Hedge funds

OPM Wire goes activist on West Face's ass

OPM 3 min read

My other resolution is to double down on the fire-breathing. Welcome to OPM Wire, Phase 2.

You know that advice to newly incarcerated inmates that on your first day, you should pick a fight with the biggest guy in prison so that everyone else falls in line? Today, OPM Wire is going activist on West Face Capital. The tables have turned, the shoe is on the other foot and what's sauce for the goose is sauce for the gander.

In my last post on West Face honcho Greg Boland, I released a peace dove in his direction. This peace dove had spent most of its life in a cage and was not used to freedom. It fluttered aimlessly for a bit like an imbecile. Then pretty soon, it became exhausted and crashed to the ground, only to be pecked on by a seagull. Meanwhile, Greg Boland just watched with a smirk, not even acknowledging my peace dove, let alone coming to its rescue.

This is not acceptable. I am renewing the demand I have made in previous posts: I want to see performance data for West Face's flagship fund. Here's why this matters. Often, the media celebrates supposed investment genius in an episodic manner. They report investment exploits in terms of specific wins or a few years of outperformance. This is meaningless. Even a blind squirrel finds a nut occasionally. In Boland's case, I have every expectation that he has a great record overall. I just want to find by what margins he's beating the indices.

We don't have to go far to find track records that went south spectacularly. Here's distressed investing mogul Newton Glassman speaking to my archrival the Wall Street Journal in 2015:

Mr. Glassman argues that Callidus shareholders are getting a good deal, since he is paid only C$1 a year for his Callidus duties. “I’m not really sure anyone else has access to the No. 1 distressed-debt manager in the world for one dollar” he said.

Callidus was trading at $15 then, it got acquired for $0.75 last year. Newton’s troubles have now been documented reasonably well.

In a 2015 activist press release on Gran Tierra Energy, West Face used such hurtful expressions as "ineffectual governance" and said they had no coherent strategy. These are the ways of activists. But lately, many of the vocal activists have been quiet. Remember George Armoyan or Peter Puccetti? You don't hear from them so much anymore. It brings to mind the words of raspy-voiced, mezzo-soprano Caucasian-American songstress Paula Cole, when she said: Where have all the cowboys gone? You probably remember her from Sarah McLachlan's Lilith Fair '98.

There is no public indication of Boland's performance - good or bad - I can find since 2006, when Globe journalist Derek DeCloet called him “The Smartest Man on Bay Street”. In 2012, Report on Business did a cover feature on Boland that essentially rebranded him as a "constructive" activist. This was a great PR coup for him, but not a single line of that article is devoted to the vital question of what his returns are. Instead, he is described as "smart as hell" and "scary bright". In the words of Grammy-winning, five-octaved African-American songbird Whitney Houston, I want to see the receipts.

I am not a shareholder of West Face Capital and I am not an investor in any of their funds. So you might wonder: what legal standing do I have to go activist on West Face? That’s a good question. I am not an expert on corporate law, but I have watched many episodes of Suits. And if there's one thing I have learned from that show, it's that corporate jousting has very little to do with the finer points of the law and everything to do with leverage. And so today, I am announcing that if Greg Boland doesn't release his performance record to me soon, then I will take away a certain title Derek DeCloet bestowed on him many years ago. I am not horsing around anymore. Fingers crossed that this is not extortion, otherwise, I'll end up in the slammer just like Mike Ross.

When Greg Boland goes activist on widely held names, many minority shareholders are impacted. They deserve to make informed decisions about whether they should empower him. And that can only be done by looking at his overall record, not media accounts of episodic brilliance. Boland also no doubt works behind the scenes to influence his investee companies. Boland manages money primarily for pension funds, endowments and sovereign wealth funds. This also brings what he does within the sphere of public interest. In the short while I have been blogging, many of you have come to regard me as a moral authority figure, like Desmond Tutu or the Dalai Llama. Rightly so. Roman poet Juvenal asked: Who watches the watchmen? As of October 2019, it's OPM Wire. I am the Sheriff of Bay Street.

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