Buy, hold, and prosper - Cover Story - investment strategies

Black Enterprise, August, 2002 by Matthew S. Scott

Lee-Chin's most recent deal takes him back home. AIC recently bought the struggling 52-branch Jamaican National Commercial Bank (NCB). The bank's market share had recently fallen from 40% to 35% after the Jamaican government was forced to step in to save the bank from bad loans made in the late 1990s. Why did he invest in such a wild card? Lee-Chin believes he got a bargain: 75% of the bank's shares for $130 million, 42% of the price paid up front, the rest to be paid over a nine-year period. "I think too many were quick to criticize him for buying the bank," says Brown of FundMonitor.com. "On the surface they had a point because the bank wasn't too profitable and the country has a reputation for a weak economy and high crime. But I think Lee-Chin intends to turn the bank around. He wants to make it the top bank in Jamaica." In fact, says Lee-Chin, the bank's largest asset might be the emotional connection it has with the native population. He reasons that the island nation's "great appetite for wealth management products," together with his belief that "it [would be] difficult for a foreign bank to compete with a son of the soil" will give AIC distribution in Jamaica. "And the next stop will be the rest of the Caribbean," Lee-Chin says.

In fact, this is not Lee-Chin's first foray into the Caribbean market. In 2000 he created AIC (Barbados) Limited, a wholly-owned subsidiary responsible for managing AIC Offshore Funds. To ensure, the success of the Jamaican venture, Lee-Chin recently tapped Nigel Clarke, who heads the investment firm Caribbean Equity Partners and worked as an equity derivatives trader for Goldman Sachs in London, to oversee the operation.

EDUCATING THE MASSES

Lee-Chin gets as big a kick out of providing financial education as he does cutting deals. For example, at a road show in fall of 2000, he preached about long-term investing like an evangelist.

As with most of his sessions, his sermon ended with his Coke story. It goes like this: If an investor bought one share of Coke for $26 back in 1919, it would be worth $4.3 million today. If 100 people bought the stock at that time, only one investor would remain. Why? Lee-Chin surmises that the other 99 investors would have sold the stock because of price fluctuations. The moral of the story: True investors don't focus on a stock's price, they study the characteristics of the business. "We don't buy stock," he maintains, "we invest in companies. We measure long-term success, not short-term prices. A speculator reacts to short-term market fluctuations. An investor will stay the course."

If you don't buy it, just take a look at Lee-Chin.

RELATED ARTICLE: Lee-Chin's laws: wealth building secrets of a black billionaire.

BLACK ENTERPRISE asked Michael Lee-Chin, billionaire CEO of Canada's AIC Limited, to reveal his secrets for acquiring wealth. On cue, the energetic money manager flashed a confident smile and gave a wink before providing his sage advice. His four steps are as follows:

1 FIND A ROLE MODEL