Canadian investor and TV host Kevin O’Leary likes to tell how his investment strategy derives from his mother's preference for safe stocks that pay dividends.
“She’d say the same thing every week when she got paid,” said O’Leary at a presentation in Victoria June 12 sponsored by Alitis Investment Counsel. “She’d say: never spend the principal – just the interest – and never buy a security that doesn‘t pay a dividend.”
O’Leary believes in that principle so strongly that when he couldn’t get existing funds to adhere to his dividend directive, he decided to form his own company with that simple rule. The O’Leary Funds now have more than 20 funds, each of them adhering to the dividend-only rule.
Dividends only for this dragon.
“Think of executives at a company that has to pay you up to 30 per cent of their cash each quarter for your dividend. They have to think every day about where that money is coming from,” said the man Alitis President and CEO Cecil Baldry-White calls “a genetically-coded entrepreneur.”
Canadians are familiar with O’Leary’s success because of his lengthy television pedigree. He is co-host with journalist Amanda Lang on The Lang and O'Leary Exchange on CBC News Network. He is one of the venture capitalists on Dragons' Den and host of Redemption Inc., both of which air on CBC Television. O’Leary is also a "shark" on the U.S. version of Dragons' Den, Shark Tank, which airs on ABC. “People always ask me ‘if you’re an investor, why do you spend so much time on television – are you a narcissist?’ In fact, television makes me a better investor,” he said.
Tapping the information well of television
The secret is in the “Green Room” – the TV makeup room that forms a “cone of silence” for guests – an unwritten law that started with talk show legend Johnny Carson.
“What does every CEO, CFO, politician, author, artist, want? They want to be on television,” he said. “Can you imagine the information I get from these people every day?”
One precious nugget came when O’Leary participated in the taping of Dancing With The Stars. ABC called him and asked him to come to the show in order to call out a promo for Shark Tank. Initially reluctant to make a six-hour trip to shoot a six-second promo, O’Leary quickly came on board when ABC dangled the prospect of having dinner with Apple co-founder Steve Wozniak.
“Steve never gives interviews but he loves Dancing With The Stars and he attends every taping,” O’Leary said. While commiserating with O’Leary about the fact Apple doesn’t pay dividends, Wozniak suggested O’Leary consider investing in Apple’s suppliers. He e-mailed O’Leary the list that night.
“I now own shares in all those companies.”
Finance without fear
O’Leary also loves debt (bonds).
“I like to hold more than 50 per cent debt. I can sleep at night because debt-holders are the first to get paid if something goes wrong. You can rock and roll this market and not worry me.”
Not much seems to worry this dragon – whether it’s nose-diving markets, the inevitability of a rise in inflation or the woes of the European Union.
“I don’t subscribe to the end-of-the world philosophy because that’s never happened before,” he said. “I stay with a very simple philosophy. People still need to eat, buy diapers, ride bicycles and fill their cars with gasoline – and I just want to be there getting paid by the companies that sell all those products.”
Alitis Investment Counsel donated $5,700 from the proceeds of the Victoria event’s ticket sales to the Victoria Foundation’s new Smart and Caring Community Fund.
Photos: Top – Darren Stone of the Times Colonist takes photos of (from l to r) Deirdre Roberts, Board Chair, Victoria Foundation, Sandy Richardson, CEO, Victoria Foundation, Kevin O'Leary, O'Leary Funds, and Cecil Baldry-White, President of Alitis Investment Counsel.
Bottom: from l to r – Stephanie Slater, Director of Communications for Victoria Foundation, Terry Gwilliam, Vice-President & Director, Alitis Investment Counsel, Sara Neely, Director of Philanthropic Services for Victoria Foundation, Sandy Richardson, CEO, Victoria Foundation