, I can't take it. I got to get out. And I told her, I said, look. There's many of them. Are positive. That's like 70% of the time you have positive experience. And the one we just experienced, it happens, but it doesn't happen that often. I go, this could be an interesting opportunity, but this is the one that sealed it for. 17 00:28:42,190 --> 00:30:28,840 I showed her this chart that shows the rolling ten year return from US equities. The rolling ten year return. So this series, at some point, you made very little being invested for ten years. You made very little being invested for ten years. Very little. Very little. Very little. When we started, it was zero. You had made no money being invested in US equities for the previous ten years. And I said to my wife, It never flatlines at zero. Sometimes you make 20% over ten years, Sometimes it's 15, sometimes it's 17, sometimes it's 21. I go, there's a chance that we're going to make money because the average person is selling. They don't understand what's going on. We put up a negative number. It scared the bejesus out of everybody. This series never flatlines. And by the way, my partner's tying Jeff that are going to be managing the money are telling me that the opportunities are fantastic. So we took I think we took 85 to 90% of all our money and invested it in our business back in zero eight. And and like I said, our ten year or 14 year numbers is pretty good. So that is hard to do. But. If you have a good financial advisor, you use a proven investment approach. Measure success over the appropriate timeframe, embrace the opportunity and volatility. I think you can have success. It's not easy. I'm just saying I think that's what's required. 18 00:30:28,860 --> 00:32:12,390 If it was super easy, everyone would be rich. But they're not. So I think you're in good hands with with Jim and Matt. I want to spend a couple minutes here. Jim said maybe talk about two names in the portfolio. I'm going to highlight how we build a portfolio. We look for companies that have the ability to grow. We certainly don't want to pay too much for those businesses. We may have a proprietary idea how this business can grow in the future. We like to have defendable barriers to entry. We like to diversify the portfolio. I'm going to show you two names that could not be more different. And that's how we build our portfolio. We don't like to concentrate it in 1 or 2 ideas. The first one is, is a company called Gentex. They make auto dimming rear view mirrors. So in your car at night, when the guy behind you has got his bright lights on, it automatically dims your mirror. This company has been growing for two decades at double digit growth. They have a 94% market share with only one third of the cars in the world equipped with this mirror. We think that's going to two thirds of the market. They also make auto dimming side mirrors. That is only one sixth globally penetrated. It's growing faster. We think that's going to increase. The big driver in this business recently is the full display video Rearview mirror. 19 00:32:12,690 --> 00:33:58,060 I have only pulled up behind, I think, two cars. I think they're both Cadillacs where I'm behind them and I can see in their rearview mirror everything that's behind their car, including my car. And the reason this is popular is because the new new SUVs and cars. Have a sloped back, smaller windows you can't see as well. So the manufacturers have a camera on the back. It projects whatever is being seen on that camera onto this mirror. And I was talking with Highridge before I left one of the portfolio managers. He said shipments were up 49% in 2022, constrained a little bit by the availability of semiconductors. They expect 20% growth in this in the full display mirror in both 23 and 24. And what's interesting is the price of these full display video mirrors are $200 compared to $20 for the normal mirror and the margin they make twice the margin on that mirror. So it's it's very attractive. There's a couple of other parts of the business where they they have the homelink button on the on the the mirror to open your garage door. There's an opportunity with the increase in toll roads around the world to coordinate the payment of that through there as well as on a Boeing Dreamliner. You can now tap something in the glass dims and they may want to bring that technology to sunroofs in cars. So a pretty interesting car that's had a track record of growth in some really interesting opportunities. 20 00:33:58,390 --> 00:35:45,190 The next one completely different, a toy company, Mattel. You know, Barbie, Hot Wheels, Fisher-Price. We had the opportunity to buy this in 2018 when Toys R up when Toys R Us went bankrupt. So one of the biggest distributors of toys goes bankrupt. That doesn't help business. In 2018, they lost the Disney Princess franchise to Hasbro, and they had a cost structure that wasn't quite right sized. They brought a new CEO, new CFO. And what was interesting about this, this this combination is they have media experience and they they have positioned Mattel now as a as the a content company. They've got a toy business, but they also have intellectual property in these toys. And they're currently striking deals. There's a Barbie movie, if you can believe it, with Margot Robbie and Ryan Gosling coming out this summer. You've got J.J. Abrams producing a Hot Wheels movie. This is the same guy that did Armageddon, Mission Impossible, Star Wars. They've got Netflix deals, Masters of the Universe with He-Man. And there's even a theme park opening up in Arizona with all hot wheel rides, Barbie rides and Thomas the Tank engine. It's a different we think it's a different business and it's attractively priced. So we're optimistic we can make some money. But look, in the interest of time, I think I'm going to stop here. Um, there's a whole bunch of disclaimers that I'm going to quickly put up, uh, because compliance wants me to, but I'll stop sharing and happily answer questions. 