Billionaire Peter Munk's flag-waving rants about Canadian mining executives selling out to foreign takeovers is pathetic and laughable. Especially when one considers the source.
Munk has spent most of his 78 years raving about the creation of shareholder value, which has very little to do with nationalism. If he'd spent his time wrapping himself in a Canadian flag, would he be one of Canada's richest tycoons today? Probably not.
Munk is chairman of Barrick Gold Corp., a global mining company that has operations in 16 countries and recently completed the sale of his real estate company, Trizec Canada, in U.S. dollars to Brookfield Properties, a company based in New York. So the man who describes himself as an economic nationalist and bashes Inco chairman Scott Hand and Falconbridge CEO Derek Pannell for selling out seems to know a thing or two about cashing in on the global economy.
Munk has been firing missives at Hand and Pannell over the controversial foreign takeovers of two Canadian mining institutions, Inco and Falconbridge, by foreign companies Companhia Vale Do Rio Doce of Brazil and Xstrata PLC of Switzerland, respectively.
He questions their courage because they weren't able to orchestrate a Made-In-Canada deal with a three-way merger with a third Canadian mining giant, Teck Cominco.
Well, the bottom line is that few shareholders give a hoot about where the takeovers come from as long as they get a juicy takeover premium and all-cash deal, as Inco and Falconbridge shareholders received (those deals are worth $19.4 billion and $18 billion, respectively).
Surely, even Munk knows that shareholder value trumps patriotism any day of the week.
Munk, who lashed out at Canadian mining executives for lacking the "balls" to do all-Canadian deals, has admitted that Barrick contemplated buying nickel producer Inco four or five years ago but decided not to diversify into base metals. At press time, Hand had not returned fire in these strange mining wars, questioning why Munk didn't have the guts to make a pitch for Inco.
A self-described nationalist such as Munk may get a little queasy if he tries to access Falconbridge's website at www.falconbridge.com, because traffic is already being redirected to www.xstrata.com - but he'd better get used to it.
As long as there's a raging bull market in commodities, Canada's resource companies will remain ripe for the picking and those egocentric foreign bullies will continue to bulldoze some of our largest corporate head offices.
Considering the world's obsession over oil and the fact that the Canadian energy sector is holding the trump card of the oilsands, there could be a flurry of blockbuster deals in the oilpatch involving senior companies in the next few years.
As for Munk, perhaps he should spend a little more time minding his own businesses - Barrick - and a little less time worrying about that of his peers.
Barrick may boast that it is the world's largest gold producer as a result of its hostile all-Canadian takeover of Placer Dome, but it has been a major bust with the investment community in recent years because of its controversial hedging of gold prices.
Influential Canadian investors such as gold specialist John Embry of Sprott Asset Management have frequently berated Barrick over a hedging program that hasn't allowed the company to take advantage of the soaring price of gold.
While the gold price has doubled in the past six years, Barrick's stock has lagged behind most other gold producers with a return of less than 50 per cent over that time.
During the same period, Canada's second-largest gold company, Goldcorp, with its gold production unhedged, boasts a return of about 400 per cent.
It seems that Barrick shareholders, one of whom is named Peter Munk, ought to be ranting about that.
* GAS PAINS: How much pain is the oilpatch absorbing over the collapse of natural gas prices this year?
Well, consider the performance of oilpatch veteran Peter Linder, an energy fund manager famous for his bullish calls on commodity prices.
Linder is managing director for the DeltaOne Capital Partners and manages the DeltaOne Strategic Energy Fund. It was one of the hottest funds in Canada last year, but this year it's been annihilated.
Through Sept. 15, that fund, weighted in natural gas stocks, was down a jaw-dropping 57.4 per cent. Despite that, the fund has a stellar return in the four years since its inception, with an annualized return of 11.4 per cent.
You've got to figure that Linder won't be complaining too much if North America gets hit by a bone-chilling deep freeze this winter.
* OMINOUS WORDS: "If we don't curtail our own oil consumption, the planet will do it for us ... A crude shock lurks nearby."
- Jim Dines, The Dines Letter.
On that note, Dines, the self-described original uranium bull, recently cranked up his target for the uranium price to $70 to $100 US per pound based on the belief that the global shift toward nuclear energy will ramp up demand for yellowcake.
If you think the San Francisco-based Dines is off his rocker with that bold prediction, consider how many investors questioned his sanity six years ago when he told subscribers that uranium would hit $50 when it was worth only $8. Uranium busted through that $50 target in August.
Dines isn't pounding the table on uranium stocks. He's dancing on it. As of early September, 20 of Dines's 32 buy recommendations to subscribers were junior uranium plays.
* COMMON CENTS: If you've been knocking yourself out trying to analyse those exploration results of your junior mining play, you may be wasting your time.
At least that's the word from junior mining guru Bob Moriarty, editor of 321gold.com.
Writes Moriarty: "Screw drilling results. If you do nothing but buy juniors when they hit a new yearly low and sell when they hit yearly highs, you will make a lot more money than the guys using rulers and mumbo jumbo. Don't take this as being some kind of rocket science, it's not. It's investment based on human foibles."
* SAGE WORDS: "When I go into a confrontational meeting, I am not good, because I don't give up, I attack. It's awful. I think it comes from when I used to be beaten (during a childhood in Hungary) because I was a Jew."
- Peter Munk, from the book Peter Munk: The Making of a Modern Tycoon, released in 1996.
(Gyle Konotopetz can be reached at gyle@businessedge.ca)
