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News and analysis on Bay Street and the world of finance
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Entry archive:

Move over housing bubble, it’s autos’ turn

Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.

Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.

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ValueAct’s winning ways may be key to change at Agrium

Boyd Erman

ValueAct Capital, the San Francisco-based activist investment fund that just took an $850-million stake in Canada’s Agrium Inc., has a reputation for quietly getting things done.

It’s the second time in a little over two years that Agrium has faced an activist.

The last activist to show up in Agrium’s stock was Jana Partners in early 2012, which ran a noisy, combative and ultimately losing campaign to split the company up. Jana wanted the company to divide its fertilizer production business from its farm-products retailing business. Agrium fought back aggressively and fended off the challenge.

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Rogers CEO’s dressing-down all in good fun, analyst says

NIALL MCGEE

I’ve listened to many (too many) conference calls that companies do with analysts after reporting quarterly earnings. They can be stupefyingly boring, and the deference that analysts pay to management can be nauseating. “Congratulations on a great quarter,” “Great job on your acquisition of company XYZ,” etc.

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When it comes to IPOs, go big or stay home

NIALL McGEE

The moribund initial public offering and lacklustre late-stage financing environment that had hung around the poor old North American technology sector, since the great financial crisis of 2008, is long gone. As one banker put it, “The drought is over.”

David Wismer, managing director of technology investment and corporate banking with BMO Nesbitt Burns. Inc., called the end of the dry spell at an IPO-themed breakfast event hosted by Deloitte, BMO and Bennett Jones, which was held Thursday in Toronto. In attendance were investment bankers, lawyers, tax gurus and the usual smattering of scruffy financial journalists, such as yours truly.

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Salman to close Calgary office amid weak trading business

Jeffrey Jones

Salman Partners Inc., the Vancouver-based investment dealer, is closing its Calgary office following several staff departures and weak oil-patch-related sales and trading activity, according to a source familiar with the situation.

The decision coincides with the retirement of veteran energy analyst Gord Currie, who was the operation’s last Calgary-based employee, the source said.

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Investment firms in Vancouver make key hires

JACQUELINE NELSON

Two Vancouver investment firms have expanded their teams.

Investment dealer Salman Partners Inc. is welcoming Rahim Rajwani back to the company. He will be a managing partner and the firm’s vice president of corporate development starting Oct. 27.

Mr. Rajwani joins the team just a few months after Salman Partners acquired rival independent dealer Woodstone Capital Inc., driven in part by Woodstone’s high-net-worth investor base.

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Auto loans: should we be worried about a bubble?

TIM KILADZE

Move over, mortgage lending. A different type of debt is stealing the spotlight.

As North American vehicle sales soar, with Americans and Canadians pulling the trigger on the new car purchases they put off during the financial crisis, there are growing cries for caution around auto loans. And they’re only getting louder.

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TMX says biggest threat is losing trades to U.S.

BOYD ERMAN

TMX Group Inc. wants to make big changes to how its stock markets operate, to combat what a senior executive says is the “single biggest issue” facing Canadian equity trading – the possibility that more trading migrates to the U.S.

In the U.S., traditional stock markets have become increasingly less relevant as brokers do more and more business in alternative venues. That’s driven by what’s known as “payment for order flow,” which allows trading venues to essentially buy orders from brokers. In Canada, that is prohibited.

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Brookfield Residential shareholders angry at parent’s offer

BOYD ERMAN

Minority shareholders of Brookfield Residential Properties are starting to speak out against parent Brookfield Asset Management’s bid to buy the rest of Brookfield Residential for $23 (U.S.) a share, saying that’s not even close to the fair price.

Brookfield Asset said Thursday it would make the bid. Brookfield Residential will now set up a committee of independent directors to review the bid, and hire bankers to offer an opinion.

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Boris Wertz's Version One raises second VC fund

BOYD ERMAN

Version One Ventures is unveiling a second early stage venture capital fund, giving Boris Wertz and his team $35-million to invest.

The firm will use the money to invest in mobile, software as a service and Internet ventures.

Vancouver-based Version One's first fund, a $20-million fund that closed in 2012, is "well on its way" to providing the target return of three times capital, Mr. Wertz said. Mr. Wertz has backed companies such as Wattpad, a publishing venture, and crowdfunding source Indiegogo. He has been called by Crunchbase "One of (if not the) most well-respected fixtures in the Canadian venture capital scene."

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‘Golden leash’ adds another layer to proxy battles

ADRIAN MYERS

The language of finance is endlessly creative. First it gave us “golden handcuffs,” and then “golden parachutes,” and now we have the most evocative term yet: “Golden leashes.”

If you follow this stuff, you might be familiar with the golden leash from such proxy contests as Jana Partners’ messy attempt to oust Agrium Corp.’s board last year. The golden leash is a deferred payment from activist hedge funds to directors that they nominate during a proxy fight. While funds often give nominees cash compensation to run during a proxy contest, on some recent occasions, nominees have been offered additional rewards if they win, and if the company meets certain stock-price based benchmarks over a multi-year period.