21 00:35:48,010 --> 00:36:03,400 Speaker1: So if anyone wants to ask a question, there's a little hand in the toolbar. And so if you click on that hand, we'll see your hand raised and we will unmute your mic and you can ask your questions. 22 00:36:16,160 --> 00:36:34,010 Speaker2: All. I'll ask one part. When you're talking about your portfolio managers in times of crisis being very busy, can you kind of go through what they're doing? Are they looking for all new names? Are they maybe just reworking the portfolio a little? Can you add maybe a bit of color to how you've been successful in those periods? 23 00:36:35,390 --> 00:38:04,290 Speaker3: Sure. March. March of 2020 is a good example. So our portfolio dropped 33%. The index dropped 26%. Inside our portfolio, there were names like Berry Global, for instance, that dropped 60%. It's a company that that makes plastics, not plastic water bottles, but plastic packaging in diapers in. And as it turns out, in masks, masks. So picture this is COVID masks. The you know, the Lysol wipes that plastic canister. The Lysol wipes came in. They make that canister feminine hygiene products. And what happened in 2019, Berry Global bought a company and put on a little bit of leverage. And as soon as the pandemic hit, market traders said, oh my God, it's just like the great financial crisis. What should we do? We should go and crush any business that has leverage. And Berry just strapped on some debt. So they've got some leverage and they took it down 60%. Well, I was privy to a call where management like one week, you know, after after the pandemic started, they said their guidance for the full year is unchanged. And we went, Well, that business is now down 60%. 24 00:38:04,320 --> 00:39:10,660 Management is telling us their guidance is unchanged because they're actually making. They can't keep up with the the sanitary disinfectant, wipe the packaging for that that and we we added so we added that we might have had a name in our portfolio like a Tim Hortons that really was unchanged. And we went, okay, well, that's unchanged. But there's a name in our business, in our portfolio that is down 60%. We should take some of that. The risk reward going forward is better in Berry Global than it is in Tim Hortons. So a restaurant brand. So we made a we made a switch. So in times of volatility, it's often the case they revisit names that are in the portfolio because they already know them. They do have a watch list of other names that they would love to own, but the base we don't own them is because they're too expensive. So sometimes in a in a period like that, they become attractive. But we do start with names where we have a much better understanding of the story. And that's what active management is all about. 25 00:39:11,890 --> 00:39:41,320 Speaker1: So I'll ask a question on you started the firm in 2008, November 2008. I remember you coming by the office to doing your roadshow at that time. Can you just walk us through your process and how you made that decision in spite of what was happening in the markets in November of 2008 to launch at that time instead of delaying for for a better time? 26 00:39:43,120 --> 00:41:11,150 Speaker3: Yeah, it's it's a good question. I, I, I talked a little bit about the companies we think are, are more sales and marketing type companies out there today and we like to consider ourselves an investment company. A sales and marketing company would not try to raise money when the markets are down 45% because no one wants to buy it. They would wait until they rebound and go, We got a great idea. It's up X percent. You should buy it. Well, that's not good for any investor. So we went out and we said, look, we have fundamentally believe I can't I can't manage my own money myself. So I know the average person can't manage their own money themselves. So I believe we need to exist and they don't have the emotional wherewithal to do it on their own. So they need a financial adviser. So you need to exist. So we came out and said we're going to distribute through financial advisers because there's value there and there's value where we are. And we said the the attractiveness of these businesses, if you own them for a long enough period of time, we're going to get through this. It looks like this crisis at the end of the world. But you've got to have some confidence and. By businesses. At the beginning we said we know the economy is going to be slow. If you look out five years, the economy is going to be slow. 27 00:41:11,180 --> 00:42:39,870 We said try to invest in businesses that have the ability to grow even if the economy is going to be slow. So we weren't going out buying car companies in zero eight because if the economy is going to be slow, you need a booming economy to be selling more vehicles and it's just not going to happen. Instead, we bought a company called Interface that made carpet tiles. So when you walk into gym, it's probably the carpet behind you, behind your desk, our little squares that that people are. Back then they were replacing full broadloom with carpet tiles. And if you spill the coffee or red wine or something on it, you pull up a square and and the growth profile, you didn't need a lot of buildings to be built for this company to do well. You just needed people to change from one type of flooring to another. And there was tremendous growth opportunity. So we were finding lots of businesses that we found could grow all else being equal, if the economy is slow. So it was it took convincing not everyone. There was a lot of fear in the in the world and in advisors minds, but we managed to tap into relationships where you started the advisors that had dealt with us for a long time at Trimark, it was easier to convince them to give us a chance. 