Bruce Chernoff has made a lot of money by investing when, he says, “there is blood in the streets.” But for a few months after the 2008 crash, it was his own blood flowing on the pavement.
The Calgary oil and gas investor, known for his adroit timing, was staggering from a flurry of unkind cuts. His oil company, Harvest Energy Trust, had taken a hit when Ottawa lowered the boom on income trusts in late 2006, and was further maimed two years later by the stock market meltdown.
Meanwhile, he made a foray into financial services by buying a fund management business on the eve of the crash, only to watch its asset base crumble. To add to the agony, he agreed to buy a ski cabin in Fernie, B.C., at the peak of the market, and saw mountain property values dive.
“My pants were down around my ankles on all fronts,” he says, grimacing at the memory.
It was a defining moment in the education of the man who is one of the oil patch’s most resilient investors. Mr. Chernoff epitomizes a new wave of younger titans who, through bitter experience, have learned to live with market volatility, production bursts from new technology, and alarming price gaps between Western heavy oil and the world’s benchmarks. He had a hand in founding brand-name companies – such as Pacalta Resources Ltd., Petrobank Energy and Resources Ltd., and Harvest – and yet remains the most important Canadian energy tycoon whom nobody knows.
Mr. Chernoff was able to rebound from his all-fronts debacle, but there was no magic to his comeback – he just gutted it out. “I couldn’t control what was happening in the world, and stressing about it wouldn’t be constructive. Whatever was going to happen was going to happen.”
What happened was that Korea National Oil Corp. in late 2009 paid $1.8-billion net of debt for Harvest, providing a handsome premium over the market price. As for his investment fund company, it retrenched and waited for the recovery, which came as markets bounced back. The Fernie place? It has proved to be a hit with his three kids, all under 12.
The fund management business he had bought, which was running the EnerVest group of closed-end funds, is now rechristened Canoe Financial LP, and with $1.6-billion under management, is pushing out into the mutual fund marketplace with the help of a high-profile partner – author, former Dragons’ Den star and investment banker Brett Wilson, a friend of Mr. Chernoff for many years.
But building a new mutual fund brand means a rare public selling job for the very private Mr. Chernoff, who has reluctantly agreed to meet a journalist at, appropriately enough, the Canoe restaurant high above Toronto’s Bay Street.
Mr. Chernoff is known for being media-shy but turns out to be an entertaining raconteur with a colourful turn of phrase, as he dips into the mushroom soup and duck pasta. He looks younger than his 47 years, with more the appearance of a lean, weathered rodeo cowboy than a fat-cat financier. And he is actually a weekend cowboy who dabbles in amateur riding and roping, skills he hones on a 60,000-acre spread south of Kamloops in the prime cow-punching country of the B.C. Interior.
“I’ve been bucked off four times but I’ve never hurt myself,” says Mr. Chernoff. He could just as easily be talking about his 30-year ride as an investor, which began back in high school in Calgary when he became interested in trading stocks. He went east to Queen’s University in Kingston, Ont., to study engineering in the footsteps of his geologist father, Michael. He got his degree, but was not a great student, largely because of an active social life and a continuing distraction in share-trading.