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Canadian activist fund managers prefer to stay under the radar

NIALL MCGEE

So we’re all probably by now familiar with the stereotype of the loud-mouthed, brash, arrogant, activist investor. They’re camera-ready, often American hedge fund managers, who will think nothing of engaging in shouting matches on national television – sometimes with each other. We’re not devoid of these kinds of larger-than-life activist characters in Canada either; to wit, long-time dissident investor George Armoyan, executive chairman of Clarke Inc., has never been accused of being a shrinking violet.

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Déja vu as Kinross sells troubled mine to Lundin company

RACHELLE YOUNGLAI

The latest deal between mining veteran Lukas Lundin and Kinross Gold Corp. is a case of history repeating itself.

This is the second time the Lundin family has ended up on the rosier side of a deal with the Toronto-based gold miner.

Kinross announced this week that it will sell its idled Ecuador gold project to Fortress Minerals Corp., a company controlled by the Lundins, for $240-million (U.S.).

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Edgecrest Capital’s head of sales departs for Laurentian

NIALL McGEE

Jeffrey White, former managing partner and head of equity sales at Edgecrest Capital Corp. has joined Laurentian Bank Securities. Mr. White has taken on the role of head of institutional sales and trading. He started on Monday.

In a telephone interview, Mr. White expressed excitement about his new role and says that when approached by Laurentian he was presented with an “unique opportunity to work in a boutique culture within a bank envelope.” He also likes that Laurentian has a “nice niche” in the small cap field and is a “broadly diversified” firm. Edgecrest, he said, lacks that kind of diversification. He added that his former firm, “like a lot of boutiques, is heavily levered to the resource market – both mining and energy” and is a company that “will do extremely well in a bullish resource market, but in a tougher market, it will be tougher to prosper.”

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TD’s investment banking arm shuffles group leaders

TIM KILADZE

TD Securities, the capital markets arm of Toronto-Dominion Bank, shuffled its client coverage as the fiscal year-end comes to a close.

As of November 1, Sante Corona and Andrew Phillips will split coverage of financial institutions and sponsors.

Mr. Corona, who currently heads the bank’s equity capital markets group, will now also oversee the investment bank’s financial institutions group. Mr. Phillips, who currently heads the bank’s real estate coverage, will now also oversee coverage of financial sponsors, as well as the diversified industries team.

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BLG establishes a toehold in China

JEFF GRAY

National law firm Borden Ladner Gervais LLP is opening a representative office in Beijing, looking to attract more business from China’s state-owned enterprises and other Chinese investors interested in Canada’s natural resources.

The small office in the Chinese capital’s central business district will be staffed with a handful of local business development staff, but no lawyers will be permanently based there. It is BLG’s first office outside Canada since it closed a small London office it had a decade ago.

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Canada’s pension funds not following U.S. lead on hedge funds

TIM KILADZE

Canada’s biggest pension funds are largely staying quiet when it comes to their investments that are managed by external hedge funds.

Amid reports that more U.S pension funds are reconsidering whether external hedge funds should manage their money, a number of Canadian pension funds have opted not to comment when asked if they are doing the same.

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How to invest like an activist – without the migraines

NIALL McGEE

Proxy fights, public spats, personal barbs, expensive legal fights, shorting – Activist investing ain’t for the faint of heart. Also you can forget about being diversified; Activist investing is all about being highly concentrated. Paul Hilal, partner with Pershing Square Capital Management speaking recently at the Activist Investing in Canada Conference said the company “only puts three or four of their eggs in one basket, and takes a small number of swings.”

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Major Indian oil explorer hires former Irving Oil CEO

JEFF LEWIS

India’s largest independent oil explorer has picked a Canadian oil-patch veteran as its new chief executive officer.

Cairn India Ltd., which has a market capitalization of about $10-billion (U.S.), named Mike Ashar to the role on Tuesday, effective Nov. 17.

Mr. Ashar, who will also serve as managing director, was previously president and chief executive of Irving Oil Ltd., owner of Canada’s largest refinery in Saint John, N.B. He also held senior roles at Suncor Energy Inc. and Petro-Canada and is currently a director at Teck Resources Ltd.

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Junior miner Euromax raises eight times its market value

ERIC REGULY

Junior mining companies aren’t having much fun – or luck – raising money for exploration and development. Commodity prices are down, banks and investors are wary and the appetite for political risk is about zero. Plus the stock markets are, suddenly, terribly volatile.

The Toronto Venture exchange’s little Euromax Resources just bucked the dismal trend by raising $175-million (U.S.). That’s about eight times its market value of $25-million (Canadian). Investors liked the deal and drove up the shares by a nickel – about 17 per cent – at the start of trading Tuesday morning.

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One of Canada’s remaining energy trusts has big change of heart

TIM KILADZE

The energy trusts that went public after the financial crisis are scrambling to adopt new investment strategies, and one is especially keen on investing at home.

Four years after going public, Eagle Energy Trust is asking shareholders for the right to invest in Canadian energy assets – a shift that would radically change its mandate.

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‘Boring’ strategy brings in big bucks for portfolio manager Mawer

BOYD ERMAN

After quintupling in size in five years, Mawer Investment Management is finding that boring does indeed make money.

The Calgary-based company has $25-billion of assets under management, up from $5-billion five years ago. About half of the jump comes from rising markets, and half from clients sending in more money for the fund to run. The company ranked ninth on the Benefits Canada list of fastest-growing pension fund managers last year. But measured by percentage growth rather than total dollars, Mawer is growing faster than any of the other firms in the top 10.

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How Pershing Square coaxed Hunter Harrison out of retirement

NIALL McGEE

“It all started with a phone call from my brother.” And so begins the fascinating story of how Pershing Square Capital Management’s Paul Hilal coaxed legendary railman Hunter Harrison out of retirement, and into the role of chief executive officer of Canadian Pacific Railway Ltd.

Mr. Hilal, a partner with Pershing and board member with CP, told the story to a captive audience of corporate directors, hedge fund managers, investment bankers, mergers and acquisitions lawyers and journalists Thursday at the Activist Investing in Canada Conference in Toronto.

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Lloyd’s stands out by insuring unusual risks

JACQUELINE NELSON

Lloyd’s of London has built up its Canadian business by taking on unusual risks. The insurer already offers coverage of offshore oil production, corporate jets and even hockey players, and now it’s looking for pockets of emerging risk to take on, from manufacturing in Ontario to cyber security.

Lloyd’s has a 326-year history of insuring quirky and one-off items, and recently its Canadian business has been growing. The country is now Lloyd’s second-largest generator of premiums outside of its U.K. home base, making up 5 per cent of the insurer’s global premiums.

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Netflix flexes muscle, and cable cringes

Every day ROB Insight delivers exclusive analysis on breaking business news and market-moving events. Streetwise offers news and analysis on Bay Street and the world of finance. Inside the Market delivers up-to-the-minute insights on market news as it develops.

Here are our editors’ picks of some of the best reads available to Globe Unlimited subscribers this week.

More »

Approach with roses, not Tinder come-ons: Activist investors

NIALL McGEE

Much like poor old Lindsay Lohan, activist investors have a serious image problem. And not just within the general investor community – within their own industry. ”Activists are not evil” said Navi Hehar, principal with Kerrisdale Capital, a New York-based hedge fund. “Activists are not crazy people wanting to destroy [a company],” added Stephen Griggs, CEO of Toronto-based Smoothwater Capital. The “perception problem” was one of the resounding themes coming from the Activist Investing in Canada Conference which took place Thursday in Toronto. The event hosted Canadian and U.S. activist investment companies, investment bankers, lawyers specializing in mergers and acquisitions, fund managers, public relations firms and a smattering of financial journalists.

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Teine holds off on IPO, but Seven Generations goes on

JEFFREY JONES

A rapid deterioration in energy markets has prompted one privately held Canadian oil producer to hold off on plans for an initial public offering, while another tests conditions as it sells its IPO plans to prospective investors.

Teine Energy Ltd., with operations in the Viking light oil play in Saskatchewan, had been expected to launch an IPO worth up to $500-million by around the end of this month, but has decided to postpone the effort for now, according to sources.

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Veresen snags former BG Group executive

JEFF LEWIS

Veresen Inc. has tapped a former BG Group PLC executive to head up a liquefied natural gas project on the U.S. West Coast.

Calgary-based Veresen said Friday it appointed Elizabeth Spomer as president and chief executive officer of Jordan Cove LNG LLC. Ms. Spomer will also serve as executive vice-president at Veresen.

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Sunny days are long gone for Canadian banks’ Caribbean operations

TIM KILADZE

They put on a brave face in public, swearing they are committed to the region, but in private, Canadian bank executives have admitted desires to revamp their Caribbean operations.

If only there were bidders to help them with that task.

The latest sign of the banks’ wavering commitment to their Caribbean arms is that Bank of Nova Scotia is reportedly considering options for its Puerto Rican business, according to Bloomberg. The island’s debt was downgraded earlier this year and there are widespread concerns that the economy will take a long time to rebound.

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Why do we have no good bond pricing? Banks and regulators

BOYD ERMAN

Why does Canada not have a good public system for displaying bond trading? The country’s banks and fragmented regulatory system are at the root of the issue, according to Maureen Jensen, the executive director and chief operating officer of the Ontario Securities Commission.

On a panel at the OSC’s annual Dialogue conference, the focus turned to why markets other than stocks are still so opaque. We have a lot of data, but it doesn’t make it to investors. Consequently, those who make markets in areas such as bonds can still get away with wider spreads than in stocks.

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