28 00:42:41,240 --> 00:43:17,840 Speaker1: Super. Thanks. Thanks for that, Pat. And just just one other question on your website. I know that some people did visit the website, but you have links to all of the companies that you own. So I can go on your website, look at your top ten, click a link and go to the website for that particular company and learn exactly what it is that you own in that fund. And that's fairly unique in the industry. Can you can you talk to that a little bit, please? 29 00:43:19,060 --> 00:45:23,930 Speaker3: I think it's just it makes sense to us. It's. It's just transparency. Um, we like, we like our businesses, we like our portfolios. We run concentrated portfolios. So the top ten in our portfolios generally are 30 to 45% of the portfolio. So we think you should know what you own and we're happy to have that link there. And and it's it's critical that you understand you might go, oh my God, in the top ten, these ten names represent 40% of the portfolio. Go look through that top ten and try to find two businesses in the same business. It doesn't it doesn't exist. You're going to have a toy company. You're going to have a HMO. You're going to have a, you know, the auto dimming mirror company. You're going to have restaurant brands, which is Tim Hortons, Popeyes, Burger King. It's it's by design. Each of these businesses are different. And, um, you know, we think you're we think you're well diversified. It's one of the misconceptions that people have when they see a mutual fund name in their portfolio. They go, oh, edge point global. Jim you haven't done anything with that in in a year or something. I should probably change it out for something else. Little do they know that that's what the portfolio managers are doing. Whenever there's a hiccup in the marketplace, they are trying to make that portfolio as attractive as it can possibly be for the buyer tomorrow. Every single day something in that portfolio is up, something is down sometimes sharply, and the managers go, Should I buy a little more of that, sell a little bit of this, make it the best portfolio. So it's a you own a mutual fund, you own a diversified basket of 38 to 42 names that are constantly being adjusted to make it as attractive as it can be for the next the buyer the next day. That's how we about it. 30 00:45:24,230 --> 00:45:45,950 Speaker1: Thank you, Pat. Any any other questions? Feel free. We'll wait a few minutes to see if anyone raises their hands. And if there are no other questions, then we'll close. Um, Matt, did you have anything you wanted to add before we. We close? 31 00:45:49,080 --> 00:47:30,960 Speaker2: Uh, no, I don't think I have anything to add. Although it was interesting hearing Pat talk. I mean, Pat spoke about elements, essentially due diligence that that should be done for active managers and spoke about some of the pressure that comes with being a publicly owned asset manager. And if you've looked through your portfolios, edge point obviously isn't the only mutual fund or active manager you own, but you'll notice a common theme that most of managers we deal with are private. And the reason from our perspective is if there's lots of companies out there that will have. Six different global equity funds. And as the market changes, they will or maybe shifts to a different style. They will launch a new fund that is maybe popular on that current style over time. That doesn't really help our returns. So we tend to really favor privately owned businesses. And there's a few other things we favor when we look for active managers. We obviously want low fees and importantly, we want high levels of manager ownership. And obviously performance is part of that process. But performance is not the be all end all. There's lots of other things that have to go into an analyzing, I think an active manager outside of performance because performance can also even over three or 4 or 5 year periods, which seem like long periods, you can still have a lot of luck that comes into having good returns. So we've been really happy, you know, that our kind of due diligence process led us to edge points. And also, you know, obviously happy with the other managers we have. But it was just interesting, I think, to hear Pat talk about those things. And it really big reason why we are choosing to do business with with edge point. 32 00:47:32,460 --> 00:48:01,150 Speaker1: So thank you, Matt. Thank you, Pat. Really appreciate you taking the time. Thank you, everyone, for joining us for our first virtual event. As Matt said, we are absolutely open to any comments at all. Feel free either by email, phone, whichever way you want to reach out. We're open and we thank you again and wish you all a great rest of the day. Thank you. Thanks, everybody.