Jennifer Law knows how to stay poised. After all, she has a 15-month-old and a 3 1/2-year-old at home. And she can tame those often-volatile small-company stocks (which declined by an average of 47% in 2008). As of March 31, Law's Renaissance Canadian Small-Cap Fund, sold by CIBC Asset Management, sported a five-year average annual compound return of 9.7%, compared with just 4.4% for its rivals. The 38-year-old manager corralled Andrew Bell and explained how she does it.
It's a high-risk asset class. I've been here seven years, and in the down years, it's terrible. But we do a pretty good job of capital preservation.
We still have 17% to 18% of the portfolio in income trusts. We have names that are yielding 10% and, because they're in income deposit securities (IDS) format, they won't change.
I say this to all the CEOs who visit us: We encourage you to have a dividend yield. Your share-price multiple expands, and when bond yields are low, as they are now, everyone wants more yield.
I did accounting at university, but I knew it wasn't going to be a long-term career. It wasn't dynamic enough.
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I started at Montrustco Inc. as an analyst in 1997, the year before Long-Term Capital Management failed and oil went down to $12 (U.S.) a barrel. It was a great learning experience-a severe bear market for small caps. You learn what doesn't work.
I went to Empire Life, where I got the opportunity to run money. I took over a small fund with returns in the fourth quartile, and got it up to the first quartile. Then a headhunter called: CIBC was looking for a small-cap manager. I was running $60 million at Empire and I thought I'd love to run 10 times that.
The No. 1 lesson I've learned in investing is to know yourself. Know when you want to take risks, and the signs you're getting too complacent.
Trust your instincts. After I meet with management teams and I'm walking out the door, I ask myself: What's your call? Buy or sell? When the interview is fresh, it's usually a pretty good indicator. I've had meetings in which something sort of bothered me-a little lingering thought-and then, a couple of weeks later, something bad happened to the stock.
You have to be really disciplined about buying. Your decision will come back to you. We have a buy range. Waiting for a stock to come into it can be painful. You really want the stock, and you don't want to let it run away. But I've found that patience works.
My unitholders want to sleep at night. I want to sleep at night. I've got two young kids. I don't need added stress.
Some people are great momentum traders, but I'm not one of them. If I chase a stock, I know I'm not at an advantage.
We have Venture Exchange stocks. We'll go down to $50 million market cap or a little lower. We like to seed them with a little cash on the balance sheet.
I love to look at management information circulars just to see how much CEOs make. It makes me mad when they're irresponsible about issuing stock and they don't own any of it. That's the worst combo.
A turnoff for me is when companies tell me that something isn't important. Well, you know what? Finding out about that is my job.
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