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FOR YOUR CONSIDERATION

/John Daly

GUARDIAN CAPITAL GROUP LTD.

TORONTO

REVENUE (2020)

$215.8 MILLION

THREE-YEAR SHARE PRICE GAIN

32%

P/E RATIO (TRAILING)

20.4

Guardian certainly isn’t the glitziest or most cutting-edge stock on the TSX, but it’s hard to find one with a more stellar long-term track record for value or growth investors.

The 59-year-old money management firm’s 154% share price increase over the past decade was almost double (or better) than the gains made by any of the Big Five Canadian banks. It has clobbered the S&P/TSX Composite Index by an even wider margin. By any key financial metric—assets under management (about $46 billion at the end of 2020), revenue or profit— the firm has basically tripled in size.

Yet even CEO George Mavroudis, an FCPA and certified financial planner, understands why Guardian hasn’t generated much excitement. Over the past few years, “people are always looking for the fast dollar to be made, the big themes,” he says.

In financial services alone, those themes include the rise of low-cost passive index investing, robo-advisers and do-it-yourself electronic trading platforms. There are also always tsunamis of coverage for the latest bubble, be it cryptocurrency, FAANG stocks or overheated real estate.

By comparison, Guardian can look like a decades-old classic rock act. “Unfortunately, we have some people who, when they hear the name Guardian, still think of us as circa 1990s,” says Mavroudis. And in the 1990s, the firm was a respected active manager of pensions and other institutional money, as well as traditional mutual funds, working almost entirely for Canadian clients.

He and the firm believe in the benefits of active management— with the right strategies and teams, it produces value-added long term

returns. But Guardian has renewed itself in other ways. Mavroudis arrived in 2005 and became CEO in 2011. Before Guardian, he’d worked for the British bank Flemings in Moscow and then for J.P. Morgan Asset Management in London as well as Toronto.

Two of Mavroudis’s priorities have been international expansion— of Guardian’s clients and its investments—and a push into personalized wealth management for well-heeled clients. In 2017, about 95% of the firm’s asset management revenue came from Canadians. That’s now down to 40%. In terms of the market segments, institutions account for about 55% of its business, while managing money for intermediaries adds up to roughly a third and private clients make up 10%.

Patience, diversification and complexity still aren’t hot themes for investors, though. “That’s why we don’t have the broad shareholder base we should have,” Mavroudis says. Guardian’s shareholders are a mix of institutions and individuals.

But attracting more investor interest is difficult. Many of the largest institutions in Canada and abroad now have so many billions to deploy that Guardian, with a market cap of about $850 million, is too small for them to research in depth.

Small has its advantages, however. “We can still be nimble and agile, and serve our clients very well without capacity constraints,” says Mavroudis. And if a financial giant or two stumbles, that story might look very alluring again.

WEALTH

en-ca

2021-05-29T07:00:00.0000000Z

2021-05-29T07:00:00.0000000Z

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