Northern Star

Dick Haskayne admits that he follows trends and has great luck, but he's not taking the market turmoil sitting down.

By David Ebner
Globe Investor Magazine, November 18, 2008
Photograph by Colin Way

Dick Haskayne, 73, is an Alberta business legend. The man after whom the University of Calgary business school is named made his first money selling quarts of milk for 10-cent profits in the 1940s. He's spent a quarter-century in the top echelons of Canadian business, serving on more than 20 boards, including EnCana, CI BC and Manulife. His recent memoir, Northern Tigers: Building Ethical Canadian Corporate Champions, doubled as a manifesto, advocating for strong, Canadian-headquartered corporations.

EBNER » What are your maxims for investing?

HASKAYNE » I have to know something about what I'm investing in. I take a big enough position relative to my total net worth that makes it worthwhile but not so big that it's going to sink me. It's nice to be diversified, but a lot of investors- and in fact a lot of professional investors- pattern themselves off the TSX. Well, I don't think you're ever going to make a lot of money that way. If you're a passive investor, that may be the way to do it, [but] you might as well buy ETFs. That's one lesson. It takes a little more courage, but if you're going to do it, you have to be fairly convinced you're going to do the right thing.

What do you tell these people?

Make sure, first, that you have a supportive group of friends. Quickly adopt a sense of ownership over your money. Don't just let it spill out of your wallet. Make paying down your credit card a monthly priority. Learn to pay yourself, too. See the potential in saving for your future, what it means to tuck away money each week-and how much that becomes in a year.

You're a veteran of boardrooms. Are there signs an investor can discern from looking at directors?

I look to see if they own shares themselves- that's a telltale sign. You see a lot of companies where, Christ, the people on the board may have a great reputation, but they don't own any shares. What's that tell me? I don't have a checklist, but my computer in the gut tells me that's what I look for.

This fall was crazy. Do you have any lessons from the past?

I remember '87. But this one is much broader, with the impact of globalization. Who would have guessed that all of the U.S. housing mortgages would have been held around the world? I don't know anything like it.

What do you do? What are your best long-term ideas?

I may sound biased here, but having some oil in the ground, which is going to be in demand regardless of what happens around the world, with some cash flow coming from that, whether it's $80 (U.S.) a barrel or $140 or $60, is as good of a protection as you can have. And I use potash as an even better example, because there's a pretty big demand for potash around the world, and it's increasing. This is an opportunity. The market has way overreacted.

What do you do? What are your best long-term ideas?

I may sound biased here, but having some oil in the ground, which is going to be in demand regardless of what happens around the world, with some cash flow coming from that, whether it's $80 (U.S.) a barrel or $140 or $60, is as good of a protection as you can have. And I use potash as an even better example, because there's a pretty big demand for potash around the world, and it's increasing. This is an opportunity. The market has way overreacted.

It seems counterintuitive: commodities as a safe haven?

Oh my god, some of these, the Suncors of the world, are trading at valuations I've never seen. Wonderful companies, well-financed, generating a lot of cash, with long-life reserves. Trading at three times cash flow. Typically, five or six was a more reasonable number. Oil is down, but it's still $80.

It's a dangerous time to make predictions, but if oil ratchets down to $60, what does that mean to you?

I don't see it ratcheting down to that, but if that's the case, as an investor, I would probably continue to add to my holdings. ...It's pretty simple, as far as I'm concerned.

You were shaken by Canada's biggest miners getting scooped up, but your critics call you a protectionist.

I've been harping on this, bitching away about it, and I'm still upset. People challenged me on that substantially, saying, "Well, it's free enterprise, and that's the way it is," and that the mines are still here. I don't agree with that. We were a mining capital of the world, for god's sake, and we lost all that, and I don't know how you ever regain that.

You've said Exxon could buy EnCana with its petty cash-an exaggeration?

Not much.

So you're worried about Calgary's companies-a city that used to be dominated by U.S. firms but now is Canadian-led?

The same kind of thing could happen in the oil business. Dominic D'Alessandro and I put together some concepts, which were criticized. An example is the Bank Act. Dominic will be the first to tell you, if it hadn't been for the Bank Act, Manulife wouldn't be here today. And all the Bank Act did was provide some protection and welcome anybody as long as they didn't own more than 20%, foreign or otherwise. We said we maybe should have something like that for the oil business. Well, it didn't go very far.

Investors' automatic reflex would be to denounce any ownership restrictions.

Canadians have been very well served by the banks. Sure, they've screwed up a bit, but look what's happened to all those big banks in the U.S. and around the world. Here we are in Canada with a very stable set of banks, probably the strongest balance sheets in the whole world of banking. The system works. I'm really concerned that we don't fully appreciate what we've already got.

Time to buy Canadian banks, then?

CIBC has stubbed their toe some, but, nevertheless, I don't see them cutting the dividend, and I still own a fair bit of the stock. I have mostly equal holdings of all of the Big Five. If you're getting a 4% to 6% yield on a Canadian bank, I think it's a great long-term holding.

Who's your broker, by the way?

I make the decisions, but I have two brokers I've dealt with for more than 20 years each, guys in their 50s that I respect and admire. I guess you could do it online and do it a lot cheaper, but the advice that I get is very valuable, particularly at times like this.

You are a big reader.

I read analysts' reports that I get from a bunch of different sources, and often there's some very good insights in there. But I don't have any magic answers. I watch trends.

You're also averse to "This is it" answers. You're skeptical. It's refreshing.

I don't have silver bullets. And it's not just a matter of investing. I had farmland that I just sold. I started accumulating some back in 1961. It's done reasonably well-but didn't do well for a long time- but has taken off because of what's happening to grain prices. There's no magic. In the final analysis, you've got to have some luck.