Westaim and Arena

[petec]

Fairfax recently invested $100m of prefs and warrants in Westaim.  More importantly, they committed to invest $500m in Arena, Westaim's asset management arm.  As far as I can tell Arena is one of many nonbank organisations stepping in to fill the void created by banks withdrawing from small business lending.  They seem to be building a diversified portfolio of secured loans with reasonable risk metrics yielding ~12%.

 

I've read the Westaim/Arena annual and investor presentation.  Interested to know if anyone on here knows them well or has any thoughts.

 

Thanks

 

P

[TBW]

Hi Petec.  I own Westaim stock and am a big fan of their management.  Really impressive capital allocation track record there.

 

Arena CEO has an interesting past.  Check out this podcast interview he gives to get a sense of his style https://www.bloomberg.com/news/articles/2016-04-04/odd-lots-the-unbearable-brightness-of-being-a-shadow-bank

 

I think this investment is a homerun for Westaim and a very smart one for FFH.

 

The risk is in the execution of Arena and their investing abilities. 

[petec]

Thanks TBW.  I need to go back and read Westaim historic annual reports.  If you have any other sources of info that you can post or PM me I'd be grateful.

 

Interesting that both Zwirn at Arena and Way at HIIG seem to be rebuilding careers tarnished by accounting scandals!

[PSDFinancier]

You should also look up Way's track record at HCC. From 1993 (when HCC went public) until 2005, when Way resigned, HCC grew book value per share at ~21% per year. Outstanding long-term track record as an insurance executive.

[petec]

Yes, I'd seen that.  Westaim are clearly partnering with clever people (Way and Zwirn).