WSJ: Barrick Gold investor wants director Anthony Munk out


A large Barrick Gold (ABX) investor has written to the company expressing concern about the recent resignation of two directors, and the investor is calling for Anthony Munk, a director and the son of departing chairman Peter Munk, to step down, WSJ reports.

ABX had tried to quell unhappiness about its corporate governance when it announced a series of board changes last month, but apparently some funds continue tell ABX of their dissatisfaction.

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Comments (5)
  • gmmpa
    , contributor
    Comments (659) | Send Message
     
    Gee... Politics at ABX at a similar level at Washington DC. Who knew... Operations of both are completely dysfunctional. Perhaps both need the same remedy. Clear the swamp and start over. It may not be an altogether bad thing. Nepotism at any public organization is usually not a good thing. Perhaps it is time to give the shareholders what they want. How badly could the performance of ABX be with a new board and a fresh competent management team to drive a leaner / meaner company forward in a difficult commodity market?
    14 Jan 2014, 08:16 PM Reply Like
  • TDWelander
    , contributor
    Comments (624) | Send Message
     
    To gmmpa. Continuity is everything. Starting over is worse than nothing. What you will get with a new board. Gold mining and refining takes knowledgeable people, not politicians. New board members without experience in gold mining or refining at Barrick would be a disaster. Or new board members at Barrick would likely be a disaster not knowing the inside workings of and at Barrick; a unique corporation on the planet not amenable to amateurs meddling.

     

    There are no corporate governance problems at Barrick. Only outsider creating plausible fictions for the purpose of a take over without a constructive or positive result.

     

    So cut the crap. Get a grip. And find out how the real world works. Continuity trumps everything you have mentioned in the private sector, for profit world. The private sector must solve problems to survive. Your suggestions comparing to the public sector are and would only create more problems. Please stop talking like some wall street parrot. Some real inside knowledge of Barrick corroborating or connected to their annual report would be really useful.
    15 Jan 2014, 10:29 AM Reply Like
  • gmmpa
    , contributor
    Comments (659) | Send Message
     
    To TDWelander with all do respect:

     

    You are correct. Continuity is everything. However, that only applies to companies that are hitting on all cylinders. This management team owes it to shareholders continued success. If I really thought that Barrick was like Washington DC that seems unfixable in my lifetime I would be selling my entire ABX position on the next market up day. Continuity in a company that has gone from a share price of $55 to $18 is not a continuity I want for my investment. A company that has restructured and downsized its operations to the extent that Barrick has in 2013 and still cannot raise its share price above $18.50 does not need continuity. It needs real change!

     

    Good management is everything in the private sector. Introducing parallels to the dysfunctional public sector is an expression of complete frustration on my part of the performance of both. Barrick should be doing better and so should the economy and commodities prices. I took a big position in Barrick on a technical basis and expect results. My basis is breakeven but my investments opportunity cost is high. My time horizon is 18 months to two years max from here. I would like a double but have 25 as a reasonable target regardless of the commodity price of gold. There are other places to put capital to work than a company that pays a marginal dividend and shows no capital appreciation and is heavily shorted in this market.

     

    I have no insider knowledge of what is going on in the boardroom beyond what I read. I did not research the CEO and management team until now. I come to find that the CEO is the 85 year old founder that has been there for 30 years and has arguably made some bad or self-servicing decisions with negative results not in the best interests of majority shareholders. I come to find out that his son is on the board. Two other board members have resigned with no explanation. I don't care to ask if his son brings gold mining experience to the table beyond what daddy taught him. There is lots of good mining talent that would love to be on Barrick’s board.

     

    So what is your solution to this problem besides not liking what I wrote? I hope you are long ABX or it is you that needs to get a grip.
    I posted a while ago in another article that Barrick Gold was cheap trading at 18 and was a no-brainer. How much lower could it go? Your counterpart posted a snippy reply that it could go to zero. Both of you should cut the crap and stop whining about the reason Barrick is dead money because of the current price of gold or that gold prices are being manipulated.
    16 Jan 2014, 12:34 PM Reply Like
  • TDWelander
    , contributor
    Comments (624) | Send Message
     
    The shorting of ABX over the last year or so was beyond Barrick's
    control; and was probably unlawful if the regulators ever get off their
    hands.

     

    Hindsight is always 20/20. Barrick could have maintained cash
    reserves and a stock buy back program to prevent or substantially
    reduce the shorting; maintaining a more reasonable stock price.
    You can blame Barrick's wall street advisors who should have
    implored them to have this in place; as to where the problem lies.

