Gluskin Sheff (Symbol-GS) - Hit by Income Trust Wave

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Gluskin Sheff (Symbol-GS) - Hit by Income Trust Wave

Post by Ron Mann »

Gluskin Sheff + Associates Inc went public in May at $18.50/share netting the selling shareholders (not the Company) $133,000,000. Ira Gluskin, one of the name partners and selling shareholders, was forever boasting about his wisdom in loading up on Income Trusts for his clients. GS was reputed to hold over $800,000,000 in Income Trusts in their clients' account.

Today GS-T is selling at $13.90 - a loss of 25% for those who bought the much sought after IPO. GS earnings were heavily dependent on
perfomance fees.
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Post by Taggart »

Saturday, July 30, 2005

IRA GLUSKIN:

"Our little firm manages about $2.8-billion in assets, of which roughly $800-million or 27 per cent are in income trusts."

Tuesday, December 06, 2005

Ira Gluskin, president of Gluskin Sheff & Associates and a major investor in income trusts told a real estate conference in Toronto this week that the government could take another stab at changing the tax status on income trusts after the January election.

There’s a lesson in all this for the retail investor: If the government can giveth, the government can always taketh away. That’s one risk the investment industry has underplayed since the onset of income trust mania. Income trusts are on stable ground for now and it may be the perfect time to trim some from your portfolio.

We all need income in a well balanced portfolio but the payout is modest and not worth the risk that is present in income trusts. Perhaps it’s time to go back to bonds.

Saturday, December 17, 2005

IRA GLUSKIN:

"Yes, the trusts look okay for now, but the government is not your friend when it comes to trust regulation."
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Post by Ron Mann »

Taggart wrote:Saturday, July 30, 2005

IRA GLUSKIN:

"Our little firm manages about $2.8-billion in assets, of which roughly $800-million or 27 per cent are in income trusts."

Tuesday, December 06, 2005

Ira Gluskin, president of Gluskin Sheff & Associates and a major investor in income trusts told a real estate conference in Toronto this week that the government could take another stab at changing the tax status on income trusts after the January election.

There’s a lesson in all this for the retail investor: If the government can giveth, the government can always taketh away. That’s one risk the investment industry has underplayed since the onset of income trust mania. Income trusts are on stable ground for now and it may be the perfect time to trim some from your portfolio.

We all need income in a well balanced portfolio but the payout is modest and not worth the risk that is present in income trusts. Perhaps it’s time to go back to bonds.

Saturday, December 17, 2005

IRA GLUSKIN:

"Yes, the trusts look okay for now, but the government is not your friend when it comes to trust regulation."

More recent quotes from Ira Gluskin: Globe and Mail October 6, 2006

"More than 20 per cent of our firm's managed assets are in the sector and therefore we care."
"In conclusion I still like trusts"
"The inevitable conclusion is that trusts should produce returns in the high single digits, which looks pretty good at this very moment."
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Post by Taggart »

Ron Mann wrote:
More recent quotes from Ira Gluskin: Globe and Mail October 6, 2006

"More than 20 per cent of our firm's managed assets are in the sector and therefore we care."
"In conclusion I still like trusts"
"The inevitable conclusion is that trusts should produce returns in the high single digits, which looks pretty good at this very moment."
Personally I was surprised Ira made no mention in his column in last Saturday's Globe on the tax changes to trusts.
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Post by George$ »

Not on iicome trusts but more from Ira Gluskin in today's Globe and Mail
An eye for the financial all-stars will net winning returns

A bit from it on private equities
I recommend reading two magazines -- the Nov. 22 edition of Fortune with an article on private equity and the Dec. 11 issue of Pension & Investments, with a variety of articles about private equity and alternative assets. The articles confirm the popularity of private equity in the institutional world and even offer some plausible explanations for the superior performance. Private equity firms are the top dogs in the financial world in terms of generating consistently higher equity returns over other asset classes. Academically this makes no sense, because everyone else is just as smart and financial theorists support the argument that private equity returns will revert towards the pack.

There are all sorts of critics of private equity. Some focus on the huge leverage that is taken on most of the time and others decry the belief that private equity managers are any different, or any better, than anyone else. In contrast, you can find all sorts of articles that suggest that the leading private equity managers walk on water.

