In picking companies to invest in for Dynamic Global Equity, Dana Love considers how they'll fare over the course of a full business cycle. "We'll do things that are unconventional, be willing to look wrong in the short term, if ultimately we think it's going to preserve and/or grow capital for unitholders."
Love is a vice-president and portfolio manager at Toronto-based 1832 Asset Management LP, which manages the Dynamic family of funds. He joined the firm in October of last year.
A month later, Dynamic appointed Love as the lead manager of the newly launched Dynamic Global Equity and Dynamic Global Balanced. Working with Love on the funds is analyst Kevin Kaminski, who came over with Love from the Trimark global team that is part of Invesco Canada Ltd. The duo selects the same stocks for both funds, but the sub-advisor for the fixed-income portion of the balanced fund is PIMCO Canada Corp.
Love says he is "hard-wired" for the investment discipline that he has employed throughout his career. He manages concentrated portfolios of high-quality equities, chosen on the basis of valuations, competitive advantages and the quality of management. There are no restrictions on sectors or market capitalization.
Love's 30 to 40 holdings in Dynamic Global Equity are based on bottom-up company selection, and he's comfortable with deviating substantially from market-index weightings for sectors or countries. For example, he currently holds several Singapore-based companies. "Singapore is a relatively small country," he says, "but its economic clout in the Asian region is fairly significant."
Currently, the fund holds about 50% large-cap, 33% mid-cap and 16% small-cap names. Over Love's career, some of the best and most rewarding investments have been from smaller, niche-oriented companies. "A disproportionate amount of the success that I think I have had as an investor," he says, "is exploiting those types of opportunities."
Among his top holdings is AEON Delight Co. Ltd., a Japanese company whose business segments include facilities management, building maintenance, security, hygiene and sanitation. "I stumbled across the company," says Love, "by simply reading a periodical and doing some digging."
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Investigating further, Love travelled to Japan to meet with top AEON Delight executives. "It was one of the most progressive Japanese management teams that I have ever met." Among the company's other advantages in Japan are economies of scale in a fragmented industry.
So far this year, Love's travels have also taken him to Mexico, Singapore, Europe and the United States. He has two more trips planned this year. One is to Latin America and the other is a second visit to Asia.
Love says he conducts "on-the-ground" interviews with multi-layers of the management of companies that he holds or could potentially hold. "It is perhaps the most valuable part of the research," says Love, "that you can't get from reading an annual report, crunching numbers and sitting at a computer screen."
Love's current top holding is ComfortDelGro Corp. Ltd., a Singapore-based transportation company. It operates bus routes, taxi services, and some rail and subway facilities on behalf of municipalities that span the United Kingdom, Singapore and Australia. "It's a true toll business, an indispensable service, and it's doing it in the most efficient and cost-effective way."
Another favoured holding, the food and beverage giant Nestlé SA, "remains the best managed large company that I've ever encountered." Nestlé is the clear leader in the food and beverage industry, Love says
Love is a graduate of the University of Waterloo who received a BA in sociology in 1992. During his university days, with intentions of becoming a lawyer, he began reading investment books and discovered his passion for finance. In 1993, he joined Fortune Financial Corp. in a marketing and business-development role. He moved to Guardian Mutual Funds in 1994 in a wealth-management capacity. In 1995, he joined Altamira Investment Services Inc. in a client-advisory role.
Realizing that he really wanted to analyze businesses, Love returned to school. In 1998, he received an M.Sc. (finance) degree in England from the London Business School. He joined what is now Invesco Canada in February 1999 and received his CFA designation in 2001. In March 2012, he moved to Sentry Investments, where he managed Sentry Global Growth & Income. He was there for about 14 months before joining 1832 Asset Management.
Looking ahead, Love considers the global market, broadly speaking, to be "probably fairly valued at best." He's finding it more difficult to find attractive opportunities. "I seem to be able to identify longer-term, lower-priced, higher-return opportunities in some of the emerging markets currently," he says. "Conversely, I'm finding fewer opportunities in many of the developed markets, and in particular in the United States."
