Veteran Fund Manager Bill Kanko has faced some stiff challenges in his 27-year career in the business. But managing a fund that was relaunched only two years ago into choppy stock markets that collapsed soon afterward has to be near the top of the list.

Kanko’s firm, Toronto-based Black Creek Investment Management Inc., is the sub-advi-sor to the $141-million Hartford Global Leaders Fund, which is sponsored by Hartford Investments Canada Corp. The fund was previously managed by Wellington Management Co., but as a precondition to Kanko’s arrival about two years ago, the fund’s assets were liquidated and Kanko came on board to rebuild the portfolio from scratch.

The meltdown of global stock markets is “a serious crisis, and it’s unprecedented,” says Kanko. “It’s global in nature and it’s not just in the U.S.”

But, he also notes: “It’s creating opportunities. The value is quite compelling, but the big picture is relatively uncertain.”

Hartford Global Leaders Fund has by no means escaped the maelstrom that has engulfed world stock markets. For the 12 months ended Sept. 30, it reported a loss of 16.4%, vs a 21% loss for the MSCI world index in Canadian-dollar terms.

Kanko says a two-year record is too short a time to judge his performance with Hartford Global Leaders and the fund’s performance is about average relative to its peer group. “We’re right in the middle of it, so we don’t feel too bad,” Kanko says of his fund’s performance rank against its peers.

However, Kanko is confident about one thing: his fund will do better over the next 10 years than cash or bonds: “The 10-year potential is quite decent right now. You really do have to have a longer view.”

A well-known name in the fund management business, Kanko established himself while co-managing Trimark Fund, sponsored by Trimark Investment Management Inc., from 1985 to 1994 with Trimark co-founder Bob Krembil. Kanko left Trimark, which had been acquired by AIM Funds Management Inc., in 2004 to start up Black Creek.

Another star manager who had worked AIM Trimark, Richard Jenkins, joined Black Creek as co-owner and managing director this past summer. Jenkins will take the lead on the new Hartford International Equity Fund, which will focus exclusively on markets outside Canada and the U.S.

As Kanko went shopping to rebuild Hartford Global Leaders, he drew on his years of experience at Trimark. He approaches each new investment as a business person buying a business, a strategy cultivated under Krembil, who has served as a mentor to many portfolio managers.

The stated goal of the fund, according to its June 2008 prospectus, is to find companies that are “leaders in their respective industries, as indicated by an established market presence and strong global, regional or country competitive positions.”

Using a bottom-up approach, Kanko does not focus on any sector, industry or country when seeking investments. He is looking for companies with good growth potential, but at a reasonable price.

Kanko crunches numbers when he does a valuation, but he also relies heavily on intuition, judgment and experience gained in more than 25 years in the money-management business. He suggests it is these qualities that allow managers to move quickly, noting as an example that investment guru Warren Buffett took just 15 minutes to decide to invest US$5 billion in beleaguered Goldman Sachs Group Inc.

“It’s not that extreme always, but basically that’s what we’re trying to do,” Kanko says. “We’re trying to make judgments on investments based on our knowledge and experience and based on what the market is serving to us.”

When it comes to that gut instinct, adds mutual fund analyst Dan Hallett, president of Windsor, Ont.-based Dan Hallett & Associates Inc. “You either have it or you don’t.”

Hallett says it is hard to categorize Kanko but says his style could be called “price-conscious” growth, as Kanko wants a moderate amount of growth but is careful about the price he pays. “He is looking for both characteristics,” says Hallett. “He is not looking for broken companies, distressed companies. I would call him a growth manager first.

“People shouldn’t necessarily be discouraged that managers like Kanko are having a tough time right now because you can’t always expect managers to do better during bear markets,” Hallett adds. “You want a manager who is going to be consistent in their style.”

@page_break@Kanko prefers a concentrated portfolio that allows him to track each company closely. There are currently 19 holdings in Hartford Global Leaders, and Kanko had a turnover rate of 19.4% as of June 30.

“The idea is not to go to 100 holdings or 200 holdings and become like the index,” Kanko says.

He regularly culls his holdings, and maintains a list of ideas to draw upon. When the top idea on the list becomes more attractive than the worst holding in the fund, Kanko sells the holding and buys the top idea. (He doesn’t have price targets, as his views on his investments are relative to each other.)

Kanko likes international companies that also do business in Canada because they are more accessible; he avoids companies that operate exclusively in emerging markets. He also has no holdings in China or India, where it is a challenge to get a accurate valuations.

Kanko also says the weakness of contract law in China is a huge deterrent; India has contract law and a more westernized view of business, he says, but is still overvalued.

Among the Hartford fund’s top holdings is multinational computer printer and photo giant Canon Inc., which Kanko believes is heavily undervalued. In his view, as more and more people print information locally, from e-mail attachments and the Internet, the more demand there will be for computer printers’ ink cartridges.

Although Kanko would like to have more assets under management in the Hartford fund, the advantage of a relatively small fund is that the portfolio can include small companies, such as Hamamatsu Photonics, a little-known high-tech Japan-based company that manufactures technology that uses light in medical imaging, astronomy and scientific research. Its sales are only US$700 million-US$800 million, but Kanko is enthusiastic when describing the growth prospects of the company, which has about 2,500 employees.

He discovered Hamamatsu through an offhand reference in a research report on the Internet; at the time, no major analyst was following the stock. IE