Greg Dean, who helped build CI Financial Corp.’s small-cap investing franchise, has launched his own firm with the backing of Australia’s Pinnacle Investment Management Group Ltd.
Toronto-based Langdon Equity Partners has opened two funds that focus on spotting undervalued smaller companies in cash-generative businesses. Pinnacle will own 32.5 percent of the firm in what is its first foray into Canada, said Dean, adding that he’s putting his entire investable net worth into seeding the firm and its funds.
Langdon’s Canadian fund will build a portfolio of 15 to 20 companies between C$100 million ($78 million) and C$5 billion ($3.88 billion) in market capitalization, while its global strategy — offered in Australia and Canada — invests in small-caps around the world. Private-company holdings will be limited to 10 percent of either fund.
Soaring inflation, rising interest rates and war in Europe have battered equities this year, with the small-cap Russell 2000 Index tumbling 21 percent. That’s worse than the S&P 500’s 18 percent decline and the 10 percent fall of the S&P/TSX Composite Index. For longer-term investors, the selloff means it’s a good time to put money to work, Dean said.
“Over a five to seven year period, you go through a whole bunch of short-term setbacks. And those usually present as opportunity,” said Dean. “They seem to be great moments in time to put capital to work, because when there’s more people scared than optimistic, you tend to buy at lower prices. So I see this as an incredible environment.”
Among the sectors Langdon invests in are consumer goods and “asset-light” financials, according to Dean. An example is Colliers International Group Inc., a Canadian company that provides professional services and research to the commercial real estate sector.
Langdon’s strategy tries to avoid companies that are likely to be heavily impacted by commodity swings, currencies, interest rates and government policy. “I think there are industries where companies can better control their destiny,” he said.
In 2021, Dean left CI Financial after a decade at the firm. At the time, he was managing or co-managing more than C$1.5 billion in small-cap and mid-cap equity funds.
In 2015, Morningstar named Dean the Breakout Fund Manager of the year for the CI Cambridge Pure Canadian Equity Fund, which he co-managed with Stephen Groff.
Dean says he doesn’t spend much time worrying about short-term moves in stock indexes. “We’re buying a collection of 20 companies, 25 or 40 companies, depending on the portfolio. That’s what we obsess over.”