Column

The life and death of Bay Street's guru

The Nation’s Business

Peter C. Newman May 12 1997
Column

The life and death of Bay Street's guru

The Nation’s Business

Peter C. Newman May 12 1997

The life and death of Bay Street's guru

The Nation’s Business

Peter C. Newman

Andy Sarlos, who died last week of heart failure at 65, was no typical Bay Street trader. During the three decades he dominated Canada’s financial markets, he operated according to his own rules and in his own dimension. There was no one remotely like him. He payed more attention to the long arc of history than to the spurts and pulses of the Dow, valued friendship above profit, and became the undisputed Canadian financial guru of his generation. “His contacts were phenomenal,” recalls trader Max Yamada, who worked for him. “Beforejoining Sarlos, I had run the largest U.S. dollar account in Canada for 14 years and always got the first call from Wall Street. But after a week in Andy’s office, I realized how business was really done. He could call, literally anybody, and they’d always call back. Fast.”

Sarlos was not the richest investor in the country, because he was a born gambler and enjoyed losing almost as much as winning. “If I was right all the time,” he once told me, “it wouldn’t be any fun. It’s the risk that makes the market an exciting place to be.” But he knew how to play the odds, and in 1977 alone the value of stock in his investment trust, HCI Holdings Ltd., more than tripled. At one point, so many people wanted to buy shares in his firm that trading on the TSE had to be halted for four hours. He seemed to be in on every deal that counted. In one transaction involving the Hiram Walker-Consumers Gas merger, Sarlos’s syndicate walked away with a $13-million profit.

He hypnotized his peers. ‘Wliat’s Andy up to?” everybody wanted to know. In the wine bars and private clubs that ring Toronto’s brokerage houses, the talk was often about the source of his market magic. Why was this diminutive Hungarian whose Establishment credentials were zilch consulted by just about every big player in the country? Why did the likes of Peter Munk, Conrad Black, Peter Bronfman, the Reichmanns in their glory days, Trevor Eyton, and many others of equal rank scarcely make a major move without seeking his input?

The answer was simple. He gave advice the way a priest grants absolution—freely, and with no hidden agenda. That was unheard of on Bay Street, where contacts at his level usually mean leverage that can yield fees, big ones. “He was a giant of a man,” Munk said of him last week, “a real prince who never said an evil word about anybody, and was more interested in making money for others than for himself. He was also very shrewd—on a human level, twice as shrewd as George Soros. I can’t even say how much I’ll miss him, personally and in business.”

To know him was to trust him. “Andy’s Numero Uno with me,” declared Gus Van Wielingen, one of Calgary’s oil millionaires. “I don’t mind giving Andy my chequebook any time. I’ll even show him how

Andy Sarlos was a giant of a man, a real prince who was more interested in making money for others than for himself’

to sign my name.” As his network widened, Sarlos became a generous philanthropist, making significant donations to several Canadian universities. After the fall of Hungary’s Communist regime in 1989, he helped revive the economy of his former homeland, including the financing of a bank, department store, newspaper and the country’s first modern shopping centre.

Playing the market, he always went to the source, frequently visiting rigs in the field and talking to the roughnecks actually drilling for oil. He was a keen student of human psychology and knew that CEOs of companies under threat of takeovers often don’t act rationally but on the basis of stress. Despite his gentle manner, Sarlos knew when to move in for the kill. “Good traders,” he maintained, “rely on what they hear; great traders assimilate the facts, then act on the basis of their gut instincts and sheer nerve. Balls are as important as brains.”

A Hungarian by birth and persuasion, Sarlos shared the national trait of being impossible to stop, once moving in a desired direction. He loved Canada and was an incurable romantic. The son of a Budapest grain trader, he was drafted into the Hungarian air force, and arrested by the occupying Communists in 1952 for trying to defect to Yugoslavia. His subsequent year-long imprisonment changed his life. “Death seemed a better alternative than life,” he recalled, “because the guards always made you believe you’d be executed the next morning, and many of us were.”

Sarlos later fought with distinction in the failed 1956 Hungarian Revolution, fled to Austria, and eventually landed, with no money or prospects, in Canada. After studying to be a chartered accountant, he spent nine years in Labrador with Bechtel Canada. There, he worked on the Churchill Falls power project before moving on to Bay Street.

During the past decade, Sarlos continued to trade, but his role was more advisory. “Check it out with Andy,” became the Street’s war cry whenever a big deal was coming down. Sarlos never let up, though he suffered from increasingly serious heart trouble, undergoing two major operations, and was twice declared clinically dead.

He lived modestly with Mary, his Austrian-born wife, in a spacious but not extravagant house in the largely middle-class Toronto suburb of Don Mills. Their son, Peter, 35, is a computer analyst.

The dignified and superbly organized way he died was typical of the man. On April 24, as he was leaving his Toronto office, he asked his partner, Hal Jones, to close all his futures positions. He was so weak he could hardly walk, but insisted on taking part that evening in a conference-call board meeting of Munk’s Trizec-Hahn real estate company, via his bedside telephone. Two days later, he lapsed into a coma from which he never recovered. The previous week he had dined with Munk at the Toronto Club, and told him: “I am totally at peace with myself. I’ve had more lives than I deserved.”