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Streetwise

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

Hedge fund manager abandons short position on Bill Gross’s firm

SEAN SILCOFF

Not every short-selling strategy turns out as planned. Sometimes hedge fund managers who make a gutsy call that a stock will drop in value find themselves turning tail and covering their positions quickly, cutting their losses if any loose threads threaten to unravel their thesis.

Such is the fate of a daring trade one Canadian hedge fund manager undertook a few weeks back. Streetwise readers will recall the manager’s idea was to short the stock of U.S. bond king Bill Gross’s new employer Janus Capital Group Inc., by borrowing stock and selling it, with the intention of buying it back at a lower price.

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Valeant back in action with sights set on a smaller target

Bertrand Marotte

Valeant Pharmaceuticals International Inc. does not sit still for long.

The notoriously acquisitive pharma giant is back in the M&A game, albeit with a much smaller deal than the failed blockbuster attempt last year to take over Allergan Inc.

Laval, Que.-based Valeant says it has entered into a so-called “stalking horse” bid for world-wide rights to Dendreon Corp.’s anti-prostate-cancer drug and other assets.

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Joe Groia to run for Law Society

JEFF GRAY

Joe Groia, the Bay Street lawyer facing professional discipline for allegedly rude behaviour during the Bre-X trial almost 15 years ago, is seeking election as a bencher of the Law Society of Upper Canada.

Mr. Groia, who has launched a website to promote his candidacy, says he is running to try to stop the Law Society from treating other lawyers the way it has treated him.

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BlackBerry's top investors favour restructuring over M&A

JACQUIE MCNISH

Investors are apparently still pining for an acquirer to sweep up BlackBerry Ltd., judging by continued buoyancy in stock trading volumes two weeks after the company refuted rumours of takeover talks by Samsung Electronics Co. Ltd.

The M&A fantasy is unlikely to come true any time soon for the recovering smartphone maker. One obstacle is the company’s biggest shareholders. According to the latest regulatory filings, more than a third of BlackBerry’s shares continue to be owned by long term investors that sources say support CEO John Chen’s multi-year restructuring strategy. These investors can’t stop would be acquirers from buying majority control, but a more efficient full takeover is impossible without their support.

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Canaccord Genuity’s new Dubai office targets mid-market deals

JACQUELINE NELSON

Canaccord Genuity Group Inc. is planting its flag in Dubai with an eye on deals beyond the energy sector.

The firm is relocating Sachin Mahajan, managing director of mergers and acquisitions, to the most populous city in the United Arab Emirates in order to work on deals for clients in the Middle East, North Africa and South Asia. The small office and investment banking team will be up and running by the second quarter of this year, and will work closely with Canaccord Genuity’s offices in London and Tel Aviv.

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Grouplend brings peer to peer lending to Canada

TIM KILADZE

As Canada’s banks move to ward off competition from digital payment disruptors such as Apple and PayPal, they now face rivals in another key business area – lending.

In the United States and the United Kingdom, companies such as the Lending Club and OnDeck Capital have emerged as major threats to traditional banks. Using these Internet-based venues, borrowers can submit loan applications and then watch as the companies find them the best rate – almost like shopping for hotels on Expedia.

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Big fights make headlines, but small ones make law

ADRIAN MYERS

In Canadian securities law, while the big fights make headlines, as we saw in last year’s proxy fight between Orange Capital LLC and Partners Real Estate Investment Trust, the small ones often make law. So it’s not a surprise that Bay Street’s biggest law firms, are all over the proxy fight between activist Ryan Morris of Meson Capital Partners LLC, Nightscape Capital (UK) LLP and Aberdeen International Inc.

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Sun Life nabs money manager to form U.S. platform

JACQUELINE NELSON

Smaller U.S. money managers are getting gobbled up, and Sun Life Financial Inc. is joining in the feast as it fuels its U.S. expansion.

The Toronto-based insurer said Wednesday that it would acquire New York-based Ryan Labs Inc., which oversees $5.1-billion (U.S.) in investments for pension funds and institutions, helping them manage risk with a focus on fixed income strategies.

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If energy bonuses drop, will brokerages face an exodus?

JEFFREY JONES

The road from blessing to curse has been a short one for brokerages with large energy franchises.

For capital-markets professionals, this will loom large on their annual bonus cheques. That is, 2014 was one of the most lucrative years in recent memory due to a massive resurgence in oil-patch mergers and acquisitions as well as financing.

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Canadian corporate bond issuance plunges – in Canada

SEAN SILCOFF

The new motto for Canadian corporate bond issuers appears to be “Anywhere but Canada.” January is almost up, and, according to Desjardins Capital Markets, we’re on track for the lowest tally for issuance by corporations in Canada for the first month of the year since 2007. Beyond Canada’s borders, however, corporate fixed income issues have nearly doubled, led by Canadian financial firms.

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Online gambling company in talks for $1-billion acquisition

JACQUIE McNISH

Fledgling online gambling company Intertain Group Inc. isn’t taking any chances with takeover rumours.

