Hedge funds

Brad Dunkley: Musings on the Crown Prince of Bay Street

Brad Dunkley and Waratah have all the momentum in hedge fund land.
OPM 6 min read

I cannot conceive a man who has any guts not being controversial. The people who are not controversial are simply hypocrites. Just goody-goody, nice to everybody…just changing their masks the whole day to fit in with everybody. One of the Americans, Dale Carnegie, has written a book, How to win friends and influence people. My idea is: How to influence people and create enemies. Because, if you have created an enemy, you have created a potential friend.

- Osho

Today, I am launching a campaign to befriend Bay Street hedge fund mogul Brad Dunkley. I didn’t realize what a meteoric start to his career Brad had. Within 8 years of graduating at the top of his class at Wilfrid Laurier, he held 2.3m shares of Gluskin Sheff. Valued at the IPO price of $18.50, his stake was worth $42.5m. Again, that’s a few months shy of 8 years post graduation - around age 30. So more than $5m per year of service. You might say that Brad had a more lucrative start to his career than LeBron James. The NBA didn’t pay a lot back in the day. What is the appeal of Brad Dunkley?

One strong supporter gushed about the early Brad Dunkley thus:

Trading aggressively is lots of fun, especially for brokers. Unfortunately it requires a skill set that most of us do not possess. My partner Brad Dunkley manages our firm's hedge funds. He has demonstrated the ability to be a long-term investor and also to have trading skills worthy of high ranking in Steve Cohen's world. There are very few Brads in the world and I advocate not even trying.

That was Ira Gluskin writing in the Globe in 2006. He remains a client of Brad with his Waratah Advisors. These days, you hear about Steve Cohen more for his stewardship of the Mets than for his returns. Mean-spirited people might say that Steve Cohen has become more like Brad, rather than Brad becoming like Steve Cohen. I wouldn’t say that, as someone who wants to be Brad’s friend.

Leaving aside people like Bruce Flatt or Mark Leonard and the self-proclaimed King of Bay Street, Wes Hall, Brad Dunkley is at the minimum the Crown Prince of Bay Street, as you can see from this very credible study:

So it might have been a miscalculation on my part that in January 2020, I wrote a piece about Brad’s hedge fund titled Waratah Performance - A hedge fund that is only semi-crappy. Some people have relayed to me that the Waratah inner circle did not take it well. I don’t believe that for a minute. I suppose if you are a How to win friends and influence people 20th century simpleton, you might think that dissing one of the most respected people on Bay Street is a terrible move. I disagree. I write about powerful, wealthy people. If I wrote a glowing piece on Brad Dunkley, he will just wonder: What does this guy want from me? Is he going to invite me on to some stupid podcast? His guard will be up. On the other hand, if I use his firm's name and the word "crap" in my title, he will be intrigued. He will know I have no hidden agenda. He will see it as a breath of fresh air. These wealthy people, they're bored dealing with sycophants. Trust me, after your college years, insulting people is the only reliable way to make new friends.

Brad's outside interests

Brad is definitely wealthy. Waratah has added about $3B in AUM over the past 3 years and now manages about about $4.3B. If Brad was worth something like $40m 17 years ago, I would be surprised if that figure hasn’t crossed the $100m mark by now. The Waratah insiders have about $225m invested in their own funds. Only 3 years ago, this figure was $115m. The bulk of this belongs to Brad and his co-founder Blair Levinksy. But Brad has other interests as well. Following the Gluskin IPO windfall, he setup a holding company, Dunkley Capital. That holdco is active in buying real estate and private businesses. One of the key holdings is Stellar Outdoor Advertising, which is involved in consolidating billboard companies across Canada. Stellar is the continuation and expansion of an old family business that Brad's wife Sara inherited. She runs it now.

