My sister publication, The Wall Street Journal, has reported on a $700m gain on GameStop, now fully realized, by a hedge fund operated by Senvest Management. Montreal connoisseurs will know that Senvest has roots in Montreal and is part of a TSX-listed holding company, Senvest Capital. It was originally started as an operating company by Montrealer Victor Mashaal, who remains Chairman. In the 90s, his son Richard Mashaal turned the company towards public equities investing, primarily through a US hedge fund.
The hedge fund is high-octane, highly opportunistic and volatile. But the overall track record since the 90s has hovered near 20% annualized. Including the GameStop gain, the fund was up 38% in January and is compounding at 18.3% since April 1997, probably making it one of the top performing funds in that period. This comes at the price of steep drawdowns, such as being down 54% in 2008. Senvest on the TSX is up 14x since 2009. Richard Mashaal grew up in Montreal, studied at Wharton and has been based in New York for a long-time. But his Montreal office phone number still works and Senvest, the parent company, is still headquartered here. The Mashaals’ holding in the listed Senvest is now worth around $400m. The hedge fund that had been started with $5m, now runs some $2.4 billion.
Senvest is a versatile investor, with eclectic interests, such as in Israel tech, Cyprus, real estate and private equity. Senvest was part of the group that bought MacDonald Dettwiler (MDA), owner of the Canadarm in 2019. They spent some time in the past few years desert-wandering due to energy investments. Richard says: "We seek out of favour, unloved, misunderstood, and under-appreciated companies where expectations, sentiment and valuations are all low." In other words, catching falling fridges. Despite the 20+ year record, I am going to stay skeptical on any frog-kissing approach. You can read this article for a more nuanced description of the Senvest strategy. Thanks to Twitter user Terminal Value for alerting me to this and the WSJ story.
The other Montrealer benefiting from GameStop is Ryan Cohen, the billionaire founder of pet food retailer, Chewy.com. Ryan Cohen is a 35 year-old dropout from Montreal. His 9 million shares stake, acquired at an average price of $8.43, has gained more than $600m in value (despite GameStop's steep fall from peak, trading around $80 now). He probably has less freedom to opportunistically cash in, considering he's now a director of the company. He credits his father for teaching him how to invest for the long-term with conviction. He has almost his entire billion-dollar wealth in 3 stocks: GameStop, Apple and Wells Fargo.
In summary, Saint-Jacques Street is the cradle of opportunistic investing.