The National Post is Canada’s second largest national paper.
As gold prices stumble and mining stocks sink to woeful lows, a lot of investors are asking the same question: where are the activists? The sad answer, experts say, is that activists don’t see any more hope for this sector than anyone else does right now.
It was a given over the past several years that proxy battles would break out across the mining space whenever commodity prices dropped. Frustrated investors would scrutinize the strategy and compensation of boards and management teams, and quickly act when they saw a problem.
Activists overhauled many mining boards during recent bear markets, including HudBay Minerals Inc. in 2009. There was an average of nine mining proxy fights a year between 2008 and 2013, according to law firm Fasken Martineau.
There are more frustrated mining investors today than at any other point in recent memory. But prices for commodities such as gold, silver and iron ore have fallen so much that it is hard to find opportunity in any of the related stocks.
“If you take over the board and take over the company, how are you going to create value at a gold price like this?” said Wes Hall, head of Kingsdale Shareholder Services.
“You don’t want to put good money after bad by spending money on a proxy fight, winning the proxy fight, and the company is still a piece of shit.”
Activists want to target companies that are poorly run and could turn around quickly with a change at the top (Canadian Pacific Railway Ltd. is a prime example). But this market has not distinguished between well-run and poorly run mining companies: they have all been slaughtered, leaving little opportunity to create value by replacing management.
For the rest of this article, click here: http://business.financialpost.com/2014/11/14/the-gold-mining-meltdown-is-so-bad-even-activist-investors-wont-touch-it/