(The following story by Tony Martin appeared on The Globe and Mail website on September 6.)
JOHN SIMPSON
AGE: 72
OCCUPATION: Retired sociology department head, University of Toronto.
PORTFOLIO: Exxon Mobil Corp., Burlington Northern Santa Fe Railway, EnCana Corp., Power Financial Corp., BCE Inc., Canadian Pacific Railway Ltd.
THE INVESTOR
A semi-retired professor of sociology, John Simpson has been investing for 20 years, in part driven by need but also, he says, “by my interest in how things work.”
While he’s learned a lot, says the 72-year-old Toronto man, what has really changed over that time is how much more complicated the investing world has become, and how much more information there is. “It’s really hard to know what to believe.”
The key, he says, is to find your own niche or approach. For Mr. Simpson, that means staying away from juniors and sticking with blue chips. He focuses on companies that will grow because they supply something that consumers or other companies need, such as the railways, thanks to their low-cost transportation.
WHY HE LIKES RAILWAYS
At the end of the millennium, Mr. Simpson became convinced railways were a smart investment.
“I thought the elites in North America would catch on to the fact that rail is an efficient and cost-effective way to move goods and people around,” he says, noting that while the railways have performed well, it’s been due to businesses shipping commodities and finished goods from ports to distribution centres, not any mass realization of its use for public transit.
Still, he says, “I take comfort from the fact that Bill Gates and Warren Buffett own big blocks of [railways].”
WHY HE AVOIDS FUNDS
Safety through instant diversification is one main selling feature of mutual funds. But Mr. Simpson says they are more risky than most people realize.
“When you buy a mutual fund, you’re speculating on the team of managers,” he says, adding, “My personality is such that I’m willing to live with my mistakes, but I’m not willing to live with someone’s else’s mistakes.”
BEST MOVE
A poet in his spare time, it was the romance of the Canadian railways that got Mr. Simpson – born and raised in Seattle – investing in Canadian Pacific. He did well when the company was split up, and still holds many of the resulting companies, including EnCana Corp. and Canadian Pacific Railway.
WORST MOVE
Mr. Taylor decided to bet against Cott Corp. when the company was just getting into cut-rate colas and other soft drinks. The reason was that prior to taking the reins at Cott in 1989, Gerry Pencer had been growing Financial Trustco Capital Ltd., which foundered with the 1987 market crash. In 1998, Mr. Pencer stepped aside, and the company’s main operation – Financial Trust Co. – was sold as part of a government bailout. Mr. Simpson – alongside his broker – bought put options on Cott. Unfortunately for Mr. Simpson, “While [Mr.] Pencer had a history of toying with this and that,” Mr. Simpson says, ” this time, he got it right.”