Portfolio Manager Barry Schwartz said there needs to be significant change at Rogers Communications Inc. for the stock to be attractive enough for his shop to buy back into it.
“It has not been a great environment for this company to work,” said Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management, in an interview Monday. “They have all the pieces in place, and I think the Shaw deal is really transformational. But now, of course, does it close?”
Schwartz said Baskin Wealth owned Rogers for clients between 2015 and 2020, but exited early in the pandemic when it “stopped being a growth story.”
Without knowing about the corporate and family drama that was about to unfold at the Canadian telecommunications giant, Schwartz said Baskin Wealth exited Rogers because it was bound to miss out on revenue from roaming fees when travel came to a screeching halt as the COVID-19 pandemic took hold. Schwartz also cited Rogers’ move to an unlimited model for wireless customers, which limited its ability to charge overage fees.
His comments come the same day the boardroom feud at Rogers moves to British Columbia’s Supreme Court, as parties involved seek to confirm the company’s rightful board of directors.
The governance uncertainty is playing out as Rogers seeks to close its proposed $20-billion takeover of Shaw Communications Inc.
With the fate of that deal still up in the air, Schwartz said shares in both companies are risky investments.
“[Shaw] trading at $30 makes no sense,” he said. “Shaw should be trading in the low 40s. There’s a gigantic upside. But, clearly large players do not think this [takeover] is happening.
“If it doesn’t happen, Shaw’s stock goes back down to the mid to low 20s. You’re taking a gamble on information you don’t have.”
While not an owner of Rogers shares at this time, Schwartz said the company needs to close the Shaw deal and “get the ball rolling” in order to make it an attractive buy.
“It’s hard to find a place for it in your portfolio,” he said “What I would like to see from here is everybody make up. Really quickly. And figure out who is going to be the CEO and get started on a plan for growth.”
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