The Toronto company took the unusual step of requesting a temporary halt in its stock Tuesday morning to announce advanced discussions to acquire unnamed assets for about $1-billion. A spokesman for Intertain said the company made the request after the company’s advisors became concerned about deal rumours. The spokesman would not identify the target and although talks are in the final stages, he said, “it is still subject to board approval.”

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CPPIB executive to lead federal government pension plan

JANET McFARLAND

Canada’s major public sector pension plans have continued to swap top executives as André Bourbonnais leaves the Canada Pension Plan Investment Board to become chief executive officer of the federal government’s largest employee pension plan.

The Public Sector Pension Investment Board said Mr. Bourbonnais has been appointed CEO effective March 30, replacing departed CEO Gordon Fyfe. PSP Investments manages $100-billion of pension assets for federal civil servants, including members of the Canadian Forces and the RCMP.

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Dundee Capital Markets hires GMP veteran

JEFFREY JONES

Dundee Capital Markets has added a veteran to its institutional trading desk, hiring Mark Hawkins as a director.

Mr. Hawkins had worked at GMP Capital for well over a decade, when he left in June 2013 in an exodus that included several long-time executives. When he left, he was vice-chariman of institutional trading and a member of the executive committee.

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As oil patch suffers, private equity circles

JEFFREY JONES AND JEFF LEWIS

It’s the worst energy market in years, yet Paul Charron is starting up another oil and gas company.

The Calgary oil man has made a good living building and selling private companies, all named CanEra. Now he’s embarking on the third one, with backing from two of the most prominent U.S. private equity firms focused on energy.

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Second proxy advisory firm urges change at Aberdeen

JACQUIE McNISH

Proxy advisory firm Glass Lewis & Co. is recommending shareholders of Aberdeen International Inc. replace executive chairman Stan Bharti with dissident shareholder Ryan Morris at a shareholder vote next week.

Citing the need for “additional outside scrutiny and independent oversight” at the money-losing junior mining holding company, the Glass Lewis report recommended Mr. Bharti step down as a director because of “a significant number of potential conflicts.” Mr. Bharti’s family owns Forbes & Manhattan, a private Toronto mining finance company that earns fees and other benefits from Aberdeen. Forbes & Manhattan has stakes in a variety of junior resource companies with which Aberdeen has lent money, exchanged assets and, in some cases, share directors.

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Eric Sprott joins Kirkland Lake Gold as chairman

SEAN SILCOFF

Eric Sprott has added another chairman title to his resume. Fresh from his long-planned decision to step down as lead portfolio manager of his Sprott Asset Management LP and Sprott Inc., the 70-year-old Mr. Sprott is joining the board of Ontario gold miner Kirkland Lake Gold Inc. and replacing Harry Dobson as chairman. The move is subject to regulatory approval.

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Former Barrick deal maker joins TD

JEFF GRAY

The Toronto-Dominion Bank has brought in former Barrick Gold Corp. executive Rick McCreary as deputy chairman of its investment banking arm, TD Securities Inc., as it seeks to strengthen its efforts to work on mining deals around the world.

Mr. McCreary will work closely with Michael Faralla, the managing director and head of global mining at TD Securities. Mr. McCreary was forced out of Barrick in August, when new Barrick chairman John Thornton dismantled the corporate development team. Mr. Thornton was leading a reorganization that saw several senior Barrick executives leave, including the company’s CEO.

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Tsubouchi’s role at Haywood changes again

JEFFREY JONES

Haywood Securities Inc. has shaken up its oil and gas research department, with its prominent former head switching over to a contractor role that allows him to take on other jobs in the industry.

Haywood has appointed Darrell Bishop head of energy research, replacing Dan Tsubouchi. The two had joined the Vancouver-based boutique dealer in 2013 as it sought to rejuvenate its energy business. In that time, the sector has gone from feast to famine as crude prices have fallen by half.

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The burning question on Bay Street: Did RBC overpay?

TIM KILADZE

Even if you buy the long-term acquisition strategy, and even if you believe in the acquired management team, you’d be crazy not to wonder if Royal Bank of Canada paid too much for City National Corp.

Bay Street quickly expressed shock and awe at the $5.4-billion (U.S.) price tag. In public, people were polite, suggesting that RBC paid a “full price” or that the price tag looked a “bit rich.” In private, though, everyone asked the same thing: is RBC serious?

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Huawei appears set to open office in Kitchener-Waterloo

IAIN MARLOW

China’s Huawei Technologies Co. Ltd., one of the world’s largest telecommunications equipment companies, is opening up an office in BlackBerry Ltd.’s hometown of Kitchener-Waterloo – and hiring former employees of the struggling Canadian tech firm to help it beef up on mobile security.

Huawei, which is based in Shenzhen and sells everything from mobile phones and tablets to routers and cellular antennas, is looking to hire engineers in Kitchener, Ont., the heart of Ontario’s technology-hub.

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Wekerle’s Difference Capital loses another executive

NIALL McGEE

Difference Capital Financial Inc. has lost another key executive.

Managing partner Jamie Brown resigned late last week. Mr. Brown was among a handful of executives that CEO Michael Werkerle had identified as being core to the business as recently as July 2014. When he was hired in April 2013 the company trumpeted his experience in investment banking. Mr. Brown previously served as president of Canaccord Genuity Inc.’s U.S. division.

