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Invest like a legend: Gerry Schwartz

Gerald Schwartz.

MARK BLINCH/REUTERS

The 72-year-old founder and chairman of Onex Corp. has long been one of Canada's most successful investors. While building the country's most influential buyout firm, the billionaire has stuck resolutely to the long-term view, ignoring quarterly numbers, market fluctuations and economic data to focus on the essential health and prospects of businesses he likes.

What's your assessment of the current state of North American markets?

I have said many times that it's a mistake to bet against the long-term health of the U.S. equity markets, because it's a mistake to bet against the long-term health of the U.S. economy. It will have ups and downs, some of them big downs, like
2008-'09. But if you look at it over  a long period of time, it is a very strong economy.

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So do you ignore the economic news, quarterly earnings and day-to-day market gyrations?

Totally. I have almost no interest in quarterly reports. Running a business or investing in a business based on quarterly earnings doesn't make any sense at all to me. There are many, many things that can happen during the course of a year. Good decisions can have bad short-term outcomes but be great for the business long-term.

What's your worst investing decision?

A lot of what I do is running businesses, rather than buying stocks. My worst decision is probably when I know I have the wrong chief executive running the business and I keep on waiting to make the difficult decision of replacing him. First of all, I'm probably friends with the person, so I don't want to fire him. I made the decision to have him as chief executive, so I don't want to admit that I was wrong. And above all, there's the human dimension. It's tough on the person. It's tough on his family. It's tough on the organization that he's leaving. So I have too many times delayed, delayed, delayed. And lots of damage has been done by waiting too long.

Is there anything about the economy, the markets or  business conditions that keeps you up at night?

The answer is no. But I believe that in running any business, you fundamentally need a very strong balance sheet. Fortunately, we've been able to create a fortress balance sheet at Onex. We have no debt whatsoever and a billion and a half in cash on hand. So I don't lose any sleep at night.

Were there times in the past when you did lose sleep?

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Sure, in 2008, when the markets all turned desperately bad. We had roughly a couple hundred million in cash on hand and worried that wasn't enough, and made some decisions to sell some businesses to get a stronger balance sheet. In retrospect, I wish we hadn't done that.

Why is that?

It was the right thing to strengthen the balance sheet. But I'm sorry that we sold some very good businesses.

What would you do with a windfall?

Buy Onex shares.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More

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