I don't have the long-run answer, but in the short run, the trend is unstoppable.

Gigantic institutions such as university endowments are going to continue to allocate greater amounts to alternative assets, especially to the private equity space. Historically, superior returns always attract the most new cash.

Because my day job is managing public equities, I remain fascinated by the steady disillusionment of so many players in so-called active stock management. Despite the fantastically strong stock markets worldwide, there is an ever-growing belief in the institutional world that the day of the active long-only manager is coming to an end.
Any views? This does not seem like "fundamental" to me - but simply chasing performance and the crowd.
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Post by Taggart »

George$ wrote:Not on iicome trusts but more from Ira Gluskin in today's Globe and Mail
An eye for the financial all-stars will net winning returns

A bit from it on private equities
I recommend reading two magazines -- the Nov. 22 edition of Fortune with an article on private equity and the Dec. 11 issue of Pension & Investments, with a variety of articles about private equity and alternative assets. The articles confirm the popularity of private equity in the institutional world and even offer some plausible explanations for the superior performance. Private equity firms are the top dogs in the financial world in terms of generating consistently higher equity returns over other asset classes. Academically this makes no sense, because everyone else is just as smart and financial theorists support the argument that private equity returns will revert towards the pack.

There are all sorts of critics of private equity. Some focus on the huge leverage that is taken on most of the time and others decry the belief that private equity managers are any different, or any better, than anyone else. In contrast, you can find all sorts of articles that suggest that the leading private equity managers walk on water.

I don't have the long-run answer, but in the short run, the trend is unstoppable.

Gigantic institutions such as university endowments are going to continue to allocate greater amounts to alternative assets, especially to the private equity space. Historically, superior returns always attract the most new cash.

Because my day job is managing public equities, I remain fascinated by the steady disillusionment of so many players in so-called active stock management. Despite the fantastically strong stock markets worldwide, there is an ever-growing belief in the institutional world that the day of the active long-only manager is coming to an end.
Any views? This does not seem like "fundamental" to me - but simply chasing performance and the crowd.
George$,

In answer to your question this one is from Jonathan Davis of the Independent in the UK. I don't want to burst the bubble, but...

Published: 11 November 2006
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Post by George$ »

Taggart wrote: In answer to your question this one is from Jonathan Davis of the Independent in the UK. I don't want to burst the bubble, but...

Published: 11 November 2006
Thanks Taggart and here is a link to the FSA discussion paper your link references ..
http://www.fsa.gov.uk/pages/Library/Com ... /114.shtml

Is Jonathan Davis somebody well worth reading. This is my first read of JD.
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Post by Bylo Selhi »

George$ wrote:Is Jonathan Davis somebody well worth reading.
Generally yes. In my experience a good rule of thumb is that if a financial columnist's first name is Jonathan (Clements, Chevreau, Burton, Davies) their work tends to be a cut or two above the usual financial porn one finds in the media. (Or perhaps the rule is that their first name starts with a "J", which would add Jason Zweig who certainly belongs in the list.)

Then again, maybe I'm just data mining ;)
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Post by George$ »

Any thoughts on GS as an invstment?

It is pretty thinly trader but there has been significant insider buying since they went public.
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Post by jiHymas »

Bylo Selhi wrote:
George$ wrote:Is Jonathan Davis somebody well worth reading.
... perhaps the rule is that their first name starts with a "J", which would add Jason Zweig who certainly belongs in the list.
Among others. Huh.

Private equity is here to stay for a number of reasons.

1. The ever-increasing amount of bullshit inherent in being a public company. Sarbanes-Oxley is only the most egregious example of the additional costs that arise. There is a lot of public pressure for increased controls every time something blows up. Some of it is aired in this forum.

2. Ever-increasing capital pools. Deal size is no longer a constraint for private equity.

3. Accounting Fumbly-Diddles. One of the Very Bad Things about public equity markets is their over-reaction to every sneeze in the marketplace. If it doesn't trade publicly, you don't have to worry about your entire year's performance being determined by some other fund having a massive margin call in late December.