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Secret shopping and private dinners: The story behind RBC’s $5.4-billion (U.S.) deal

TIM KILADZE

Before asking for a dinner date with City National Corp.’s chief executive, Dave McKay assumed the role of secret shopper.

In 2012, Mr. McKay, then Royal Bank of Canada’s personal and commercial banking head, was tasked with shaping RBC’s U.S. growth strategy. After some brainstorming, he set his sights on Los Angeles-based City National, which specializes in serving high net-worth clients.

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Ember Resources’ shallow play is paying off

JEFFREY JONES

Ember Resources Inc. has quietly climbed into the top 15 ranking of Canadian natural gas producers, concentrating on a part of the business many thought the shale revolution had killed off.

The private company, which is backed by Brookfield Asset Management Inc., has become a consolidator of Alberta properties producing coal-bed methane: natural gas trapped in coal seams. It is prospering, even with gas prices well below last year’s levels, chief executive Doug Dafoe says.

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Talisman executives to receive $28-million in Repsol deal

CARRIE TAIT

Talisman Energy Inc.’s top five executives will collectively receive at least $28-million after Spain’s Repsol SA takes over the long-struggling Canadian oil and gas outfit.

This number may rise if some of the senior executives resign within 12 months of the takeover, or are fired at any time.

Talisman chief executive Hal Kvisle is guaranteed the richest package: a $15.1-million goodbye, according to figures in the company’s information circular tied to the takeover agreement. Paul Smith, the company’s chief financial officer, will walk away with $3.5-million; Paul Blakeley, the man in charge of Talisman’s Asia-Pacific business, will collect $3.2-million; Paul Warwick, who oversees action in the Europe-Atlantic, gets $3.2-million; and Robert Rooney, executive vice-president, corporate; will pocket $3-million.

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Lexpert: More deals coming in the oil patch, not fewer

LEXPERT

Lexpert identifies and reports on emerging business issues and practice areas in the business of law. Whether online, in our magazine or the DealsWire e-newsletter, we chronicle deals and lawsuits of interest, and cover issues of broad concern to the legal profession and those who purchase legal services. We hope you enjoy this sample of our latest content.

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RBC’s red-carpet move: L.A.’s City National is ‘Bank of the Stars’

JACQUELINE NELSON

With its $5.4-billion acquisition of Los Angeles-based City National Corp., Royal Bank of Canada has tied itself to the “Bank of the Stars.”

City National earned this moniker and reputation over its 61 years building relationships in the entertainment industry, having formed its first small office on South Beverly Drive in Beverly Hills. One of the company’s founders was a friend of Frank Sinatra’s  – even putting up the ransom money to help recover his son in the 1960s – and City National has provided financing for films such as Silence of the Lambs and Driving Miss Daisy.

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Fund manager alleges Dragons’ Den star owes $1.3-million, seeks bankruptcy declaration

NIALL McGEE

Former star stock trader Michael Wekerle is embroiled in a lawsuit with a long-time business associate who wants to push the CBC Dragon into bankruptcy.

Rohit Sehgal, a portfolio manager with Dynamic Funds, alleges in court filings that Mr. Wekerle owes him $1.38-million (U.S.) from the 2014 sale of a property in New York. He alleges that he has pursued payment from Mr. Wekerle for months and now wants him “adjudged bankrupt and that a bankruptcy order be made in respect of [Mr. Wekerle’s] property.”

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The Bay Street veteran going head to head with Wekerle

JACQUELINE NELSON

From allies to adversaries – the $1.4-million dispute between Michael Wekerle and veteran portfolio manager Rohit Sehgal has decades of history behind it.

As Mr. Sehgal has edged away from the limelight in recent years, Mr. Wekerle’s public profile has been boosted by television appearances and a deal to purchase the storied Toronto concert venue, the El Mocambo. Despite these divergent paths, the two once had a close business relationship and friendship.

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Ontario court won’t hear Aberdeen case until after vote

JACQUIE McNISH

An Ontario judge has delayed a court hearing into allegations of improper stock sales and lavish payments at Aberdeen International Inc. until after a shareholder vote on dissident directors is held.

Aberdeen shareholders are set to vote Feb. 3 on whether to replace the board’s seven directors with a slate backed by two dissident shareholders, San Francisco activist Ryan Morris and U.K.-based fund Nightscape Capital. The investors own a 9 per cent stake in the junior mining holding company.

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Sun Life executive: Bank of Canada thinks oil could stay low

CARRIE TAIT

It’s all about the oil.

At the root of the Bank of Canada’s stunning rate cut Wednesday is oil’s plunge and the resulting hit to the economy, says Sadiq Adatia, chief investment officer for Sun Life Global Investments, a division of Sun Life Financial Inc.

“For the energy sector as a whole, the realization is the Bank of Canada thinks oil is going to be low for a significant period of time,” says Mr. Adatia. “If they [the Bank of Canada] didn’t think that was the case, then you wouldn’t see a rate cut so quickly.”

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