Inspired by the magnificent sums of money tallied in this year's Rich 100–some $130 billion–we decided to look at some of the companies associated with the people on the list to distinguish which of Canada's fabulously wealthy are also making their shareholders rich. That limits this survey to publicly traded organizations, obviously, but we're also looking at long-term wealth creation, so companies or trusts that have been around for less than five years were not picked up in the survey.
To rank the performance of publicly traded companies controlled or managed by members of the Rich 100, we looked at total five- and 10-year returns provided by Thomson Baseline, a financial data service controlled by the No. 1 man on our list, Kenneth Thomson. His Thomson Corp. (TSX: TOC) deals in the distribution of digital information, a job it does ably, but the firm's shareholder return is less than stellar; the company has returned a measly 15% over the past five years, less than the total return of the S&P/TSX composite index (including dividends), which returned 21% over the past five years. We should add, however, that Thomson beat the 10-year measure with a total return of 215% compared to 146% for the TSX composite.
So who produced the highest 10-year returns? Not surprisingly, companies that soared during the go-go '90s–when tech valuations were rising exponentially–firms such as ATI Technologies (TSX: ATY), Cognos (TSX: CSN) and Biovail (TSX: BVF). Money invested in Eugene Melnyk's Biovail 10 years ago has grown 2,288%, which makes it the top performer of the public companies held by members on our Rich 100 since 1994, while Michael Potter's Cognos is up 1,549% and Lee Ka Lau's ATI gained 1,114%.
Of course, the five-year returns on these companies are drastically different. ATI has returned just 21% since 1999, while Biovail shares are down 33%. But the returns give us a picture of the Canadian economy over the past decade–an economy that went from tech bubble to bust before reverting to its heritage role as a producer of commodities, a sector that's been all the rage of late.
The top performers in terms of five-year return are in the mining and energy sectors. Ivanhoe Mines (TSX: IVN), controlled by Robert Friedland, has generated a very healthy total return of 847% since 1999. The boom in commodity prices also explains the success of Canadian Natural Resources (TSX: CNQ), which has gained 191% in the past five years. Murray Edwards, who owns about 2.5 million shares of Canadian Natural, is also involved with Penn West Petroleum (TSX: PWT) and Imperial Metals (TSX: III), two other firms that have put up good numbers of late.
But what about steady and stable returns over both the 10- and five-year periods? For that, investors would be wise to look to second place on the Rich 100, where Galen Weston sits. One of the strongest performers over both periods is Loblaw Cos. (TSX: L), controlled by Weston's holding company George Weston Ltd. (TSX: WN). You can't go wrong selling food, and Loblaw has returned 918% over the past 10 years, and some 113% over the past five years, which is just slightly better than George Weston Ltd., which has returned 787% and 113%, respectively.
Another strong performer on the steady growth front has been Jean Coutu Group (TSX: PJC.A). Coutu's company has returned 904% over the past 10 years, and 112% since 1999. And Power Financial (TSX: PWF), associated with Rich listees Robert Gratton (80th place) and Paul Desmarais Sr. (sixth place), might also be thrown into this list of steady performers, with returns of 851% over 10 years and 147% over five.
Anyone who held a portfolio with Power Financial, Loblaw and Jean Coutu over the past decade would have done quite well. But it's worth remembering that past performance is no guarantee of future success. Firms like Loblaw and Jean Coutu will likely face tougher competition in the years ahead as they reach the limits of growth in Canada. Revamped Loblaw stores are now ubiquitous, which also means it is attracting the attention of newcomers like Sobeys and Wal-Mart. In the case of Jean Coutu, the company has had to look south of the border for growth, which takes it into a new and fierce competitive environment.
And what of the less distinguished performers on the list? Considering the automotive sector makes up more than 12% of Canadian manufacturing GDP, you would think the world's premier auto parts supplier, Magna International (TSX: MG.A), may have been able to turn a decent profit for long-term shareholders. That doesn't seem to have been the case, however. Magna A-class shares have returned only 141% over the past 10 years, which doesn't beat the TSX composite. Also faring badly was Bombardier (TSX: BBD.B), which has returned a dismal 36%. Pity the investor who placed his savings with the Bombardier family in 1994 and held on. Somehow, the Bombardiers still made it onto the Rich 100, but their wealth did drop by about $470 million over the past year, and if the lousy performance continues, they might not be on the list much longer.
