Eric Rosenfeld of Canaccord and SPACs

Eric Rosenfeld is back in the news with Canaccord.

So US hedge fund manager with a penchant for investing in Canada, Eric Rosenfeld, is back in the thick of things.  I had been wondering what he was up to. Over the past 20 years or so, he has had many activist entanglements with Canadian stocks, but he had been less vocal in the past few years.  However, he recently demanded and got a seat on the board of Canaccord Genuity.  He owns about $11m worth of the shares. Apparently, their big UK wealth management unit might be for sale.

The last SEC filing I can find for Eric’s firm, Crescendo Advisors, lists $25m in assets in private funds.  I would have thought he was a lot bigger.  At its peak, Crescendo had $350m in AUM. His peculiar manner of operation might also explain this: his funds are each structured to capitalize on a single idea (rather than a portfolio of ideas). One investment that really worked well for him was buying 8% of beverage company Cott (now known as Primo Water) during the 08 crisis for less than $3 (current price $20). I guesstimate Crescendo’s long-term track record as low double digits.

There are two Eric Rosenfeld hedge fund managers - the other Eric was an important part of blow-up LTCM.  Google is making a mistake here: this is the picture of Crescendo’s Eric Rosenfeld, but the profile is otherwise wrong.  Our Eric Rosenfeld had to settle for a Harvard MBA. Before Crescendo, Eric headed arbitrage trading for Oppenheimer (eventually, CIBC Oppenheimer).

Eric and I once had a common cause - BCE Emergis, where he was an activist and my employer and I were shareholders. This was a phase where I always figured other people had all the answers, so I got in touch and he agreed to meet.  I met him in the lobby of the Royal York after my boss and I had had a quick street hot dog lunch.  The meeting started with these two millionaires exchanging on the finer points of street hot dogs.  My line of questioning was about how fast he could sell BCE Emergis for parts, but these activists always like to claim that they have some high-minded multi-faceted long-term playbook.  In the case of BCE Emergis, that was sort of true, it took 3 years for the company to be sold.

Eric was a pioneer in what’s now a very hot sector: publicly-listed blank check companies, now known as SPACs.  He has launched a number of those.  The first one was Arpeggio Acquisition Corp., which became Hill International.  The value at the time of the transaction was $113m.  The current value of the company some 15 years later is $85m.  Most of his SPACs have not fared well in the long-term, forgive me for saying so.

You think you know someone after a single meeting, but I could not have imagined that Eric wrote a children’s book called Mrs. Buttkiss and the Big Surprise. The central plot of which is a large woman suppressing her flatulence. Moving on. He is part of the Columbia Business School gang (old school, cheapness focused value investing). I have no comment on Eric’s investment record and judgment, I will let this video speak for itself, it’s a song called Stupid Callous Fragile Ego Execs with Halitosis. You can peruse the full Eric Rosenfeld musical repertoire here.

Hedge fundsMemba them?