Investors pull half a billion out of O’Leary Funds

Kevin O’Leary surfed the wave of his TV notoriety to attract money into the funds he launched just after the market crash in 2008. And he was very successful at bringing in more than a billion in capital via the sales distribution channel–paying brokers to funnel him unsuspecting client capital.

The buzz circulated and perpetrated by O’Leary himself (aided and abetted by the CBC who were desperate for business ratings) was that O’Leary was an investment genius because he said that he “sold a software company and made billions of dollars”. Actually this was very far from the truth. See more here:  What is the origin of O’Leary’s billionaire moniker.  Also see:   TV’s shark tank guru:  in real life, no business whiz

I wrote about my own personal experience and impression of O’Leary here last October.

But regardless of how much money he really had or has, the truth is that O’Leary is a fantastic salesman but woefully inept at the real life risk management of other people’s savings.  Thank heavens retail investors are finally waking up.  See:  Investors redeemed 500 million in O’Leary funds in 2011:

I guess the idea of Getting Paid to Wait may not be all that worthwhile if you’re not even gettin’ paid while you’re doing all of that friggin’ waiting! At least not solely out of profits, that is (see prior post “O’Leary: ‘We have never dipped into the principal‘” June 7-11).

I’ve just had a chance to peruse the 2011 financial statements for the various mutual funds and closed end investment vehicles managed by our man Kevin O’Leary, Canada’s Rock Star asset gatherer. Across the board, it seems that some investors are starting to walk, briskly, to the exits. By my count, KO’s various funds suffered more than $498 million of redemptions in 2011, which works out to be about 24% of all of the funds under KO management. At that rate, unless he can continue to raise new funds to replace the assets that he’s losing, Mr. O’Leary won’t have anything left to manage by the time his infamous “Decade of Daddy” comes to an end (hat tip – Globe & Mail).

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5 Responses to Investors pull half a billion out of O’Leary Funds

  1. John says:

    Good.

  2. Excellent post, Danielle.

    If it’s true that O’Leary personally pocketed only about 12 million dollars or so from his sale of TLC and his subsequent involvement with Mattel, then he is nothing more than a very entertaining—and rather deflated–fraud.

    I used to enjoy watching O’Leary on BNN, but I never liked his “the only thing that matters is money” mantra. Every time he espoused his filthy lucre world-view I would cringe at the thought of so many Canadians (especially young Canadians), who were caught under his curmudgeon charms, nodding their heads and saying, “right on!”

    I agree that the CBC has denigrated its own credibility by exploiting O’Leary’s rude, pompous, and arrogant on-air personality. Of course, Amanda Lang’s role was to maintain that credibility with rational comment and to reign in O’Leary when he went to far. Sadly for her, their on-air partnership was the financial news equivalent of Abbott & Costello. Are they still together? I don’t know, I stopped watching long, long ago.

    As for his funds, I’m not surprised they’ve underperformed. But redemptions since the crisis of ’08 have become pretty much common across the board, so I would not necessarily single him out for that.

    While I’m sure this does not apply to you or to Venable-Park in a negative way, it has to be said that the most lucrative practice in finance is taking the “golden crumbs” of naïve investors. Kevin O’Leary certainly parlayed his abrasive personality into more business for his fund company. Sadly, it may turn out that his personality may be (perhaps) the only thing that was real about him.

  3. peter says:

    Unfortunately, in my years of living in North America, I have noticed that displaying that aura of confidence (veering on arrogance), whereby one cannot show self-doubt at all cost, is very alluring to many, making the balanced individual look bad. It is clear that one can never, ever, show one’s vulnerability or the vulnerability of your product, your decision. NEVER,… unless you have billion dollars sitting in your account, in which case that could be a plus. The key is to ALWAYS SHOW your success (using your credit cardS to BUY status symbol gadgets, clothes with labels, each other partners or their goods,…. and ALWAYS SAY that you know EVERYTHING. Grey doesn’t matter anymore, nor does grey matter! I don’t subscribe to this facade, but it has been tough to find a partner! FAKE people are everywhere! Padded bras, botox lips, leased BMWs, outrageous mortgages at incredible terms and conditions,…. Things are so ridiculous that even REALITY TV isn’t … real!

  4. Robert C says:

    I find it interesting how many people decide to invest in these startup fund/financial companies and investment companies when a person with celeberity status lends their name to the company. I was invited last year by my bank to a presentation of another of these companies where another ‘Dragon’ was lending his name to a group to bring aboard we ‘potential’ investors. I didn’t buy in because I did not see any indepth knowledge from the team on Canadian markets or financial understanding. What I saw was a bunch of let’s ride the wave of commodities together, there is big money to be made with Canadian commodity companies. The two funds they were offering one started at about $12 per share the other about $11. Fifteen months later the $12 is now worth $7.50 and the $11 is now worth $8.50. Not a very good return for those who decided to invest.

  5. dave says:

    CBC got O Leary to make themselves not look as left wing. OF course being tax payer funded they will be guilty of that no matter what.

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