John Watson continues to mentor young investors and pass along his years of experience.
John Watson says he bleeds blue. Leafs paraphernalia—including a huge photograph of the last game at Maple Leaf Gardens—punctuates his 13th floor office at Sprucegrove Investment Management in Toronto. Born and raised in Toronto, the fit 63-year-old also plays hockey year-round with more or less the same group of guys he started with 40-odd years ago. Watson usually plays right wing, even though he’s a left-hand shot. “Once in a while I take a turn on defence,” he says, “but I’m a bit of a liability.”
Where Watson is not a liability is in investing. In fact, you could say he has investing in his blood. “Even when I was a kid, my dad gave me a few share certificates and I used to look the quotes up in the daily paper and chart the stock price from day to day.”
Thanks to the share certificates and a father with a sound business mind whom he counts as an early mentor, Watson’s not surprised he ended up in investing. “Getting onto ‘Bay Street’ always appealed to me.”
Watson joined Confederation Life in 1967 and rose quickly, becoming vice-president, investment, in 1977 at age 33, then senior vice-president in 1983 and president of Confederation Investment Counselling Ltd.(a subsidiary of Confederation Life)in 1990.
But 1973 is Watson’s watershed year. That year, he was asked to start up an internal research department to support the management of investments for the company’s clients. There were analysts, he says, but there wasn’t an organized formal department to provide “cohesive principles.”
Following the value investing approach, Watson built up a solid research team, training business school graduates at the “Confed School.” “We created an environment where people were allowed to make mistakes, they were allowed to learn, and they were allowed to develop.” Some developed so well that, over time, they left to start their own business or to work for another firm. “We populated Bay Street with some very fine investors.”
“He’s not afraid to give his knowledge or his input to people when they ask for it,” says Marcel Leroux, vice-president, marketing, at Sprucegrove, who nominated Watson for the award. “He’s extremely good with people.”
Good with people—even board members. By 1984, the research department had become a global investment operation, managing foreign assets from Toronto and London, England(where Confed U.K. was located). But at the time, pension plans could only invest 10% of their assets in foreign content. Those that did invested in U.S. assets. Why, the Confed board wanted to know, would pension plans want to invest in foreign assets? Watson was prescient. “Well, you know,” he told them, “it could be that one day this foreign content rule will be eliminated or at least made more flexible.”
Watson got the go-ahead to manage foreign assets internationally for clients in Canada in 1984 and a year later in the U.S. By 1989, when the foreign content rule had widened, Confederation Life was one of the few places in Canada that had foreign-investing capacity. “The business took off,” he says.
Watson built up a client base, and in the summer of 1993, when he and his partners, Ian Fyfe and Peter Clark, left Confederation Life to start Sprucegrove, there was just under $1 billion of assets under management. All of the clients, save one, remained with them. By the end of 2006, that $1 billion had soared to $26 billion.
Watson will retire at the end of 2008, but intends to work within walking distance of his home in Thornhill and the golf course. He’ll continue his philanthropic work—he created the John H. Watson Chair of Value Investing at the Rotman School of Management at the University of Toronto, endowed a scholarship for youth at the Yonge Street Mission and gives generously to other charities in the city. He’ll keep busy, but maybe he’ll have more time to work on his defence.
Brooke Smith is assistant editor of Benefits Canada. brooke.smith@rci.rogers.com
© Copyright 2007 Rogers Publishing Ltd. This article first appeared in the September 2007 edition of BENEFITS CANADA magazine.