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Georges St.-Pierre in a story about UFC for Report on Business Magazine - April 2011 cover
Georges St.-Pierre in a story about UFC for Report on Business Magazine - April 2011 cover

How Fortress Paper became a TSX star Add to ...

I know Chad Wasilenkoff's secret: He doesn't sleep. Back when he was a teenager, the CEO of fast-growing Fortress Paper tried every sort of solution for his insomnia-sleep clinics, acupuncture, hypnosis. Nothing worked.

And nothing works now. This explains why, around midnight recently, I received an e-mail from Wasilenkoff. Lying awake, he'd figured out the solution to a problem in one of the deals he's trying to stitch together. Why waste time counting sheep when you're vibrating with a self-described "drive to find a better solution for everything"?

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Wasilenkoff has accomplished what no one thought was possible: He has made a fortune in forestry, a sector that has been dead money for years. Building on an $8-million private offering in 2006 and a $46-million IPO in 2007, Wasilenkoff's creative deal-making has rocketed Fortress to a $770-million market capitalization. An astounding stock-price surge of 306% in the past year is bested by only one other name in the 244-member S&P/TSX composite, the benchmark index that Fortress is poised to join, and in the past three years Fortress has outpaced all comers with its 817% gain. As investors have piled in, Wasilenkoff's own fortune-he owns about a sixth of the company he founded-has jumped to $130 million.

No mere hewer of wood, Fortress is a unique animal that makes money in three cherry-picked specialties. The first is making banknote paper at a mill in Switzerland that also manufactures high-security paper for other uses: passports, visas, lottery and train tickets. The second business is non-woven wallpaper, produced at a mill in Germany. Fortress dominates this quality niche.

The third, and latest, leg is the most counterintuitive of them all: the rag trade. Wasilenkoff scooped up a pulp mill in Quebec dirt cheap and is overhauling it, with the bulk of the money supplied by the Quebec government. The plan is to make dissolving pulp, a suddenly hot commodity used to produce rayon, which is a popular substitute in China for cotton.

Wasilenkoff's title is CEO, but he's more like a good hedge fund manager-a relentless value hound, in other words. It's always been this way, says his mother, Nina. When he was 8, while on a family holiday in Hawaii, he asked to borrow $20 to buy a supply of watermelon bubble gum, which wasn't available back home in Calgary. The stuff wasn't for chewing; it was for flipping. Wasilenkoff quadrupled his money selling the gum to classmates. "He was always looking for action," says Nina. "His mind never stops. He's constantly searching."

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By the time he was a teenager, Wasilenkoff was in the habit of wearing a suit, and his arbitrage had moved past gum to everything from video-game cartridges to Robert Bateman prints to beater cars. He earned enough to buy a used Porsche 911, canary yellow, for $14,500. The occasional presence of the car in the school parking lot and the frequent absence of its owner from class led the school's vice-principal to suspect Wasilenkoff was dealing drugs. He hauled mother and son in for a chat. "School wasn't the place for him," says Nina. They discounted the drugs notion in no time. "Chad and I left smiling. They had no clue what he was about."

Wasilenkoff arrived at the University of British Columbia in Vancouver with ambitions of becoming a real estate developer. But on graduation, he realized he couldn't abide the wait to get to the top of that business. Curious about the stock market, he got a two-month gig at Canaccord Capital, the legendary brokerage on Howe Street, stapling stock receipts. He got into an introductory broker's course after he finished the Canadian Securities Course in a dizzying three weeks. He had convinced Canaccord's chairman, Peter Brown, that he could sprint the marathon.

Wasilenkoff is a famous persuader, though not a voluble one. "You get sold before you realize you're being sold," says Richard Whittall, a Fortress director and Vancouver investment banker. "Chad's a tremendous listener. He chooses his words very carefully. He'll sit patiently. I don't want to call it a poker face, but he's basically very good at not betraying any emotion."

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