Successful veteran Winnipeg portfolio manager Larry Sarbit, 68, and his team have recently joined Value Partners Investment and will manage its $100-million Value Pool.

Sarbit, who has had a notable career as a fund manager for companies such as Investors Group, AIC and IA Clarington,says "$100 million is a small pool of assets in this industry, but we see that as an advantage in that you have great flexibility to be able to invest in smaller companies. You can make smaller companies a larger percentage of the pool."

Sarbit has previously managed funds that were $3 billion , $2.2 billion , and 1.4 billion. "These funds started off being much smaller. We built them up. The first fund was $185 million when we started with it.The second fund was zero when we started with it, and the third fund was 80 million when we started with it."

Sarbit is  a devotee of the Warren Buffett style of value investing, an investment strategy that searches for great companies trading below their real values.  "The key is to not overpay and to find a terrific businesses at a bargain price," Sarbit says. As Sarbit explains, "According to Buffett, great businesses have sustainable competitive advantages, don't require a lot of capital input over time, generate a lot of excess cash, are manged by great people, and the demand for their product or service is growing. Buffet defines great people as being hardworking, smart and having high ethical standards. If you have that combination of these things, then your chances of success go up a great deal."

Sarbit adds, "You can't see perfectly into the future and know how much a company's excess cash will grow , but some companies are more definable in terms of what their future will look like than others."

Sarbit and his team — Tim Skelly and Tyler Baessler — joined Value Partners Investment, a mutual fund company  that now has about $3 billion under management. Sarbit says "Our objective first and foremost  is to protect our clients' capital over the long run and to generate above average rates of return over that time."

Since joining Value Partners Sarbit's team  sold all of the holdings that were in the $100-million Value Pool fund. "We did this so that we could start with a clean slate and put our own investments into the pool. We found a few companies that fit the Warren Buffett model," he says, adding that "We are likely to have a fair bit of cash going forward, because in the current market it's hard to find great businesses at bargain prices.  It's coming up to eleven years of a bull market which makes it very difficult. If we can't find what we're looking for-a great business at a great price-then the right thing to do is to wait and have patience. We'll wait for the next idea to show up or for the market in general to give us better pricing" ( As an aside, Sarbit notes that Buffett’s publicly traded company, Berkshire Hathaway,"is sitting on US$128 billion in cash" because the firm is patiently waiting to invest the funds in reasonable priced or bargain companies).

Sarbit indicates that "It's great" being at Value Partners Investment, which is headquartered in Winnipeg, and is "the right fit" for his team.  Not only is Sarbit able to work in Winnipeg after a few decades running funds for Toronto and New York firms, but he will also be working with people who agree with his overall investment philosophy.

"Value Partners is a value oriented investment house. They only believe in the value approach to investing, which is our style of investing. They have  a limited  shelf of great value managed products. That's very unique in the industry, and the fit is perfect," Sarbit says. Value Partners Investment, led by president Gregg Filmon, is about 15 years old and has ranked as one of the fastest-growing companies in Canada and the only mutual fund company with positive net sales through that period.

After being in the business 40 years, Sarbit knows a lot of financial advisers, brokers and planners who have clients for whom they invest. " What makes them interested and in many cases loyal to Sarbit investment discipline is that we've succeeded in generating returns for our clients, while at the same time  limiting their losses in down times," Sarbit says.

After having owned his own company for 13 years, Sarbit points out that there are benefits to being an employee. "You don't have the responsibility of managing a company," he says. "You don't have to deal with the substantial regulatory requirements of managing an investment firm which can be time consuming. As a result we can concentrate our efforts on finding great companies and investing in them. We can spend most of our time hunting for more companies that meet our discipline and getting to know them well.This becomes our primary responsibility as opposed to dealing with  administration."