Brad’s outside interests continue to broaden. Since 2017, he has been a director of Parkit Enterprise, a public real estate investment firm. Brad’s stake is worth about $9m. Parkit has had a lot of management and board turnover since Brad joined, which he partly instigated. He introduced the company to Chairman Steven Scott and CEO Iqbal Khan and they are now running the show. They’re the team that took over StorageVault in 2015 when it was trading at $0.42 and helped deliver more than a 10x since. Blair Tamblyn of Timbercreek fame is also a director. In 2016, the Dunkley family bought the Santa’s Village theme park in Muskoka. Santa’s Village is all about keeping the magic of Christmas alive year-round. Ira Gluskin is rolling over in his grave. In 2022, Santa’s Village acquired the Severn Lodge in Muskoka. Waratah also owns about 2m shares of publicly traded theme park operator Cedar Fair. So whether you go to Wonderland or Santa’s Village, you are making Brad richer.

Brad is a freedom-loving nutbar

After writing my original critique of Waratah, I learned many positive things about Brad. Most importantly, he has a libertarian streak, aka being a “right-wing nut”. I wish I had known that, I have a soft spot for such people. Although to be clear, I deploy a more fluid political playbook, ever since I found out how much the ladies love Bernie Sanders. Brad is a director of the Calgary-based Canadian Constitution Foundation. In fact, his last 3 reported charitable donations include that foundation, the Justice Centre for Constitutional Freedoms and the Beautiful World Canada Foundation - $730k in total in 2021. The Justice Centre took care of the defence of Freedom Convoy organizer Tamara Lich for example. I am less familiar with what Beautiful World does, but I assume it has something to do with fighting for traditional norms of beauty - ie, no fatties. I feel terrible that I distracted a man doing such important work with my tiresome tirades about him underperforming the S&P 500.

Overall, Brad’s family foundation has $15m in assets. As long as a portion of that money finds its way to establishing that Dove bombarding me with photos of plus-size models in underwear is a violation of my Charter rights, I am fully supportive. There are no bad causes, although giving nearly $750k to the Oshawa Aeronautical, Military & Industrial Museum makes me question that notion. Brad spent six years as an army reservist, but saw no action. I guess he always has great timing to escape volatility. I don’t know if this is the right term, but Brad is sort of a war buff. In 2013, the Dunkleys endowed The Dunkley Chair in War and the Canadian Experience at Wilfrid Laurier, with a $1.5-million gift. So Brad loves the military. He also happens to support the monarchy. I don’t know if I can sustain a lasting friendship with someone this predictable. On the other hand, he has an ESG product and that's a line I would never cross, despite my desire to appease the ladies.

Closing arguments for friendship

Some knowledgeable defenders of Waratah were critical of my initial post, even though calling a hedge fund “only semi-crappy” is strong praise by my standards. While a strong autocrat like me can’t possibly ever apologize, I forgive Brad for failing to properly understand me. In any event, in my long and arduous experience, unless you call someone's mom names, things can always be patched up. On that front, Brad’s first job was working for his mom, who ran a convenience store in downtown Orillia. I am sure she ran a great operation. Now, some people grumble that she insisted that if you buy a lottery ticket there, she gets to keep 20% of any winnings. That does seem a bit capricious, but it’s not my role to review convenience stores. Orillia is a suburb of Barrie and is close to Brad’s heart. His wife is from there as well.

Orillia’s most famous part-time resident might have been the writer Stephen Leacock. Leacock wrote: “I keep my money in cash in my trouser’s pocket and my savings in silver dollars in a sock.” So he was even more conservative than Brad. Brad won the Stephen Leacock student essay competition in 1993. His foundation now sponsors the Stephen Leacock Medal for Humour to the tune of $60k per year. He has said: “We think it is important to celebrate Canadian writing”. If Brad is serious about Canadian writing, I can’t think of a finer exemplar than yours truly. I mean, winning some student prize is nice, but these days, I am mentioned in the same breath as Margaret Atwood and Lucy Maud Montgomery. Brad would therefore be a fool to rebuff the hand of friendship that I so generously extend to him.

I should have another piece soon detailing how Brad rose within the firm and how the various people associated with Gluskin Sheff made out over the years.

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