A licence to print money

Fortress Paper's Chad Wasilenkoff was an entrepreneur at age 10. He's never looked back.

At the tender age of 10, Chad Wasilenkoff first displayed a talent for making money. He would hire friends to fish golf balls out of the pond at Calgary’s Silver Springs Golf & Country Club, then sell them at a nice markup. Wasilenkoff rounded up the addresses of golfers and had his mother drive him right to their homes to move product. “At that age, there are no taxes. It was all profit,” he remembers fondly. The barriers to entry in the golf-ball-recovery business were too low, however—basically it’s take off your shirt, walk in a pond—and competition quickly showed up.

Not to be outdone, Wasilenkoff made a nice lateral move into a new sector: buying and selling Atari video games that he found in the Calgary Bargain Finder. With mom back behind the wheel, he would pick up games and resell them at a profit. “I monopolized that part of the paper,” he says. “If you weren’t on the ball, you would have to buy it from me. I’d make $50 to $100 a game.” The business model was extended to other in-demand products of the time—BMX bikes and Apple II computers—and then finally to used cars. All this before Wasilenkoff was even old enough to drive. Now 34, the former kid entrepreneur does basically the same thing—though on a much higher level. Four years ago he headed up a group that bought Dynasty Metals & Mining (TSXV: DMM) for $1 million. When the price of gold shot up over US$700 an ounce from US$300, Dynasty’s market cap zoomed to $150 million. “Everything I do stems from that early experience,” says Wasilenkoff. “Find value.”

He struck gold again in 2004 when he took over a shell company that was $200,000 in the red. Wasilenkoff settled the debt, acquired a uranium asset and changed the shell’s name to Titan Uranium Inc. (TSXV: TUE). “The deal was zero money down, payment if successful,” he says. Since then, the price of uranium has blasted off from US$10 to more than US$100 per pound, providing another windfall on an asset out of favour with other investors. “When everyone else is throwing in the towel, that’s when I get in,” he says.

His latest company, Vancouver-based Fortress Paper Ltd., also makes money—literally. It has bought sophisticated mills in Switzerland and Germany that produce high-quality paper used in bank notes, passports, cheques and drug labels, anything, basically, that needs to be secure, hard to forge and verifiable as an official document. Fortress makes the paper used to print euros in several countries, as well as the Swiss franc. Why paper? The forestry sector is wildly overbuilt, says CEO Wasilenkoff. The plan is to buy mills that will do well in the future, then wait until excess production capacity burns off. “A lot of companies won’t succeed, and that’s steering investor sentiment, but that means the best ones are getting passed over,” he says. “Analysts in the sector tell me the only reason they are here is because they have to be. That’s why I’m here.”

Fortress is gearing up for an IPO this month to be led by the investment banking arms of RBC and TD. “They like the idea,” says Wasilenkoff. Though, he hopes the sector doesn’t come back too soon. “A turnaround could be six months away or five years,” he says. “If it’s five years away, that’s better. It gives me more time to make acquisitions.”