     

    Barricks job is to mine and refine gold and copper.

     

    Their wall street advisors are supposed to keep them abreast of
    stock shorting and did not. Or wall street dumb asses not knowing
    their own business are the problem in this instance.

     

    You sound like a sophisticated investor. Which means you
    should realize any time shorting is going on, whatever it is,
    it turns into a long run investment (5 years or more)
    because the shorters will keep the chaos coming as long
    as possible if it is successful initially.

     

    I invite you to name all of the self serving decisions Chairman
    Munk has made. I have read nearly all of the last two
    annual reports and the quarterly reports. I found nothing
    to substantiate your claim of self serving decisions.

     

    I have engaged the negative ABX bloggers here to come
    up with any facts at all over the last two years.
    They have come up with none to date.

     

    Family run businesses routinely pass on the business to
    family members, publicly traded or not. Getting upset
    over a family member on the Barrick Board just because
    he is a family member makes no sense because
    communications between a family member is of an
    efficiency usually higher than any other form of
    human communication (they have spent a life time
    interacting). Or it is an advantage to have a
    family member around to help execute policy
    efficiently.

     

    I have not only said Barrick is not dead money.
    Barrick will likely be the last man standing in long
    term drag out competition in the gold markets
    because their four core properties have the
    lowest costs in the gold business, around
    $600 to $650 per ounce cash costs; and
    around $900 per ounce all in costs.

     

    So if the worst case occurs when everyone
    else is idled or shut down, those four core
    Barrick properties will still be making money
    for share holders.

     

    Stock market games are nearly common
    place these days and the regulators appear
    out to lunch. Fortunately, long term investment
    means the shorters will either be discovered
    or shoved aside due to a market avalanche
    of ABX stock demand similar to Google or Apple.
    The only question is when; 6 months? a year?
    five years? ten? Only time will tell.
    17 Jan 2014, 02:51 PM Reply Like
  • gmmpa
    , contributor
    Comments (659) | Send Message
     
    Reluctantly I will reply to your comment because I believe you are sincere and respectful albeit a little confused. I am not trying to educate here. I'll leave that to Warren Barrett.

     

    Shorting stocks is not illegal. Naked shorting is but sadly no one does anything about it. Shorting is actually a very good way to make money in the market. The investors that shorted Barrick at 55 probably backed up the truck. The volume of Short interests are public record. No one had to tell Anthony Munk the level of short positions against ABX. He probably should not care if he was doing a good job. The best way Munk can reduce short interests is to make good decisions that will improve future earnings and to execute on the plans to make them happen. Companies that execute typically do not have large short interested.

     

    Wall Street investment bankers provide a service to client companies, their management and stockholders, but their primary goal is to generate fee income (profits) for their bank not for Barrick. That said it is in the best interest of everyone that is at the table to find mutual benefit but in the end each company must determine for themselves if the deal will benefit their shareholders. Very often CEOs do deals that benefit their interests first. You will never know until so one files a class action suit. That is why The CEOs and the Bankers get the big bucks and the Socialists and Communists go ballistic about the obscene profits the deals generate. That said, Stockholders, CEOs and Wall street bankers are necessary to make economies grow and jobs to be created. Socialists and Communists are not needed. They create nothing but a great sucking sound.

     

    As you said Barrick management’s job (ie. the COO) is to mine and refine gold and copper. The CEO’s job is to make sure it gets done right. CEO’s job is also to make sure all the resources of the company are allocated correctly to maximize shareholder value and make more money than it spends. If that happens everybody is happy… happy… but maybe not the Socialists and Communists. The problems we have here is that nobody is happy at the current market price of ABX. Hindsight is not the issue. What to do about it going forward is the issue. At least one Minority shareholder is pissed.

     

    You want me to give you one self-serving decisions Chairman Munk has made. I’ll give you two. He put his son as a voting member on the board of directors. He refused to resign from the company after taking the stock price ABX from 55 to 17 after spending $8 billion on the Pascua Lama mine on the Chile-Argentina border and didn’t get it done.

     

    Currently, we are in the tail end of a long term secular bear market at may not end before 2017. I am not 25 years old. My timeline is what it is and how I allocate my capital has an expiration date. Ten years will not do it for me. Maybe Munk should read this posting and take a hint! What I want is a double by first quarter 2015. Then we all can be happy… happy… all the way to the bank :-) Maybe even you.
    18 Jan 2014, 06:16 PM Reply Like
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