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How an activist investor shook up a Canadian brand Add to ...

In a Toronto meeting room bearing the name "TOP DOGS," two alpha business chiefs are singing each other's praises.

“He is smart as hell!” “Scary bright!” “Accomplished!”

That’s Michael McCain talking. He has been chief executive officer of Canada’s largest food processing company, Maple Leaf Foods for 13 years. Tall and broad-shouldered with a wavy crown of steel-wool hair, the 53-year-old is an effusive communicator who frequently leans into the table as he drives home a point.

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Basking in the CEO’s praise a chair away is Greg Boland, hedge fund owner and Maple Leaf shareholder. Lean and sinewy, Boland, 47, lets McCain do most of the talking while he balances his chair on its hind legs. On the few occasions that Boland interjects, he is economical with words and delivers them in a quiet monotone. “Michael, to his credit, listens.”

Breaking into a wide smile, McCain enthuses, “We are more the same than we are different.” Counting fingers, he rhymes off similarities: “analytical,” “objective,” “results-oriented,” “Type A,” “adventurous.” He stops mid-stream when asked if he shares Boland’s passion for rock climbing.

“No way,” McCain yelps in mock fear. Recalling a photograph of Boland hanging from a stiletto-peaked Italian mountain, he wags a finger at his partner, “You silly bastard, don’t do that.”

It’s a good bet McCain uttered the same warning a year and a half ago. But it wouldn’t have been with a smile. These two have waged an unusual but telling corporate war that ended with a truce that left the outnumbered McCain in charge.

In August, 2010, Boland’s fund, West Face Capital, put Maple Leaf in its crosshairs, acquiring a 10% stake in a company that had disappointed investors for years.

McCain’s executives and directors knew they were under attack: Boland was an activist with a record of shaking up companies. Sure enough, in the following weeks, Maple Leaf became the object of withering private and public critiques, culminating in West Face launching a proxy contest days before Christmas, 2010.

The peaceful outcome in what is normally a battle to the death speaks to the effectiveness of the latest chapter of the activist playbook. The days of “greenmail” and “raiders” are gone. A new generation of shareholder rebels are applying enormous financial clout, shareholder support and a good supply of patience to awaken the management of slumbering corporate giants. It’s an American phenomenon; Boland is an outlier. But American activists are pointing their lances toward Canada too. New York hedge fund owner Bill Ackman recently brought his roughhouse tactics north to shake up management at industry slowpoke Canadian Pacific Railway Ltd . “This is about restoring the balance of power back to the owners. The activist acts as the tip of the spear and is willing to take the body blows,” says Ackman.

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There was a time when Greg Boland was paid to defer to the elite.

It was the late 1980s, and the first-year science student at the University of Toronto was paying his way through school as a waiter at Palmerston, a top-tier restaurant that was making a star of chef Jamie Kennedy. One night Boland was asked to serve a private party of businessmen who had gathered to raise funds for a portfolio management program at the University of British Columbia’s Sauder School of Business. Boland was captivated by the war stories recounted by investment legends like Milton Wong.

When the guests told Boland that the Sauder program trained students by giving them university endowment money to invest, “I thought, ‘Holy shit, this is really cool,’” Boland recalls. “I liked the tangibility and the practicality of it as opposed to the theoretical stuff you normally get in school.” Within months, Boland enrolled at Sauder.

Growing up as one of two children of a divorced mother in Ottawa, Boland spent most of his spare time racing down ski hills: “It hooked me mentally and physically.” But he was good with math too—and, later, software code. The combination—“a thrill-seeking puzzle solver,” in Boland’s own words—pointed the way ahead.

The cold calculations that come with both math and advanced skiing made Boland a perfect fit for the portfolio management program at Sauder. His computer skills put him at the forefront of an emerging style of investment strategy: quantitative analysis. What most impressed teachers was Boland’s Zen-like confidence in going against the grain. “It was quite apparent early on that he was an independent thinker,” says Rob Heinkel, a Sauder finance professor. “He was very hard-working, always very calm, not cocky or smug. What distinguishes Greg is his gut feel. When he locks on to an idea, he goes with it. He has conviction.”

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