You want a piece of him?

What Nova Scotia tree-huggers have known for years, Bay Street is just starting to discover. Mr. Armoyan has handed the reins of the property business to his brother and turned his bulldozers on the boardrooms of Corporate Canada, acquiring a reputation as a pugnacious and shrewd fixer of busted companies and messed-up income trusts. He is often described as a bottom-fisher, and there’s a lot of truth in the description, but it offers only part of the picture.

Though he’s not Canada’s richest activist investor, he might be its pushiest, and is certainly one of its most effective. And his influence seems certain to grow with the rising number of broken trusts. No fewer than 36 business income trusts have cut or suspended their distributions in the past five years, according to Blackmont Capital analyst Barbara Gray. For some investors, this is a disaster, an ugly outgrowth of the income trust fever of 2001 to 2005, when investment bankers found it easy to sell trusts at inflated prices. But for an astute bargain hunter, it represents the opportunity of a lifetime.

As a result, Mr. Armoyan, a 46-year-old Syria-born immigrant, has developed a growing cadre of fans and followers who put their own money beside his. The list includes people like Michael Bregman, the Toronto entrepreneur who used to own the Second Cup coffee chain, and John Risley, the Atlantic Canada seafood king, who predicts great things ahead for his friend. “He’s got a great sense of value and a really good financial mind and an appetite to do bigger deals,” Mr. Risley says. “This guy is absolutely going to be a material player on the Canadian business scene over the course of the next few years.”

Mr. Armoyan will even put a number on his ambition: He wants to turn Clarke Inc., a $150-million public company that serves as his primary investment vehicle, into a $1-billion entity by 2010.

How? By replicating the strategy he has used in the past five years: finding income trusts and small-capitalization companies whose earnings and market values have plunged; buying a significant stake (often 10 or 15 per cent); getting a seat on the board; and using the force of his will to improve them, or, just as often, sell them.

Yesterday, Entertainment One Income Fund, a DVD distributor in which Mr. Armoyan controls a 12.6-per-cent stake, announced it had hired Genuity Capital Markets to explore “strategic alternatives.” It is at least the fourth Armoyan-related company in the past two years to go on the auction block. When he gets his teeth into a company, stuff happens, and woe to the person who stands in his way.

“If you are going to win a fight with George,” Mr. Risley says, “it’s because you’ve killed him.”

There’s probably no better example of Mr. Armoyan’s modus operandi than how he captured control of Clarke. In the early part of the decade, Mr. Armoyan took an interest in Halterm Income Fund, which runs a huge shipping terminal at the Port of Halifax. He was thinking of building a larger stake, but was put off by one thing: Clarke, an Ontario trucking and logistics company, held the contract to manage Halterm.

Mr. Armoyan found the arrangement unwieldy and expensive, and approached Roy Rideout, Clarke’s chairman and chief executive officer, to buy out the contract. “The guy really pissed me off,” Mr. Armoyan says. “He wouldn’t sell me the contract at any price.”

Big mistake. Mr. Armoyan started poking around Clarke, and saw the company had been a poor investment: It went public in 1998 at $6.87 a share and had dropped below $4 by early 2001 (both prices are adjusted for a later share split). Through his private holding company, Geosam Investments, he began to buy stock. By September, 2001, he had grabbed 16.6 per cent of the company, and he asked for a seat on the board.

“They gave me a bit of the runaround, but finally I told them if they don’t put me on the board, I’ll have a proxy fight.” He was allowed in, but it wasn’t an easy relationship. “I was a very active board member,” he says, grinning. “Always a critic. And he [Mr. Rideout]was frustrated. There was so much bullshit and bureaucracy going on there, you know?”

The tension came to a boil when Clarke’s board enacted a poison pill, to be triggered when any shareholder acquired more than 20 per cent. Mr. Armoyan, who by then had bought 18.3 per cent and owned more stock than all the other directors combined, campaigned against it and got it defeated at the annual meeting in August, 2002.

Within a week of that victory, he’d raised his stake to 27 per cent. Mr. Rideout, who declined to comment for this article, left two months later. His replacement lasted a bit more than five months before bailing out, and Mr. Armoyan became the CEO. He has been busy, selling parts of the transportation and logistics business, buying real estate and a container ship, the MV Shamrock, and Clarke’s share price has risen 133 per cent since he became CEO.

