Sprott warns of 'meltdown'Sprott warns of 'meltdown'
STEVE LADURANTAYE
August 1, 2008
NorthAmerica is the midst of a "systemic financial meltdown," Eric Sprottwarned yesterday as his company turned a quarterly profit of more than$11-million.
"I'm not trying to be shocking to anyone, but let's face it," said Mr. Sprott, chief executive officer of Sprott Inc. "When Bear Stearns goes down, Freddie and Fannie go down, and IndyMac goes broke, we have major issues out there."
Toronto-based Sprott runs mutual, hedge and offshore funds. Mr.Sprott said assets under management increased to $7.7-billion in thesecond quarter, up from $6.8-billion at the end of March, despiteoperating in what he called a bear market.
Profit was $11.4-million, or 8 cents a share, compared to ayear-earlier loss of $7.7-million. Revenue - management fees,crystallized performance fees, gains or losses from proprietaryinvestments, interest and other income - was $39.5-million. While thecompany charges performance fees, they are not calculated until the endof the year and are distributed as a special dividend.
The firm, which went public in April with a $200-million offering onthe Toronto Stock Exchange, will load its funds with gold and energystocks in the months ahead while selling the financial industry short."We're trying to position our funds to survive the difficulties," hesaid. "We've gone into gold on the long side because it will survive asa replacement to fiat currency and into energy stocks because of ourbelief in the peak oil thesis."
SPROTT INC. (SII)
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