HIM Program Professor of Practice - Ken Lester
Ken Lester has been a discretionary money manager at Lester Asset Management for close to two decades. For most of that time, he has also been teaching an investment class at McGill. Ken’s contribution as a teacher is to provide real-life experiences that help students implement the tools, theories and skills they pick up in other finance courses.
Now, under the new Honours in Investment Management program, the Montreal money manager is taking on an expanded role at the Desautels Faculty of Management. As chief investment officer of Desautels Capital Management -- an investment company formed by Desautels -- Lester handles stock and bond trades recommended by student analysts, who help manage actual investment funds on behalf of outside clients.
The program, started in the fall of 2008, includes top undergraduates and specially selected MBAs at Desautels. Many have finance-industry experience. But in interviewing candidates, Lester also sought to assemble a team with varied interests and geographic backgrounds.
That approach reflects his belief that successful investment requires more than just technical expertise. “I really believe that the best traders are people well-versed in history and psychology and physics and biology,” Lester says. “To understand investing, you have to understand many disciplines – and especially things like psychology.”
Lester, himself, brings a generalist’s perspective and a breadth of experience to the classroom. He earned a Master’s degree in teaching history at Rhode Island College and another Master’s, in American Civilization, at Brandeis University in Massachusetts. After teaching at the high-school level in New England for a couple of years, he started and operated a medical-services firm for several years before joining his father and forming what has become Lester Asset Management in Montreal.
“I tell students, ‘Don’t come to me for modern portfolio theory and all the academia in terms of finance.’” What Lester’s students do get is practical training in the real world of investment management – including a healthy dose of advice from seasoned investment professionals that he brings in as guest lecturers.
Amid the turmoil sweeping global financial markets in recent months, the student analysts in the new Investment Management Program have had plenty to chew over. The group huddles four mornings a week from 7:30 to 8:30 to hash out investment ideas, with Lester joining them for a weekly session.
The honours program sprang in part from the “applied investments” course that Lester has taught since 1992. Students in that class invest money bequeathed to McGill specifically for the course. Every January, Lester divides the money into 12 parcels and apportions them to groups of students to manage throughout the entire calendar year until the following group of students takes over. With the aid of his partners, all trades are supervised in order to maintain good governance. The $1 million donated two decades ago had grown to about $2.5 million by the start of this year.
The course proved popular with corporate recruiters, who suggested that Desautels expand it, Lester says. “That was sort of the impetus for getting Desautels Capital Management going.” Under the new honours program, Desautels Capital charges outside investors a fee to manage their funds. Unlike Lester Asset Management, which serves high net-worth individuals, Desautels Capital targets financial institutions and corporations with billions of dollars in funds to invest. For such institutions, allocating $1 million or more to the McGill students may represent a sliver of their overall portfolios. But the relationship offers a potentially valuable recruiting tool.
“These big institutions spend a fortune on recruiting,” yet often have little to go on beyond academic transcripts when they screen candidates, Lester notes. “Here they’re going to have a perfect opportunity to see these potential future employees in action.”
-- Chris Chipello