Making the Right Moves

Deans Knight Capital Management knows it’s on to something when its clients don’t recognize the companies in their portfolios

When Wayne Deans and Doug Knight founded Vancouver-based Deans Knight Capital Management Ltd. in 1992, the bulk of the firm’s assets were in pension plans and mutual funds. Since then, its client base has changed dramatically and now consists mostly of ultra-high-net-worth individuals and facilities. “As you build a reputation, you gain some traction,” says president Craig Langdon (pictured here), who joined the firm in 1999.
When Wayne Deans and Doug Knight founded Vancouver-based Deans Knight Capital Management Ltd. in 1992, the bulk of the firm’s assets were in pension plans and mutual funds. Since then, its client base has changed dramatically and now consists mostly of ultra-high-net-worth individuals and facilities. “As you build a reputation, you gain some traction,” says president Craig Langdon (pictured here), who joined the firm in 1999.

A lot of firms say they do things differently, but at the end of the day, that’s often just marketing,” says Craig Langdon, president of investment firm Deans Knight Capital Management Ltd. “But, in our case, we really are doing something differently.”

Despite Langdon’s words, his company’s strategy still seems pretty straightforward at first glance: the 16 employees of the boutique firm invest capital for 300 ultra-high-net-worth individuals and families—predominantly in Canada, with some in the United States and Europe—and they divide the business’s roughly $1 billion in assets between two strategies, one equity and one fixed income, primarily via pooled funds. (Although, in the case of the equity strategy, the firm will use segregated funds as well.)

Each of Deans Knight’s clients is different, though, and the firm will customize a client’s portfolio on request, sometimes simply by investing a specific percentage in the income and equity strategies and other times by investing in a specific sector. It’s largely this ability to remain flexible and open—combined with a flair for innovation and customer care—that sets the company apart.

“We’ve had clients come to us and request, based on our strong networks in Calgary and other parts of Western Canada, a separate mandate that invests solely in energy or natural resources, and we’ll certainly do that,” Langdon says, noting that such companies are doing well after struggling for several years. Modes of transportation other than pipelines have been found, helping alleviate the short-term backup of oil and move it where it needs to go, and the unusually cold winter of 2013–14 sent demand for natural gas through the roof and brought storage levels close to 10-year lows. This, in turn, has driven prices higher and, more importantly, painted a healthy picture for natural gas for the next 12 months. “People are starting to realize that the energy business is much more robust than anticipated,” Langdon says. “It’s led to a significant increase in investor demand and a rise in valuations.”

The firm also differentiates itself through its creative approach. “On the equity side, we have a unique view of certain situations,” Langdon says, attributing the vantage point to Deans Knight’s expansive network. Because of the firm’s investing style, its client base consists primarily of entrepreneurs, who serve as a solid source of ideas and even act as a sounding board. “Our clients have experience in every industry you could imagine, and we tap into that knowledge base as much as we can,” Langdon says. “As a result, we’re not investing in mainstream names, and we’re the first ones to see some opportunities.”

Facts & Figures

22
Years Deans Knight has been in business

16
Employees at the firm

2
Main investment strategies for the business

300
Clients that Deans Knight oversees

$1 billion
The firm’s current assets under management

Taking such risks requires a huge amount of in-house experience—not only in analyzing companies but in thinking outside the box—but it works. “Clients often look at their portfolios and say, ‘I’ve never heard of any of these companies,’ and that’s when we know we’re doing something right,” Langdon says.

On the income side, the firm holds the distinguished honour of having been the first in Canada to focus an income strategy on high-yield bonds. And today, it has expanded into another unusual area: alternative lending, including private debt and bridge loans. “Our lending complements our high-yield investments, and there aren’t many firms that have that capability,” Langdon says. The strategy has been so successful that the firm is looking into launching a separate entity to focus on investing in private-debt opportunities.

To round out its distinctiveness, Deans Knight set a customer-service standard that is now ingrained in the culture. “We have a huge amount of respect for our clients, so we’re constantly doing what we can to enhance our clients’ experience with us,” Langdon says. The firm doesn’t have voicemail, for example; someone answers the phone after one ring, and any messages received are returned on the same day. The in-person experience is similar: when a client comes into the office, he or she never waits.

“If clients have made the effort to call or come see us, we have to return that respect, and we do so by portraying the truth that their time is important,” Langdon says. “Clients often tell us how much they love contacting us because they get a genuine feeling that everyone here truly cares about them. That’s the biggest compliment we could ever get.”