In his day job, Paul Alofs helps raise money to save lives. The chief executive officer of the Princess Margaret Cancer Foundation also has ambitious goals for his personal investments. The author of Passion Capital: The World's Most Valuable Asset, says he's less focused on what a company does and more on the convictions of the people running it. The Globe spoke with Mr. Alofs recently about his investing style, and why his portfolio is so heavily weighted to stocks in the United States.
When did you start investing? I had a business teacher in high school in Windsor, Ont., who got me interested in investing. I made my first investment after working at the local Chrysler truck plant in the summer, buying $500 worth of Chrysler shares. I made a little bit of money on that, and sold it about a year and a half later.
What's in your portfolio today? About 80 per cent of my investments are in the U.S., and the rest in Canada. I have a variety of holdings, but my top five are Johnson & Johnson, JPMorgan, General Electric, Brookfield Asset Management and a new ETF [exchange-traded fund] on the Nasdaq called Loncar Cancer Immunotherapy. When I look at what to invest in, I look at the CEO. I put huge importance on their passion for their business, for it to succeed, and a passion to stay at the company for a long time.
Is that because you have been and are a CEO yourself? I think that's part of it. I have been president of a company since 1989 [starting with HMV Canada] and I know how hard and demanding it is. I also think I have pretty good insight into what makes a good president or CEO. I think they have a huge influence on the performance of your investments. I try to get as much insight as I can on them and what they are all about, beyond just reading analyst reports and financial statements. The best CEOs deliver what I call "disruptive excellence," which is always changing and reinventing the business. It's not easy to do.
Why are you so heavily invested in the United States? I have a predisposition to investing in U.S.-based companies, in U.S. dollars, since I lived and worked in the U.S. at the Walt Disney Co. [as general manager of Disney Stores North America]. It's not that I don't admire Canadian companies, but the strength of those large-cap U.S. companies that I've been invested in over time has been a focus for me. I'm also a long-term believer in the U.S. dollar. Growing up in Windsor, across the border from Detroit, also meant I was influenced a great deal by American culture and companies. The bias started early for me and was reinforced when I was working at Disney and later MP3.com.
Do you invest on your own or use a broker? I self-invest. I had an adviser who passed away from cancer. After that, because of the tools available today, I decided to make my own decisions and trade directly. I've been doing that for about five years now.
What has been your best investing move? Stepping out of my comfort zone at Disney and joining the MP3.com startup in San Diego in 1999. The stock options became very valuable and I was able to exit the company with a good financial gain in 2000. I moved back to Toronto. The timing turned out to be very fortuitous.
What has been the worst move? It's an old lesson – I should be smarter than this – but taking a tip from a friend and buying into a very risky hedge fund manager, Salida Capital [known for paying $1.68-million (U.S.) to have lunch with Warren Buffett]. It worked out very badly. I lost about half of my investment.
This interview has been edited and condensed.
For this series, a high-net-worth investor has investable assets of more than $750,000.