Hanif Mamdani: Top Canadian investor braces for biggest opportunity yet

Jun. 26, 2015 Last winter, as panic gripped the global oil trade, Hanif Mamdani spent $1-billion accumulating energy bonds that investors fleeing the sector were desperately unloading. He binged on high-quality issues that he believed had been unfairly punished – notably a large helping of Baytex Energy Inc. bonds that had fallen to 79 cents on the dollar in early December.

Five months later, he sold some of that paper at a gain of almost 25 per cent. But here’s the kicker – over that stretch, the price of crude oil actually declined, suggesting that fearful investors had been absolutely correct in their forecast of hard times in the oil patch. Where they went wrong was in overestimating the potential damage. Bluntly put, they overreacted.

The energy sell-off is symptomatic of an investing environment that is increasingly governed by emotion rather than fundamental analysis, says Mamdani, one of the country’s elite investors. It’s the kind of market in which feelings matter as much as math.

More www.theglobeandmail.com/report-on-business