PM reflects on four decades behind the desk and 592.4 per cent cumulative returns

James Cole might have been destined to be a portfolio manager. The son of a portfolio manager and the grandson of an executive on the Toronto Stock Exchange, this industry was in Cole’s blood. Growing up around investment pros he saw the unique combination of rational, mathematical analysis and emotional management that defines successful investing.

Cole went to university hoping to combine a study of financial markets and psychology, years before Richard Thaler ever articulated what would become the study of behavioural economics. He came out of school and embarked on a 40-year career that would take him to the role he holds today, SVP and Portfolio Manager at Portland Investment Counsel Inc. In that role he has guided his flagship fund, the Portland Focused Plus Fund LP, to cumulative returns of 592.4 per cent between its launch on October 31, 2012 and May 31st 2025.

Reflecting on his 40-year career, the past 25 years of which have been spent with Portland, Cole highlighted some of the deeply challenging moments that defined the whole industry through that time. In articulating those historical lessons, he outlined his own investment philosophy: holding a small number of companies for a long period of time with the prudent use of leverage to optimize returns. It’s a philosophy that he notes aligns directly with Portland — and the former AIC Limited — and its executive chairman, Michael Lee-Chin.

“I'd already been following AIC because I had so much appreciation and understanding if the investment strategy being followed at AIC: a limited number of high-quality companies in large percentage weights held for the long-term,” Cole says. “I just had tremendous respect for what Michael Lee-Chin, AIC, and now Portland had accomplished. When they came calling, I thought there's such an ideological fit here I think I could be home for a long time. 25 years later and that's proven to be the case.”

That 25-year journey has not been without tests and hurdles. Cole has seen his philosophy challenged by market movements, geopolitical crises, and a series of ‘once in a generation’ events. Through all that he’s held true to his beliefs, perhaps because on of his first lessons in the industry was that markets rebound.

Cole finished university in 1983, immediately following the end of a brutal bear market with interest rates over 20 per cent. By the spring of ’83, however, Paul Volker had managed to crush the high inflation of the late seventies and early eighties, sparking one of the biggest bull market runs of all time. Firms were hiring because of that market rebound, and Cole got his start.

Cole got his next major test right after he joined AIC (later Portland) on February 28, 2000, 11 days before the NASDAQ peaked and 12 days before the dot com bubble burst. The collapse of that first wave of technology stocks validated Cole’s belief in these high-quality, established companies. The rush towards new tech that occurred during the dot com boom saw many of those high quality names neglected by investors. When investors fled tech, they sought out quality and AIC’s investment funds soared.

The Great Financial Crisis tested Cole once again in 2008, perhaps more acutely as his portfolios suffered in the short-term along with so many other PMs. Despite that downturn, he saw an opportunity. Stock prices had been cut in half and interest rates had been cut to zero. It was the perfect time, in Cole’s view, for leveraged investing. Starting with his own personal accounts, Cole racked up significant returns by buying companies that still had strong underlying businesses and newly attractive valuations with a margin account.

At the time, Portland was a sub-advisor to Manulife so when that firm was pitched the leverage idea they passed. However, when Portland began launching funds under their own banner in the fall of 2012, Cole approached Michael Lee-Chin and showed him his strategy. What’s more, he offered to provide the full seed capital for the fund and cover its costs from his own accounts. It was a pitch that fit within two of Lee-Chin’s ‘five laws of wealth creation’: hold a limited number of companies in large percentage weights and finance that investment in part with other people’s money. Cole’s own success employing this strategy gave Lee-Chin confidence that he would succeed.

“He wanted to know, where I got this pot of money to back up the fund from day one, because he'd been my employer for 12 years by that point,” Cole says, laughing. “It was because I'd been doing the exact same thing as I wanted to do in a fund since the global financial crisis.”

Cole notes that his own RRSP and TFSA exclusively hold the Portland Focused Plus Fund. He does so because he believes in keeping his own skin in the game. He wants to see his own wealth grow alongside investors’ and since launching the Portland Focused Plus Fund LP in 2012 he has seen some significant cumulative returns, to the tune of 592.4 per cent as of May 31, 2025.

That success has empowered Cole to be completely active and discretionary in his portfolio management, adjusting equity exposure and leverage levels where he sees fit. In 2019, following strong market performance, he was struggling to find attractive value. As a result, his fund had hit a record low equity weight, of around 60 per cent with the remaining 40 per cent in cash. Leverage levels were low, too. When the COVID crash hit, his portfolio weathered the worst storms and he was able to deploy that cash to take advantage of the post-crash valuations and recovery. It’s a strategy informed by a level of self-assurance that Cole says is rooted in a belief in the businesses he invests in.

“We’re confident because we’re choosing to invest in businesses with above average predictability.  Last fall I took a big position in Toronto-Dominion Bank, when the headlines were full of why TD Bank was having difficulty. I knew, to quote that old adage, that ‘this too shall pass'. I knew that they had predictable income from all those mortgages and loans. We knew what their net interest income is going to be next quarter to a high degree of confidence,” Cole says. “I have a much more focused portfolio and I concentrate on businesses in which I have confidence in the valuation, the management, and the financial strength.”