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Alumni Western Be Extraordinary The Campaign For Western

Benj Gallander expanded story - ONLINE ONLY

by David Scott

If your company gets a phone call in the near future from someone asking to see your financial statements and meet with your CEO and CFO, don’t panic.

What sounds like an audit or possible corporate catastrophe might actually be a shot in the arm for your business.

Benj Gallander, BA’78, has made a living from pumping money, and in turn life, into companies that the majority of investors have written off. His self-professed contrarian style has earned him profits and a loyal following.

This isn’t dartboard investing. Gallander has careful criteria to determine if a company is worth his money. Even then, the majority of the businesses he tracks, he doesn’t invest in. He also spends months, even years, tracking prospects.

“I always thought differently, even as a kid. (I have three older sisters who will confirm that). I seem to have another way of thinking, in so many ways.”

A student in Social Science at Western, Gallander’s records state “no area of concentration.”

“I took economics, sociology, psychology, one law course. I was all over the map. I was lucky Dalhousie accepted me (for MBA program) quite frankly because my marks weren’t really that good. I majored in pinball, racetrack and intramural sports and cards. I was pretty good at my majors but that can’t get you too far.”

He admits that he was physically and mentally immature when he arrived at Western as a fresh-faced 18-year-old frosh who only stood 5-feet, 2-inches.

“I remember getting into Saugeen, and I met my roommate, Doug French, who was a really nice guy from Orillia, and he said ‘are you a genius?’ – just based on the fact I was this miniature guy and looked like I was 16.”

However young he appeared, Gallander was drawn to numbers and some critical lessons that would form the basis of his investing knowledge. It was at Western that he learned how to do financial ratios from D.A. (Rick) Robertson, HBA’75, MBA’84, PhD’87, now an associate professor with Ivey Business School.

Their paths crossed again decades later when he and Robertson both wrote articles for Canadian MoneySaver magazine.

Gallander, 56, has been investing for more than 35 years, “very, very little” in second year at Saugeen when his first stockbroker, someone he “grew up with,” arrived at Western.

Even the path Gallander took after earning his MBA at Dalhousie was contrarian. While classmates dove headfirst into the business world, Gallander was working at the International Youth Hostel on Church Street in Toronto, making minimum wage.

“I remember getting together with all my MBA friends. We went for a few days of golfing and most of them were pretty unhappy with their jobs making way more money than I was. But I was really happy with what I was doing.”

Gallander was travelling and meeting interesting people while his peers were stressing out in boardrooms. He went to Israel and lived on a Kibbutz. He worked there and then travelled some more. He went to Czechoslovakia first to teach English but then was asked to work in a factory because of his business experience. The company was Mez Mohelnice, an electric motor manufacturer that eventually got taken over by Siemens.

“I went to France in ’88 for a year to learn French, and ran into someone from Butterfield and Robinson, a company that runs bike tours in France,” something Gallander was interested in.

About the same time, he was offered a position at the Eyeopener, student newspaper at Ryerson, to run their operations.

There were more trips to Denmark and Iceland. From ’89 to ’91 he was business manager for The Eyeopener in Toronto.

Somewhere in there, he went to Nepal for 10 weeks and did anti-poverty work for an organization called CECI (Centre for International Studies and Cooperation) in the late 1990s.

Prior to that, he had been working at a place called the Central Ontario Co-op Federation in Toronto. “I was a regional manager. The idea was to set up co-operative businesses… I think some of the reason (I was hired) was because I had some business experience.”

First Book Still a Bestseller

Not only that, he had written a business book that quickly turned into a best seller.

The first book Gallander wrote, at age 31, was the Canadian Small Business Survival Guide to frankly fill a niche that a friend in publishing had suggested.

Astounding that this book is still in print. It has sold more than 25,000 copies and gone through 10 printings since it was originally published in 1988. It is the most popular book on small business in Canada. The first edition was printed when PC’s were just coming into existence. The newest edition is completely revised and updated, and contains new sections on modern computers and the Internet.

Gallander’s own business, “Contra the Heard,” found a successful niche of investing where few dare not tread when it started in 1994. He and business partner Ben Stadelmann publish a quarterly newsletter of suggested companies to invest in. The newsletter is limited to 1,000 subscribers at a cost of $500 a year (sorry, no credit card payments).

There isn’t a money-back guarantee but if subscribers do not make a profit, they get a reduced rate for the following year: $440 vs. $500.

The president and vice-president purchase the stocks they recommend. So, they lose and win with you, hopefully win. According to their website, the president’s portfolio currently has a 13.9 per cent return over 10 years and a 14.9 per cent return over 15 years. The vice-president’s portfolio, only recently introduced, has returns of 12.7 per cent in 2012 and -2.7 per cent in 2011.

The company states that with the “raging ups and downs of the general market, the Contra stable has only been hit by negative returns three times since 1990. This is a record of which we are extremely proud.”

Key Factors Have to Exist to Invest

What pushes this contrarian to invest in a company?

“I’ll only buy companies that have been around 10 years. So, it means I’m always looking to track them. It means I get to avoid any IPO’s (initial public offerings). I avoid anything that’s hot. After I do a fast-filter effectively, then I look at companies that are down at least one-third of their value in the last year. Then I look at the 10-year trade record.”

Gallander watches to see if the stock is trading currently at the lower end of the trading range and has traded a lot higher for a number of years within those 10 years. “Where they’ve had a number of spikes in a few years, that’s a signal to put it on my list.”  Again, he mentions learning to do financial ratios at Western helps in his prognoses.

It’s not a perfect science and Gallander admits he has made plenty of mistakes along the way.

“A lot of the major mistakes were because I was buying companies that had heavy debt loads… So now, I’ll still invest in some companies with debt but I don’t like to see increasing debt. I like to see stabilized, decreasing (debt). Often I can find companies with no debt.”

Accessing company statements to find that crucial information is something that investors might not feel completely comfortable doing.

“Once I find companies I’m interested in, that pass those first two filters, I will send an email and say ‘can you please send me your financial statements for the last four years?’ That doesn’t mean I don’t look at stuff online because I do.”

He likes to talk to management and/or visit in person. And a lot of people open the doors and books for him to see, more in Canada where he is better known as a financial columnist at the Globe and Mail, than in the U.S. But he has had success south of the border on several occasions.

Gallander will relax on his couch and read company statements like he was comparing baseball stats for his starting line-up. In fact, he wrote a baseball-related financial advice book: The Uncommon Investor III, set in the seventh game of a World Series between the New York Mets and of course, the Toronto Blue Jays. “I think back and sometimes wonder if that should have been my calling: Baseball G.M.,” reflects Gallander. But that’s another story.

Some of the most successful business people in Canada subscribe to his newsletter and “rather influential” people in the U.S. also.

Other key factors of his contrarian philosophy include:

In any given week, Gallander might be watching 150 to 200 different companies, their ups and downs and past and present performance on the market.

“But a lot of those companies I can’t really ever imagine buying into. I do it like baseball. I have my Triple A companies, which are literally on our own private website. Those are the ones I am most interested in. There may be 15 in total. Then Double A, somewhat interested in. Single A. I do most of my buying at the end of the year.”

To keep things in balance over the years and his right brain in shape, Gallander has written six stage plays that have been produced and was co-founder of the very successful SummerWorks Festival in Toronto, started by five friends in 1991.

His columns appear under The Contra Guys title with his business partner/long time friend Ben Stadelmann. Aside from writing for MoneySaver Magazine and The Globe & Mail, he is a regular on The Business New Network (BNN).

Gallander maintains a website at: www.contratheheard.com


This article appeared in the Fall 2013 edition of Alumni Gazette
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