O'Leary Funds Comments on Soon-to-Appear Report on Business Magazine
MONTREAL, Sept. 27, 2012 /CNW Telbec/ - In response to the Report on
Business Magazine story posted online on September 24th, 2012, and the soon-to-appear hard copy version on September 28th, 2012, O'Leary Funds Management LP and Stanton Asset Management Inc.
today released the following statement:
"We believe in doing what's right for investors; searching the
investment world for opportunities that in-turn offer value and yield
to investors. In this story, there are a number of unsubstantiated and
misleading comments made about our funds' performance and redemptions
Investors rely on business media to get the facts right. Unfortunately,
the Globe & Mail has once again gotten the story wrong, doing a
disservice to the thousands of investors and their advisors who trust
them for information.
Here are the facts. We participated in this "story," gave interviews and
were assured by writers and senior editors that the financial
information contained within would be accurate. What was written
demonstrates a lack of balance and understanding for how structured and
tax-advantaged products work, in a clear intent to mislead the reader.
Here are some examples:
Story: The Globe & Mail suggests that the performance of our funds is
Fact: Performance overall is quite good. Many funds' 2012 performance places
them in the top quartile amongst peers, are given 3 and 4 star-ratings
by Globe Investor, and are named market movers among peers on Globe
Story: The Globe & Mail reports that there was $253 million in investor
redemptions as at December 2011, amounting to approximately 21 per cent
of total assets under management.
Fact: Omitted from the story was that our conventional mutual funds
subscriptions are growing and far outweigh redemptions. Almost all of
the redemptions relate to structured products for which annual
redemptions of 20 per cent to 40 per cent are industry standard. This
information was provided to the Globe & Mail several times over the
course of the last few months.
Story: The Globe & Mail quotes Mark McQueen on O'Leary Fund redemptions.
Fact: In May, McQueen double-counted the redemption number, later realized
his mistake after it was pointed out to him by O'Leary Funds and
removed his related May 2012 blog post. The Globe & Mail, which
incorrectly reported that number, twice, never corrected public record
or publically admitted they got the facts wrong.
Story: The Globe & Mail writes that total return on capital since inception to
date for one of our funds is 25 per cent of distributions.
Fact: That number is actually 17 per cent, and includes a year when most
income funds returned capital to investors as a result of the financial
crisis of 2008.
Story: The Globe & Mail writes that O'Leary Funds' Yield Advantaged
Convertible Debentures Fund returned $11.1M of investors' money in
2011, saying that this further evidenced a churn of capital.
Fact: This specific structured product is intended to return capital. Paying
distributions in the form of return of capital is one of the potential
benefits of tax-advantaged products. It is always important to read and
understand the prospectus for a fund. This applies to the Globe & Mail
Story: The Globe & Mail writes that performance of two of our funds was down
by over 20 per cent.
Fact: The Globe & Mail overstated the decrease of both funds, ignored the
value of distributions paid, and omitted to mention that both funds
were launched in mid-2011 as the markets unfortunately faltered.
Year-to-date, these funds are up 10.4 and 9 per cent, respectively.
Story: The Globe & Mail reports that our funds hold obscure securities, such
as Brazilian bonds, that pay a 16 per cent yield, leading the reader to
assume that there is a higher risk profile in the portfolio holdings.
Fact: This Brazilian utilities company bond issued in $US, was less than 1
per cent of our emerging markets fund portfolio, was bought at
discount, had an 11 per cent coupon and was sold 6 months later for a
22 per cent total return.
Story: The Globe & Mail writes that: "O'Brien (our asset manager) purchased a
"convert"—a bond that carries the right to be converted into common
shares—for about $160, relative to its starting value of $100. At such
a rich premium, these bonds no longer trade like stable investments;
they swing like speculative stocks."
Fact: The bond was issued by Salesforce.com, a market leader in CRM software
- a company with a market capitalization of over $20B. The position
size was small and is entirely in line with the fund's investment
objectives and the portfolio advisor's investment process.
Year-to-date, Salesforce.com shares are up in excess of 50 per cent
with this convertible bond currently trading at around $187.
Story: The Globe & Mail attacks the credibility of O'Leary's portfolio manager
reporting that two Stanton funds "blew up on late 2008."
Fact: Not only is this incorrect, the Globe & Mail omits contextualizing
what was going on in the hedge fund market during the 2008 financial
crisis, when many markets and banks stocks dropped by 50 per cent or
more. Many hedge funds shut down entirely, while the Stanton funds
managed to protect and recover some value for investors.
Story: The Globe & Mail names at least 10 unnamed "industry" sources and
ex-employees in their reporting, even with our offers to have reporters
speak with people close to the company.
O'Leary Funds repeatedly offered access to company and industry sources
who would be quoted and provide correct facts and balance to the
article. All we asked for was the truth, which the Globe & Mail was
never interested in reporting.
To the financial community, Canadians who have invested in our products,
and our valued financial advisor network: if ever a piece demonstrated
one-sided agenda-driven reporting, this is it. This approach to
reporting is harmful to investors who deserve better from national
business media. O'Leary Funds remains focused on its goals to serve
Canadian investors. Total assets under management exceed $1B. The
business is profitable. We truly believe in our value-yield philosophy
and continue to invest our own money in our funds and Kevin O'Leary is
personally invested in every single mandate. Growth of our traditional
mutual funds was strong in 2011, is on track to be up 100 per cent in
2012 and is expected to increase again in 2013. We continue to attract
investors looking to invest in our products for the reasons that
popularized them in the first place: their focus on value and yield.
This is a story that, like the news of the day, we expect will fade. We
are working to correct the inaccuracies contained in this article."
About O'Leary Funds Management LP
O'Leary Funds Management LP is a Canadian investment fund manager of
mutual funds and closed-end funds striving to provide Canadian
investors with reliable and unique income solutions. Focused on our
value-yield investment philosophy, Canadian and global investment
opportunities are identified through a disciplined investment process.
Our core principles, Income, Capital Appreciation and Capital
Preservation, are driven by each portfolio's investment objectives. Our
portfolios are diversified by sector, region and asset class. For more
details about O'Leary Funds, visit www.olearyfunds.com
SOURCE: O'Leary Funds Management LP
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