4. More Accounting Fumbly-Diddles. We hear ad-nauseum about how pension funds want stable cash flows. While I have no direct knowledge of the matter, I'll bet these things are put on the books at a discounted cash flow based on long bonds. Why not? What could be more reasonable for, say, a small regulated utility that's going to crank out $10-million annual profits until Judgement Day? The more stable the cash flow, the easier it will be for pension funds, their auditors and their regulators to price it at long bonds +100bp, or whatever. And after the experience of the last ten years, especially, the large pension funds just love equities in bonds' clothing.

What all this means is that there will be a big shift in public equity markets over the next 20-50 years. Stable businesses will never go public; if the entrepreneur who built it can get the same pay-out from private equity as he could from going public, why bother? Let the regulators keep their rectal probes and sit on them.

There will be a tendency for public markets to include only risky or volatile businesses, that private equity cannot convince their auditors to price as bonds-plus. Goodbye banks - Hello commodities!

And, of course, the excess returns from private equity will dry up. There will probably be something of a risk premium for public markets, but this will be more related to genuine risk.

The interesting part will come when a major private equity fund blows up. Remember Crocus? That was only a fart in a windstorm.
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Post by NormR »

jiHymas wrote:
Bylo Selhi wrote:
George$ wrote:Is Jonathan Davis somebody well worth reading.
... perhaps the rule is that their first name starts with a "J", which would add Jason Zweig who certainly belongs in the list.
Among others. Huh.

Private equity is here to stay for a number of reasons.
Without disagreeing, Marty talked a bit about private equity here
jiHymas wrote:Stable businesses will never go public; if the entrepreneur who built it can get the same pay-out from private equity as he could from going public, why bother? Let the regulators keep their rectal probes and sit on them.
I disagree. Some founders have a fair amount of pride. They'd rather cash out and still see their firm survive in reasonably good shape. Others of course will be happy to take the cash.
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Post by randomwalker »

As of the issuance of their prospectus last May Gluskin Sheff had $3.75 billion in Assets Under Management (AUM) upon which they earn management and performance fees.
I suppose the big question is, just what a dollar of AUM worth?

Significant insider ownership include the following
YMG Capital at 10.77%
Wellington Management at 12.78%
Fidelity at 12.99%

Control of the company remains in the hands of Ira Gluskin, Gerald Sheff or their families through ownership of multiple voting shares. One common share equals one vote, each multiple voting share represents 15 votes.
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Post by randomwalker »

ps I couldn't help notice that Senator and Conservative Party strategist Hugh Segal sits on the baord of directors of Gluskin Sheff I wonder if there is any tension over the Flahery Income Trust decision lol
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Post by jiHymas »

NormR wrote:
jiHymas wrote:Stable businesses will never go public; if the entrepreneur who built it can get the same pay-out from private equity as he could from going public, why bother? Let the regulators keep their rectal probes and sit on them.
I disagree. Some founders have a fair amount of pride. They'd rather cash out and still see their firm survive in reasonably good shape. Others of course will be happy to take the cash.
I don't understand this point.

One of the big goals for an entrepreneur has always been to become big enough that you can go public, because that's where the big pay-off comes - there has been a huge premium paid to go public.

If that premium disappears, then there will be no point - an entrepreneur whose firm has become big enough to go public won't bother, because he can get the same money selling to private equity, by definition.

Those entrepreneurs whose plans have never included going public, for whatever reason, will not be affected by the disappearance of the premium.
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Post by NormR »

jiHymas wrote:
NormR wrote:
jiHymas wrote:Stable businesses will never go public; if the entrepreneur who built it can get the same pay-out from private equity as he could from going public, why bother? Let the regulators keep their rectal probes and sit on them.
I disagree. Some founders have a fair amount of pride. They'd rather cash out and still see their firm survive in reasonably good shape. Others of course will be happy to take the cash.
I don't understand this point.

One of the big goals for an entrepreneur has always been to become big enough that you can go public, because that's where the big pay-off comes - there has been a huge premium paid to go public.

