Trust.

That was one of the first words that popped out of the mouth of Bill Owens after he was appointed CEO of Nortel Networks.

“Trust,” said the former U.S. military leader, “will be a watchword.”

Coming from Owens at a time when investors are demanding that the bosses walk the talk, the words ring as hollow as a Nortel financial statement.

Why SHOULD investors trust Bill Owens?

Why should they trust a man who, according to the last regulatory filing from Nortel last March, was sitting on 12 other boards besides Nortel’s board?

That’s some serious moonlighting. It’s hardly a vote of confidence to investors who have been counting on Owens as saviour of Nortel and its soiled corporate governance reputation.

Although there are no rules in Canada or the U.S. on how many directorships one can hold, corporate governance guidelines generally recommend that a director should not sit on more than two or three boards at one time, perhaps no more than six or seven for a ‘professional’ director.

Yet, Owens is sitting on so many boards that he may yet wind up in the Guinness Book of World Records for most board meetings in one year.

Even if Owens were to resign from some or all of his other board responsibilities to focus on Nortel – as he should – that’s just not good enough.

He already accepted the appointment as CEO while sitting on numerous other boards.

The fact that Nortel’s other directors offered the job to a professional moonlighter should also have investors jittery about a Nortel board that was approving bonuses to the staff when it was already apparent something was terribly amiss in the company’s financials, now being investigated by regulatory agencies in Canada and the U.S.

One also has to wonder how much time Owens had to pay attention to the performance of fired CEO Frank Dunn and Nortel’s accounting issues while sitting on all those other boards, including Daimler Chrysler, Symantec and British American Tobacco.

Owens sure talks a good game. But, in the aftermath of the corporate governance shenanigans at Enron, WorldCom, Hollinger and others, investors should know by now exactly how cheap talk is.

* ROSY ANALYSTS? While Nortel shares have been taking a beating, most analysts have been modelling those rose-coloured glasses that seem to be back in vogue after a brief hiatus that followed the bursting of the tech bubble in 2000.

According to Chicago-based Zacks Investment Research, 12 of 27 analysts who cover Nortel currently recommend the stock as a buy, including nine strong buys. Thirteen others rate it a hold and only two rate it a sell.

* NO BULL: Long-time stock market bear Ross Healy has become increasingly nervous about what he perceives as a cyclical bull market within a secular bear market.

Healy, CEO of Strategic Analysis Corp., holds about 70-per-cent cash in the Accumulus Talisman Fund, a long/short fund that launched in February.

The oil and gas sector remains his favourite, although he believes the pickings are getting thin there, too.

“This is not a time for the daring,” cautions the 38-year veteran of the investment industry.

Healy is recommending his clients hold large cash positions and wait patiently for a buying opportunity.

In providing his top stock picks for the Edge’s Pro’s 3 Stars (Page 18), Healy did so somewhat reluctantly, saying cash remains his top pick.

CUSTER’S LAST STAND? Five months ago, with the precious and base metals markets in orbit, this column speculated on a junior mining stock mini-bubble. Since then, most Canadian junior mining stocks have been crushed with losses of 30 to 50 per cent, and even some of the larger-cap gold stocks such as Goldcorp (G-TSX) and Kinross (K-TSX) are down about 50 per cent.

The April blood-letting in gold and silver prices was largely blamed on China’s move to reduce bank lending and the rebound of the U.S. dollar.

In terms of the mood in the metals market, the recent Calgary Resource and Investment Conference at the Telus Convention Centre couldn’t have come at a worse time.

Yet, many experts believe the long-term bull market in metals remains intact, despite many charts showing disturbing signs of possible breakdowns in the uptrend.

“In a game where you are only as good as your last call, my firm stance in the bullish camp will either be called incredibly smart or I will be called the General Custer of metals and mining,” says Peter Grandich of The Grandich Letter.

Grandich bases his view on the fact he doesn’t believe anything has changed in terms of what was driving the metals prices higher. He notes there are still U.S. government deficits, diminishing supplies in the mining industry and U.S. Federal Reserve chairman Alan Greenspan remains “chronically bullish.”

SAGE WORDS: “The best investment on Earth is earth.”

– Louis J. Glickman, real estate mogul.



HOT STOCK: BW Technologies
BWT-TSX $35.75
Up $5.75 (+19.2%) on 1,260,900 shares (for week ending May 7).
While most stocks have been riding the rocky market roller-coaster in recent years, this Calgary-based gas-detection equipment manufacturer has been a model of consistency, steadily climbing over 400 per cent in a five-year span on old-fashioned earnings. Shareholders accustomed to BW’s smooth ascent got a nice jolt as the stock spiked on news of a $260-million takeover offer ($36 per share) from First Technology PLC of the U.K.



COLD STOCK: Descartes Systems Group
DSG-TSX $1.65
Down $1.35 (-45.0%) on 5,988,500 shares (for week ending May 7).
Thanks to the Nortel fiasco, even passive Canadian shareholders seem to be developing a no-tolerance, take-no-prisoners stance against companies with reporting and accounting irregularities. Waterloo, Ont., tech play Descartes had its share price almost halved in a single day after firing its CEO, Manuel Pietra, and announcing its financials for last year are being reviewed.