Memba them?

James S. A. MacDonald, Canadian hedge fund pioneer and the last boss Greg Boland had

OPM 1 min read

Today, I am launching what will be by far my most popular feature, Memba him (which I totally copied from TMZ).  So, Memba him? James S.A. MacDonald.

I was reminded of James S.A. MacDonald, as I was listening to the Supreme Court of Canada live hearings yesterday to see if there was anything interesting.  And indeed there was: JSA was party to a case against the Taxman.  It appears that many years ago JSA lost about $10 million on a derivative trade on shares of Bank of Nova Scotia.  Which then led to another iteration of the classic tax question of whether a gain or loss on a financial instrument is to be taxed as capital or income.  JSA deducted the loss as a business loss and the Supreme Court will make the final decision whether he is right.

James MacDonald started at McLeod Young Weir in 1969, rising to be Deputy Chairman of ScotiaMcLeod, when he left in 1997.  He was then a pioneer on the Canadian hedge fund scene.

James MacDonald was the co-founder, along with the late Jim Doak, of activist hedge fund firm Enterprise Capital in 1997.  The firm started with $200m in assets. Manulife and Claridge were two key Day 1 investors.   Claridge, the family office of the Montreal Bronfmans, put in $30 million.  Enterprise was mostly known for activist investing. The firm worked closely with Crescendo Advisors in NYC, often investing in the same stocks and together acquiring voting positions and board seats.  Enterprise closed in 2009.

Enterprise Capital is the firm that spawned Greg Boland of West Face Capital fame.  So JSA is the last boss Greg Boland, aka "the smartest man on Bay St" had.

The transaction that gave rise to the tax litigation was done for temporary hedging purposes because JSA was fearful that his Scotiabank shares would go down in the short-term. I guess the lesson is never bet against Canadian banks under any circumstance.

James MacDonald currently serves on the board of Cymbria and is a private investor.  So he's at the nexus of a network of very smart people. (I covered Cymbria in a previous post on Robert Krembil).

Update: James S A MacDonald lost his case at the supreme court.  His transaction was considered hedging, rather than speculation, therefore getting treated as a capital loss, rather than income.

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