If that premium disappears, then there will be no point - an entrepreneur whose firm has become big enough to go public won't bother, because he can get the same money selling to private equity, by definition.
There are of course those who are happy to wait for a favourable time to sell to the public. (Essentially the second half of many PE transactions.)
jiHymas wrote:Those entrepreneurs whose plans have never included going public, for whatever reason, will not be affected by the disappearance of the premium.
Tricky, many want to sell for estate/family planning reasons. It is useful to ask why private firms would rather sell to Buffett than to the PE guys. (They wouldn't have to sell to Buffett should the markets provide a nice premium but the markets don't for all firms in all periods.)
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Post by Bylo Selhi »

Mr. Rosier called Mr. Buffett recently to discuss two company jets. "Warren, I have two Learjets, a 1981 and a 1982," he says he told Mr. Buffett. "They are nearly 25 years old now, and I am thinking about getting a new airplane. Is that an issue?"

"That is your decision," Mr. Rosier recalls Mr. Buffett replying. "That is your company to run." Says Mr. Rosier: "Wal-Mart left us alone, too. But not like this."
Hmmm... He didn't suggest replacing those jets with NetJets? :shock:
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Post by lystgl »

A very smart man, that Warren Buffett. If the Co. wasn't being run properly in the first place; he wouldn't have bought it. Smarter still in not interfering after buying it. Somebody once said something about not fixing it if it wasn't broke? Wasn't Mr. Buffett but good advice in any event. (Pepsi CEO when Coke reformulated for those who can't remember)
Gotta say though that he's apparently not as smart as Bill Gates as Mr. Gates got Mr.Buffett to give him most of his money too. Mr. Gates pretty much stole everything from DOS to Windows, in my opinion but then that's just my opinion.
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Post by Taggart »

Toronto Life Magazine

August 2009

Other People’s Money

"It’s been a tough year for Gluskin Sheff, money managers to the rich and famous. Their clients lost millions in the meltdown, and some people think the firm should have seen it coming. Can Bay Street’s most exclusive investment company restore the faith?"

By Siri Agrell
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Post by Locke »

I have them on my watch list to indirectly invest in alternative investment that also qualifies for cad div tax credit.
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Post by Taggart »

Financial Post

Gluskin Sheff announces changing of the guard

Karen Mazurkewich, Financial Post

Published: Friday, September 18, 2009
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Re: Gluskin Sheff (Symbol-GS) - Hit by Income Trust Wave

Post by Taggart »

Interesting company this Gluskin Sheff. As seen above they got hit pretty bad with the tax changes to income trusts a few years ago. I also thought they were still hurting lately, then they come out yesterday with a surprise "special" dividend. I own shares in this financial company, but always looking for an excuse to sell. Not yet.

Perhaps fond memories of the go to column for Ira Gluskin, in the old defunct Financial Times of Canada.
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Re: Gluskin Sheff (Symbol-GS) - Hit by Income Trust Wave

Post by Taggart »

As per the latest special and dividend increase posted by Nile in the dividend hikes thread:
nile wrote:GS raises dividend from .8 to .9 per annum
and special dividend of .35 cents
I really didn't expect much from Gluskin Sheff when I bought shares in late 2011, but sometimes it pays to be a little adventurous when investing. With the dividend increases and special dividends since then, it's been a joy to own. May it continue, at least for few more years.
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Re: Gluskin Sheff (Symbol-GS) - Hit by Income Trust Wave

Post by Springbok »

Taggart wrote:As per the latest special and dividend increase posted by Nile in the dividend hikes thread:
nile wrote:GS raises dividend from .8 to .9 per annum
and special dividend of .35 cents
I really didn't expect much from Gluskin Sheff when I bought shares in late 2011, but sometimes it pays to be a little adventurous when investing. With the dividend increases and special dividends since then, it's been a joy to own. May it continue, at least for few more years.
Looking at Total Return since November 2011, you have done well! Longrundata says 37% annual return and now worth 3X original investment. I agree with the part about being adventurous in investing, at least with part of your portfolio. It's nice to hit a home run once in a while!

BTW, the thread title is something of a misnomer in today's context. Anyone buying GS back in June 2006, would have earned a 14.5% total return and tripled their investment by now. Not too shabby!

GS was only about 20-25% into trusts. A 100% trust fund like SIN would have only earned about 5.5% starting at same time in 2006. However, we have owned it or it's tax efficient relative since 2003, and it too has had a total return of 14.5% pa and now worth 4.5X original investment.
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