One of the things I love most is uncovering unusual investment companies. Whether you can actually invest in them is immaterial — the mere act of studying them will make you a better investor.
About a year ago, I came across the Tribal Councils Investment Group of Manitoba, a holding company based in Winnipeg, Manitoba, that owns several private businesses as well as non-controlling investments in a few public companies. With revenues around $100 million, the company is meant to generate future profits for the seven tribal councils in Manitoba.
It’s a great concept. Unfortunately, the former CEO and five other senior executives began using the holding company as their personal fiefdoms, and in May the tribal councils were forced to remove the six from their jobs. A CEO search is currently underway.
The events unfolding in Manitoba — although related to the province’s First Nations community — are really about good corporate governance. This kind of thing happens everywhere. It shouldn’t detract from the fact TCIG has built an attractive group of investments. With the proper management, I’m sure it will thrive once more.
Curious about what exists in the U.S., I’ve pulled together several investment companies that are doing well operationally and at the same time benefiting indigenous people across the country. When done properly, it’s a win/win:
Seneca Holdings, LLC
This first thing I notice about the investment arm of the Seneca Nation of Indians is its CEO, David Kimelberg. As with investments in any company, you want to know that management is competent and qualified. Kimelberg is a citizen of the Seneca Nation, a lawyer and an experienced venture capitalist, having spent six years with SoftBank Capital prior to becoming Seneca Holdings’ founding CEO in 2009.
U.S. native nations posses economic and political advantages that make private equity a good business model for its citizens. With casino gaming vulnerable to regulatory and competitive threats, Seneca Nation sought to diversify its revenue stream and formed the holding company with an initial investment of $28 million. The capital should all be allocated by the end of 2014. Its current investments are in the telecom, construction, security, software, and radio broadcast industries. While $28 million might not seem like a lot of money, consider that Berkshire Hathaway (BRK.B) wasn’t much different in the mid-1960s.
Southern Ute Growth Fund
Established in 2000, the fund was meant to diversify the Colorado tribe’s revenue streams beyond natural gas. Two funds were actually created–the Growth Fund and the Permanent Fund. The latter took 75% of its energy royalties and profits from the Sky Ute Casino and invested them in equities, bonds, etc. The remaining royalties as well as profits from its existing energy and real estate holdings would be reinvested in other businesses beyond its reservation lands.