Kevin O’Leary on NDP’s stunning win in Alberta: ‘It’s a horror movie unfolding’ – by Yadullah Hussain (National Post – May 8, 2015)

The National Post is Canada’s second largest national paper.

Influential Canadian investor Kevin O’Leary has some blunt advice for international institutions in the wake of the Alberta election: Pull out.

“It’s a horror movie unfolding,” O’Leary said in an interview from New York where he is meeting investors, referring to the election of the New Democratic Party under Rachel Notley. “Until we understand what the [oil and gas] royalties and taxes are there won’t be any material fund flows – it’s a disaster.”

The benchmark Canadian energy index retreated again Thursday, falling 1.56%, after the NDP won a majority in Alberta on Tuesday on pledges to raise corporate taxes and to set up a commission to review the royalty regime. Notley expects to make a decision on the commission’s findings within the first year of her rule.

International investors should “wait and see what happen with [oil] prices undoubtedly going lower,” O’Leary said. “You never, ever tinker with royalty rates when you are at the low. You don’t do that. “Not only are taxes going up, why would you take a whole year to guarantee that no capital flows into the province — that is beyond irresponsible,” O’Leary said. “That is un-Canadian — that’s what that is.”

Notley has tried to soothe the energy industry’s nerves, promising they will be “A-OK over here in Alberta.” But investors remain concerned that royalty rate hikes would raise business costs when oil prices have slid 40% in the past year, with many operators being forced to shed jobs and cut spending to protect their balance sheets.

“If you are a fiduciary, you can’t put money in Alberta right now,” said Leary, who shot to fame as a caustic investor grilling budding entrepreneurs seeking funds in CBC TV’s popular Dragon’s Den show.

His Montreal-based O’Leary Funds manages a number of Canadian and global mutual funds. Energy stocks made up just under 10% of the $89.4-million O’Leary Canadian Dividend Fund, according to the latest quarterly filing.

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