PlanetaryWorks
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Canadian stocks
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Painful bear market gripping global investors.
Including Canada's most famous business people.
With a couple exceptions.

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How the market's crash has hit the wealthiest

JANET MCFARLAND

Friday's Globe and Mail

October 16, 2008 at 8:11 PM EDT

The ranks of Canada's billionaires appear to be thinning in the painful bear market gripping global investors.

Since the market's peak on June 6, some of Canada's most famous business people have seen their stakes in public company holdings fall precipitously.

Robert Friedland, for example, who is best known for selling his Voisey's Bay nickel discovery to Inco Ltd. in 1996, has seen the value of his stakes in Ivanhoe Mines Ltd. and Ivanhoe Energy Inc. drop 66 per cent since the market peak in June.

Although his private holdings are not known, the value of Mr. Friedland's two major public investments have fallen far below the $1-billion level, totalling just $440-million as of Tuesday's close.

Two other hard-hit Canadian billionaires are Atco Ltd. owner Ronald Southern and Paramount Resources Ltd. chairman Clayton Riddell, who have both seen their public company holdings fall below the $1-billion mark since June.

In dollar terms, however, some of those hit hardest have been Canada's wealthiest billionaires because of the size of their company stakes.

The Thomson family, for example, has seen its stake in Thomson Reuters Corp. lose $3.2-billion in value since June, even though their majority ownership position is still worth $13-billion.

Grant Rasmussen of UBS Canada said ultra-high-net-worth individuals often have major investments beyond their public company shares, so it is difficult to estimate their true worth simply by looking at their companies' share prices.

“It would capture a large portion, because that is a big chunk of their wealth,” he says. “But the type of money they are rounding off, in terms of hundreds of millions of dollars, would still be a significant amount to most people.”

Older billionaires typically have the most diversified holdings: “With age comes wisdom,” Mr. Rasmussen says.

But even younger ones are often counselled to shape their portfolios to look like “barbells” to offset their risky holdings of one company's shares with large holdings in cash or equivalents, he said.

“So they would try to somewhat even out the risk profile of their two situations,” he said.

Some, he added, pledge some of their shares to borrow money, which they invest to hedge against the risk of so much exposure to one stock.

Most of Canada's wealthiest individuals are still rich by any standard, even if they have taken major hits since June.

Even Vancouver's Lundin family, which has been especially hurt by the market turmoil, still has $162-million of value in Lundin Mining Corp. and several other mining-related public companies. The estate of Adolf Lundin, who died in 2006, has seen its stake in Lundin Mining Corp. lose 70 per cent of its value since June and 97 per cent over the past year.

Lukas Lundin, chairman of Lundin Mining, said last week that he has never seen anything like the current commodities downturn.

“I'm very surprised. This is the worst correction we have had in the last 50 years,” he said in an earlier interview.

Some executives are feeling a pinch. Richard Gusella, chief executive officer of Calgary-based Connacher Oil and Gas Ltd., was required to sell almost half his shares in the company because of a margin call at his brokerage firm.

“Never in my wildest dreams did I expect, with the progress we've made as a company, that we'd have a market meltdown as we've seen,” he said earlier this week.

Amid the gloom, there are a small number of wealthy Canadians who have seen their wealth climb since June.

Prem Watsa, chairman and CEO of Fairfax Financial Holdings Ltd., has seen his stake in Fairfax climb in value by $128-million to $605-million as his company's share price grew by 27 per cent in the period. Similarly, Galen Weston, chairman of the George Weston Ltd. empire, has also seen his stake grow slightly to a total of $4.3-billion as investors move into safe staples such as grocery-store stocks.
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The Thomson family
-$3.2-billion (-20 per cent)
Canada’s richest family has taken a major hit since June. The value ofits stake in Thomson Reuters Corp., owned through private holdingcompany Woodbridge Co. Ltd., has sunk more than $3-billion since June.Woodbridge owns about 53 per cent of the electronic data company – astake still worth $13-billion as of this week.

Mike Lazaridis and James Balsillie
-$2.4-billion and -$2.2-billion (-48 per cent)
The co-CEOs of Research In Motion Ltd. have seen their company’s shareprice drop 48 per cent since June, taking their personal fortunes downwith it. Their shares in the BlackBerry maker were worth $5-billion and$4.6-billion respectively in June, sinking to $2.6-billion and$2.4-billion as of this week.

Ted Rogers
-$1.4-billion (-24 per cent)
Even a steady, cash-spinning business like cable television can be hitby a broad bear market, and Rogers Communications Inc. has seen itsshare price fall 23.6 per cent since June. Mr. Rogers’ large stake inhis empire has lost $1.37-billion in value since June, dropping from$5.83-billion to $4.46-billion currently.

Murray Edwards
-$909-million (-46 per cent)
The Calgary entrepreneur has suffered his largest hit from the drop inprice of Canadian Natural Resources Ltd., but has also seen hisholdings in Ensign Energy Services Inc., Magellan Aerospace Corp. andImperial Metals Corp. fall in value in recent months. Based on thevaluations of those holdings alone, Mr. Edwards has seen his personalworth plunge from $1.99-billion in June to $1.08-billion, almostfalling below the billionaire mark.

Robert Friedland
-$843-million (-66 per cent)
Mr. Friedland appears to have fallen far out of Canada’s billionaireclub, at least based on the values of his two largest public companies.Ivanhoe Mines Ltd. and Ivanhoe Energy Inc. have both seen their shareprices drop sharply since June, reducing the value of Mr. Friedland’sstakes from a total of $1.28-billion to just $440-million as of Tuesday.

Paul Desmarais Sr.
-$764-million (-18%)
Mr. Desmarais’ stake in his iconic Power Corp. of Canada has dropped 18per cent in value since June. His holdings in Power Corp. – parent ofinsurer Great-West Lifeco Inc. and mutual fund firm IGM Financial Inc.– were still worth $3.4-billion as of Tuesday, down from $4.1-billionin June.

Clayton Riddell
-$539-million (-43 per cent)
The Calgary businessman has seen several of his largest holdings hithard in the bear market, including his major stakes in ParamountResources Ltd., Paramount Energy Trust and Trilogy Energy Trust. Hisstakes in those three firms have fallen in value from $1.2-billion inJune to $706-million as of Tuesday.

Adolf Lundin
-$382-million (-70 per cent)
The estate of the mining entrepreneur, who died in 2006, has seen itsholdings drop sharply in value this year. The most notable hit has beentaken by Lundin Mining Corp., whose shares have fallen 70 per centsince June. The estate’s holdings in Lundin Mining as well as AtacamaMinerals Corp., Canadian Gold Hunter Corp. and Lucara Diamond Corp.were worth $545-million in June. That value has since fallen to just$162-million as of Tuesday.

Lino Saputo Sr.
-$403-million (-20 per cent)
Saputo Inc. has also not seen its share price hit as hard as many othercompanies in Canada, but Mr. Saputo’s stake has nonetheless dropped 20per cent since June. His holdings in the dairy and cheese company havefallen in value to $1.6-billion from just over $2-billion in June.

Ronald Southern
-$347-million (-34 per cent)
Mr. Southern’s Atco Ltd. and Canadian Utilities Ltd. have dived 35 and18 per cent respectively since June. Mr. Southern’s two core holdingswere worth $665-million this week, down from $1-billion in June.

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