But three-quarters of his time is spent on his investments in other public companies. It’s an eclectic mix that includes a hotel operator ( Royal Host Real Estate Investment Trust), a wholesaler of DVDs and CDs (Entertainment One Income Fund), a Quebec furniture maker ( Shermag Inc.), a cold-storage warehouse company ( Versacold Income Fund) and a manufacturer of oil tanks ( Granby Industries Income Fund). It may seem they have little in common, but each fits into the bargain-hunting process he has devised through years of trial and error.

First, Mr. Armoyan scours the newspapers and wires for stocks that have plunged. But not just any stocks: He’s looking for companies with hard stuff — real estate, plants, equipment — that might support their share prices. Businesses with a lot of “soft” assets, such as brands and customer relationships, don’t interest him much.

Then he and his team begin sleuthing, testing the balance sheet. Are inventories overvalued? Will factories have to be written down? Recently, he began stalking Spinrite Income Fund, an Ontario yarn manufacturer that has been one of the worst case studies of a trust catastrophe — the stock has fallen almost 90 per cent since the February, 2005, initial public offering.

“I sent somebody to buy some inventory from them, just to feel what it was like,” Mr. Armoyan says. “They don’t know it was me.” In late September, he was trying to buy the stock for 90 cents, but it staged a small recovery (it closed yesterday at $1.25).

Another Armoyan trick is to phone a company’s suppliers, to see if they’re being treated well and getting paid on time. Or he’ll talk to competitors, industry contacts or former employees. When Entertainment One parted ways with chief financial officer Chris Jamieson in August, Mr. Armoyan says he tried to hire him as a consultant. “Who would know more about the company than him?”

He’s obsessive about the China factor, and wants to see that management has a plan for dealing with it, as in the case of Shermag. The firm’s share price has been crushed, falling from $16 in late 2003 to $2.60 yesterday. “I think they were probably a little bit slow in reacting to the eventuality that stuff has to be manufactured in places like China,” Mr. Armoyan says. “But I think they’ve finally realized some of these issues.” When he disclosed that he’d bought 11.6 per cent of the company in August, the shares rose more than 30 per cent in the next three days.

That doesn’t mean Mr. Armoyan’s arrival is universally welcomed, though, because for executives, his interest comes at a price. He demands influence, even in companies where he has a high regard for management, like Shermag, where he has asked for a board seat. “It’s a typical French response, I guess: ‘Monsieur Armoyan, you have to come for interviews, we’ll consider you next year.’ I’m a big shareholder, but they want to give me the runaround! I was not happy.”

But then, he’s acquiring a reputation. Share prices may rise when Mr. Armoyan enters the scene, but job security for incumbent CEOs and directors often plummets. His tactics at Royal Host may have accelerated the departure of not just the top executive, but the founding Royer family and most of the board, too. Mr. Armoyan built a 17-per-cent stake in the hotel operator and caught nearly everyone off guard when he nominated his own slate at the May, 2005, annual meeting.

It was “a sneak attack,” but perhaps a necessary move, says Michael Smith, National Bank Financial’s real estate analyst, who was at the meeting. “It was a terrible REIT,” Mr. Smith says. “I think what he has done is install a discipline on the management.” The hotel trust has raised its distribution and bought back shares. Mr. Armoyan is talking about selling off underperforming hotels — probably a precursor to auctioning the firm, Mr. Smith says.

Even Greg Royer, who replaced his brother Randy as Royal Host’s CEO in 2004 and left the firm himself this past summer, says he has respect for what Mr. Armoyan has done. The differences between the largest shareholder and the family were overstated, Mr. Royer says: “My focus always on the company was I wanted to clean it up, and George and I agreed 100 per cent on that. I think he and I disagreed on how to grow it, but it wasn’t a big deal.”

Despite his knack for sharp elbows, though, Mr. Armoyan says he is really not the type to enjoy a fight. His first business venture, as a young man out of Dalhousie University, was as a boxing manager; he says he failed at it because he couldn’t stomach the sight of blood. In business, he’s aware of the consequences of playing too rough.

“We’re a very gentle, easy-going society. We trust everybody. We think everybody is there for the good of all shareholders. I don’t think that’s a fact,” he says. “I’m emotionally attached and I care about the people who work [at these companies] But I am there to make money. There is no doubt.”