Eric Sprott is stepping down as chairman of Sprott Inc. and will be replaced by lead director Jack Lee – a move that cements Mr. Sprott's exit from his gold-focused asset management firm.
Mr. Sprott, who is in his early 70s and is one of Bay Street's best-known maverick investors, has served as chair since 2010. As a long-time gold bull, his firm's suite of hedge funds, mutual funds and exchange-traded funds (ETFs) was built around his near-religious belief in the precious metal – a belief that was vindicated for a long time as gold bullion enjoyed an almost-decade-long bull market that started in the early 2000s and ran until the fall of 2012.
While he remains a major shareholder, Mr. Sprott's exit from the board is being seen mostly as a symbolic changing of the guard at one of Bay Street's most storied buy-side firms.
"After more than 40 years in the investment industry, I have decided to step down from the board in order to focus on my personal investments and my family," he said in a statement on Friday.
For the past few years, Mr. Sprott has been slowly stepping back from the firm he founded. In 2015, he gave up his role as lead portfolio manager on signature Sprott equity and hedge funds, passing on about $500-million in assets to other managers.
The funds had been under pressure for several years, plagued by lacklustre performance and net redemptions. In 2014, Mr. Sprott was replaced by John Wilson as chief executive officer of Sprott Asset Management Inc. He was succeeded as CEO of Sprott Inc. by Peter Grosskopf way back in 2010.
"The decision to step down as chairman should not be completely unexpected on our view, and reflects a natural step for Mr. Sprott," BMO Nesbitt Burns Inc. analyst Nik Priebe wrote in a note to clients Friday. "Mr. Sprott has had a tremendous influence on the company that he founded and is well regarded in the industry."
Mr. Sprott got his start in capital markets as an analyst at Merrill Lynch Canada. In 1981, he founded his own independent brokerage, Sprott Securities Ltd. In the early 2000s, he sold his stake to employees, and the firm was renamed Cormark Securities Inc. He then began managing money with the founding of Sprott Asset Management Inc. in 2001.
In 2008, when he took Sprott public on the Toronto Stock Exchange, the company was worth $1.5-billion. The $10-a-share IPO price would end up being the peak for the company – it has never eclipsed those levels. The shares, which were little changed on the news of Mr. Sprott stepping aside, traded hands Friday at about $2.20 apiece.
In the past few years, as the gold market has come off the boil, Sprott has diversified away from its traditional hedge fund business. Exchange-traded funds now account for almost half of assets under management (AUM), compared with just 10 per cent in 2010, according to BMO. And alternative investments such as hedge funds make up 12 per cent of AUM, compared with 35 per cent in 2010. Sprott had $9.2-billion in AUM at the end of 2016.
While he has sold some of his holdings over the years, Mr. Sprott is still the largest shareholder of the firm, owning about a quarter of the shares.
"With many years of experience in the natural resource industry and a long tenure on the Sprott board, Jack is the natural choice to take over as chairman," Mr. Sprott said about his successor Friday.
Mr. Lee currently serves as chair of Alaris Royalty Corp. Previously he served as chair of Canetic Resources Trust and CEO of Acclaim Energy Inc.
Mr. Sprott will formally step down at the company's AGM on May 10.
With a file from Jacqueline Nelson