More than a year after it halted trading, Crocus Investment Fund is still a major headache for Bill Watchorn.

The president and CEO of ENSIS Growth Fund can’t shake the effects of Crocus, which has had a spectacular fall from grace since becoming a focal point of venture-capital activity in Manitoba for much of the past two decades.

In its second RRSP season without its long-time competitor, and the first in which investors could redeem their shares, ENSIS reported net sales of $4.8 million, after $1.7 million of redemptions. During the two previous years, it posted net sales of $10 million and $15 million, respectively.

“The cloud of Crocus is affecting investors’ confidence,” Watchorn says. “The people who have invested in us understand our governance structure and how we run our business. They’ve retained confidence in us. But people who previously sold Crocus have decided not to buy us yet.”

ENSIS had set a target of $7.5 million in net sales, with the hope of stretching it to $10 million. “What we raised is fine,” he says. “We manage our business according to what we have available to invest. The disappointing element is we have more opportunities to invest than we’re able to raise money. The companies needing venture capital in Manitoba are the ones that are losing out.”

Indeed, the last year Crocus and ENSIS competed in the marketplace was 2004, when they raised a combined $25.9 million ($17.3 million of which was brought in by ENSIS). In just two years, the fundraising for labour-sponsored investment funds in Manitoba has fallen more than 80%. It’s a far cry from 2000 and 2001, when the pair raised $48 million and $45 million, respectively.

Crocus was placed in receivership last June. It has suffered through massive devaluations, a scathing report from Manitoba’s auditor general, allegations of activities contrary to the public interest by the Manitoba Securities Commission, an RCMP investigation into allegations of criminal activity and a $200-million civil lawsuit.

The disappointing sales come despite ENSIS being named one of the top LSIFs in the country for the fifth year in a row by analyst Dan Hallett, president of Windsor, Ont.-based Dan Hallett & Associates Inc. He cited ENSIS as one of eight funds to cut the mustard in his annual report on the sector.

Hallett says a relative lack of transparency with LSIFs compared with mutual funds means his interviews with executives of the 50 unique LSIFs in the country play a key role in his rankings.

“I’m looking for some willingness and an ability to answer tougher questions or questions on sensitive issues, such as the valuation process,” he says. “I’m also looking for them to be forthcoming with information. At the end of the day, I have to like the answers I’m getting and I have to believe them. ENSIS has satisfied me on all those fronts.”

Watchorn says the best marketing campaign for ENSIS will come from improved performance. A share recently traded at $8.50, down from its initial public offering price of $10 eight years ago; since inception, it has lost 1.9%.

Even so, Watchorn is confident the performance will come, especially with a growing number of its investments reaching maturity. Last month, ENSIS orchestrated the sale of Krave’s Candy, the Winnipeg-based maker of Clodhoppers, to Brookside Foods in British Columbia for an undisclosed sum. It invested $536,000 in the firm in 2000 and 2001.

ENSIS’ goal this year is to exit from one to three more investee companies and show gains.

“We have to demonstrate performance,” Watchorn says. “The only way we can do that is to exit a few investments at a value higher than we’re carrying them and show we can generate wealth.”

Despite an early interest in taking over some or all of Crocus’s portfolio, ENSIS is no longer pursuing that route. (Crocus’s receiver is evaluating a proposal from Vancouver-based GrowthWorks Capital Ltd. to buy the fund’s assets.)

“My view is we could have done a good job on the portfolio at probably the lowest cost, but we don’t control that,” Watchorn says.”

He was buoyed, however, by the fact the majority of the $4 million raised during his company’s inaugural RRSP season remains in company coffers.

“There’s confidence in us — and that’s good,” he says. “Shareholders are in no hurry to redeem; they think there’s upside in our investments.”