The Bottom Line

A new era at Altamira

After two years of infighting, the fund company has recruited a high-profile chief executive

Deirdre McMurdy January 26 1998
The Bottom Line

A new era at Altamira

After two years of infighting, the fund company has recruited a high-profile chief executive

Deirdre McMurdy January 26 1998

A new era at Altamira

After two years of infighting, the fund company has recruited a high-profile chief executive

Deirdre McMurdy

The Bottom Line

For anyone familiar with the stereo-typical bond trader, Gordon Cheesbrough is a big disappointment. Unlike the brash characters depicted in movies like Bonfire of the Vanities, Wall Street or the television series Traders, Cheesbrough does not swagger or wear red suspenders. Nor does he brag about his accomplishments or his unquestionable financial success (he earned $3.2 million last year). Instead, the 45-year-old Bay Street executive is a reserved, thoughtful fellow, more like the philosophy student he was than a Master of the Universe.

Last week, after 23 years at the brokerage firm ScotiaMcLeod Inc.,

Cheesbrough was packing up his 66th-floor office. No stranger to risk from his days as a junior trader on the firm’s bond desk, he was gambling away the security of his job as its chairman. At the end of this month, he will become chairman and CEO of Altamira Investment Services Inc.—one of Canada’s most high-profile and beleaguered mutual fund companies. “I was attracted to the challenge,” says Cheesbrough.

Whatever may lie ahead, challenge is a certainty. In the past two years, Altamira has been wrenched by a bitter internal power struggle, fined by the Ontario Securities Commission for dodgy trading practices, and it has seen the performance of several of its funds slump dramatically. Once the brightest star in Altamira’s glittering firmament, equity fund manager Frank Mersch has had an especially trying time. After several years of annual returns in the range of 30 and 40 per cent, his fund posted a meagre 4.1-per-cent return in last year’s bull market.

In many respects, Cheesbrough’s appointment marks the end of a painful period of transition at Altamira. The firm, whose four partners started up its Canadian equity side in 1987, was distinguished by its aggressive and entrepreneurial style. That corporate culture remained even as the firm grew rapidly and became increasingly diversified. “Every company goes through a period where it still thinks of itself as a small shop, even though it’s become much bigger and more complex,” says Cheesbrough. “We went through the same thing as McLeod matured.”

He claims he is unfazed by the challenging task of restoring Altamira’s stability, credibility and performance—at the same time as he gets used to a new industry. Cheesbrough says he intends to put Altamira’s turbulent past behind it. “The ownership structure is now absolutely clear,” he says of the October, 1997, deal that brought a U.S. venture capital fund, TA Associates of Boston, in as the largest stakeholder. “Now we march forward.”

Cheesbrough himself may have to heed those marching orders. According to those who have made the journey before him, the culture shock in moving from the “sell side,” or brokerage business, to the “buy side” of money management is huge. While he admits that he had a lingering tendency to meddle with ScotiaMcLeod’s bond desk—even as chairman— he insists there is so much to do in reshaping the Altamira team that he “won’t miss the hit of the trade of the moment.” Athough being the newcomer in an established team can be tough, Cheesbrough says his fresh perspective can help Altamira heal the wounds of the recent infighting and reclaim its leading role in an intensely competitive and fast-evolving industry. He is also adamant that strong teamwork will prevail under his watch at Atamira, replacing the common industry practice of promoting one or two managers as the public “face” of a mutual fund. “As an outsider, it’s easier to help focus and set priorities because you’re not part of the fabric of the place,” he notes. “The flip side is that I have to learn and listen.”

In keeping with his modest style, Cheesbrough does allow himself one small boast: “One of my personal strengths is that I truly believe in listening. I’ll make a firm decision, but never in the absence of information or input.” Industry competitors and mutual fund investors might be wise to learn and listen as well.