Two Fish: Barrick breakup along geographic lines could boost stock


More big talk from little Two Fish, as the hedge fund fleshes out a call for a breakup of Barrick Gold (ABX -3.2%) which it believes could send shares to $40-$50 after losing half their value in the past year (earlier).

Two Fish co-founder Mike Morris says splitting off the North American and South American businesses from those in Africa and Australia would allow management to focus on the unique needs of each.

Morris says ABX should return more cash to shareholders rather than spending it on acquisitions, sell non-core assets and appoint new board members; ABX says its compensation practices and potential board additions already are under review, and it has been cutting costs.

From other sites
Comments (5)
  • LYogi
    , contributor
    Comments (3115) | Send Message
     
    bust it up!!
    10 Sep 2013, 11:36 AM Reply Like
  • TDWelander
    , contributor
    Comments (624) | Send Message
     
    You want to kill the goose that lays the golden eggs by splitting it up.
    That is worse than foolish, it is stupid on the face of it.

     

    Barrick has historically balanced cash flows against the best investment available within their expertise. And have done well at
    it until lately, mostly due to traders beating up on the ABX stock through short selling; or circumstances beyond management control.

     

    So to split up Barrick would eliminate their capability of transferring assets and cash flows to the highest yielding potential investment;
    which is the most senseless consideration I have heard this year;
    maybe in several years.
    10 Sep 2013, 11:45 AM Reply Like
  • bobolaclune
    , contributor
    Comments (48) | Send Message
     
    The eggs that ABX has been laying are laced with salmonella.

     

    To claim that ABX's performance is the result of traders is disingenuous. What about the risk to their credit rating because of a deteriorating balance sheet? Or the ongoing failures at Pascua-Lama? Or executive compensation? Wake up! You've got too much religion about a company that doesn't deserve your faith
    10 Sep 2013, 12:09 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    ABX has been laying goose eggs of late, just not golden. The proposal seems silly as $40+ shareholder value will not come from a mere split. The only thing that gets you there is a $2,000 / oz gold price and continued aggressive cost mgt. Returning more cash to shareholders is an even more absurd idea given ABX's need to continue delevering their balance sheet. We've actually commended management personally on their recent strides while recommending additional ones such as issuing additional equity. Two Fish are out of water is seems.
    10 Sep 2013, 12:07 PM Reply Like
  • TDWelander
    , contributor
    Comments (624) | Send Message
     
    Thank you Mr. Johnston, brilliant as usual. And to bobolaclune: it is all about cash flow; and Barrick has it. If the gold market price drops, their cash flow drops proportionally. If the gold market price rises, the Barrick cash flow rises proportionally. There is no other private enterprise on the planet with such a large upside potential in cash flow. With the 2nd or 3rd lowest gold production costs on the planet, Barrick will be pumping out gold long after the small and medium miners shut down; if needed.

     

    If there is a surge in the gold price, people will be throwing their money at Barrick. Barrick looks like Apple 4 to 8 years ago.
    11 Sep 2013, 11:51 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs